Branded Residences & The Future of Hospitality

Branded residences, one of the fastest-growing sectors in hospitality, will take center stage at Future Hospitality Summit - FHS World in Dubai (30 September to 2 October 2024), with a dedicated, full-day conference led by one of the sector’s leading innovators Accor One Living. In the lead up to the event, Jeff Tisdall, Chief Business Officer, Accor One Living and Global Head of Mixed-Use, Accor, shares his insights on branded residences and the future of hospitality.

It has been said that change happens slowly, then all at once. This certainly describes the growth trajectory of branded residences.

The branded residence sector is one of the fastest growing categories in the hospitality industry. Savills Global Residential Development Consultancy expects 1,200 branded residence projects to be operating globally by 2027, from nearly 700 today. While its origins can be traced back over the past century, it’s really over the last decade that branded residences have matured from a niche concept to a key driver of global hospitality growth.

The 20^th century was a transformational era for the hospitality industry. Once a luxury enclave for a privileged few, hotels proliferated into a vast universe of options for all types of travelers. The Sherry Netherland Hotel in Manhattan opened its doors in 1927 – the world’s first mix of apartments and hotel suites. This was a harbinger for the hospitality branded residence sector to come – yet by 1993, only 15 branded residences existed.

It wasn’t until the start of the 21^st century that a handful of leading global hospitality brands – including two Accor brands, Fairmont and Raffles – began to assert themselves in the realm of private residential living. Homeowners were thrilled to have the opportunity to secure a residential lifestyle elevated by the services, aesthetics, and amenities of their favorite hospitality brands. Most of these early projects were designed for luxury real estate buyers – and as demand grew, new entrants were attracted to the space. Between 2009 and 2019, the number of branded residences under development grew by nearly 200%. Over the past five years, this momentum has only gathered steam.

There are many societal and demographic shifts driving this demand, one being a push among affluent home buyers seeking seamless, turnkey second homes that can be cared for and even rented out while not in use. We have also observed the onset of a generational wealth transfer among high net worth and ultra-high net worth buyers who consider real estate as essential to their wealth management strategies.

At the same time, we also see branded residences as a natural evolution for successful hospitality brands. Buying a branded residence is the ultimate expression of brand loyalty. There is strong global demand for communities that are anchored by the comforts and promises of a beloved brand experience. In the case of Accor, we are fortunate that several of our brands have been selected to safeguard some of the most iconic real estate assets in the world. For purchasers, there is a great deal of confidence that comes from knowing these same brands are also backing the communities they call home. By entering this category, brands are presented with an exciting canvas on which to evolve their brand story and envision an exciting new suite of experiences that are crafted specifically for homeowners.

Given the typical profile of branded residence buyers, the sector continues to provide new opportunities, punctuated by innovative design. The last several years have seen offerings from lifestyle and premium hospitality brands, as well as top global fashion and automotive brands, such as Porsche, Aston Martin, Bugatti, Missoni, Armani, Versace, Fendi, and Bulgari. As a leading global player, Accor currently operates private residence communities under 25 unique brands – encompassing luxury, lifestyle, premium and midscale segments.

The intersection of lifestyle brands and private residences is one of the most compelling areas of growth right now. A recent example of modern mixed-use development is SO/ Uptown Dubai, where fashion and design theater inspire a spectacular set of residence amenities and private facilities which are exclusive to residence owners.

Even so, the luxury pioneers in the branded residential space, such as Fairmont and Raffles, continue to have strong appeal. A recent standout project is the OWO Residences by Raffles in London, an entirely private and exclusive residential experience discreetly integrated with the Raffles London hotel in the former Old War Office. Today, this historic address is a masterful achievement of modern design, with 120 spacious guestrooms and suites, 12 iconic restaurants and bars, an immersive spa and 84 Raffles branded residences. This dramatic restoration is a legacy for future generations.

For developers, aligning with a renowned hotel brand helps to accelerate sales and significantly enhance the economics of hotel investment, given the ability of co-located hotels and residences to share services, as well as certain amenities, facilities and infrastructure. Industry experts have consistently found the average premium captured by developers licensing global brands for their private residence projects to exceed 30%. Quite often, there is also value to be added through the addition of other innovative hospitality products, such as private clubs, celebrity helmed restaurants, or a coworking concepts.

The key to success is selecting the right brand with an approach that emphasizes a customized fit. This requires skill and care to effectively translate the brand's identity to residential spaces and private facilities while reflecting local market interests. This is why, in 2023, we formed Accor One Living – an industry-first 360º platform focused on supporting our partners in the development, design, and operation of mixed-use projects and branded homeowner communities.

Looking forward, there is still so much room for acceleration in this sector. We are confident that branded residences will continue to be a key driver of hospitality growth – becoming even more enriched with exciting new homeownership experiences for generations to come.