The branded residences story seems unstoppable. According to Savills, there are now more than 740 branded residential schemes globally, with the pipeline set to grow by more than 60 per cent in the next five years. And based on research that the industry loves to bandy around, average price premiums of around 30 per cent compared with non-branded equivalents, depending on location and positioning.
Balance
But it’s now no longer about whether branded residences work. Everyone knows it does, if it’s done right, that is. Instead, the conversation now circles around long-term durability. Speaking at the Hotel Investment + Development Event (HIDE) 2026, experts stressed that branded residences can unlock value and accelerate cash flow on a long term basis but only when executed with discipline. While the addition of branded residential could help bridge viability gaps when it comes to hotel development, experts stress that the hotel component itself must stand on its own.
Sam Barrell, director – mixed use development EMEA at Marriott notes “At Marriott, we don’t allow the development of a co-located branded residential scheme if the hotel element itself isn’t viable to ensure the end result isn’t a situation where the branded residential is sold out and the developer is happy but then the hotel asset is underperforming.”
And Dan Wakeling, VP development, luxury, residential & partnerships EMEA at Hilton echoes this sentiment, adding “Making sure the hotel is sustainable on its own is really important.”, with stressing that while branded residences can enhance feasibility, but they cannot be used to disguise a fundamentally flawed hotel concept.
This message is even more crucial especially considering the speed on growth of the segment, which has of course drawn in numerous new entrants, not all of them well-versed in either hospitality or real estate.
This gold rush mentality without adequate consideration of all the practicalities could mean that some can become overly focused on residential sell-out and allocate disproportionate space to branded residential units, notes Roger Allen, group chief executive officer at RLA Global.
But when that balance tips too far, it can create structural tension within a co-located asset, in the long run benefitting neither the branded residential or the hotel itself. Crucially, in a co-located scheme, if residential units mirror standard hotel inventory, return expectations should be moderated. Differentiated product, such as villas in a predominantly key-based resort, may outperform.
Transparency
A focus on governance, documentation and transparency are also essential to protect not just the consumer but also the brand.
Wakeling bluntly put it: “Governing documents must cover everything including service charges and what every party is on the hook for. And investment partners and developers need to be held to account in those documents. Because we can protect ourselves as much as we can against financial risk and legal risk but ultimately, brands are the ones that suffer the black eye in the press when it goes wrong.”
Buyers, he adds, must be made fully aware of the long-term realities: management agreements do not last forever, brands can change and the hotel operator running the building today may not be there indefinitely.
Long-term premium
Much of the sector’s appeal rests on the premium and a recurring debate is around the longevity of said premium, particularly on resale.
While Allen says there’s yet to be long-term performance data across many of the newer fashion- and automobile-branded schemes, Wakeling notes that data exists particularly in more mature markets such as in the US where branded residences have been trading for decades.
The question moving forward he says is about what kind of premium can be achieved, not only against the unbranded market but against the numerous other branded residences popping up.
And these multitudes include non-hospitality brands from fashion houses such as Fendi to automotive brands such as Bugatti. While Allen notes that ultimately, the hotel operator should know more about running the product than the fashion, automobile and F&B brands, he acknowledges a counter-argument: “Could these non-hotel brands “reverse benchmark” some of hospitality’s weaker service experiences and deliver something differentiated?”
For now, the consumer decision rests on brand confidence and appeal. As long as brand equity remains powerful, non-traditional entrants will continue to test the waters. But the true measure will be resale performance and sustained service delivery, metrics that will only become clear over time.
The cost conversation
While headline licensing fees are well-understood, often underestimated are some less visible costs. Barrell explains “If you’re working with a brand, they will be looking to maintain the brand experience. There will be extra validation, extra steps and an extra layer of scrutiny.” That scrutiny inevitably increases complexity and carries time and cost implications.
The amenity mix itself requires nuance. Sharing facilities between hotel guests and residents can help control costs, but overcrowding risks undermining the value proposition. However, creating fully duplicated amenity sets risks inflating service charges to unsustainable levels.
Service charge modelling is another critical pressure point. Allen observes that buyers who are willing to spend millions on acquisition can still be highly sensitive to monthly outgoings. Once service charge levels are set, they are extremely difficult to adjust upward.
“If you don’t get that right at the beginning, you have no chance of increasing it by even a little bit later”, Allen says.
Despite the proliferation and appeal of rental pools (and narratives that sometimes highlight rental income potential), experts stress that particularly at the higher end, branded residences are primarily lifestyle purchases. In resort markets, rental programmes may form part of the proposition. However, as price points rise, buyers are less inclined to allow third parties to occupy their homes. Instead, they prioritise security, maintenance and seamless access to luxury hotel level services.
While branded residences continue to gain traction globally, experts stress the importance of scrutinising every project in detail. Licensing to substandard projects in pursuit of short-term income can undermine long-term brand reputation. Good governance and applying stringent standards to partner selection is also key. The premium is real…but so are the pitfalls for those who rush into it with their heads in the clouds and only focusing on short term gains.