- Prolonged build timelines and high borrowing costs are pushing South-east Asian hotel owners away from new builds and towards converting existing assets
- Horwath HTL’s data shows conversions are concentrated in more developed markets versus earlier stage growth markets
- Collection and soft brands are absorbing the resulting deals, as owners push for franchise and performance-linked fee structures that keep control while opening access to global distribution
Hotel conversions are claiming a growing share of South-east Asia’s development pipeline, as high debt costs and stretched construction timelines push owners away from new builds and towards faster, cheaper transformations of existing assets.
Asked to name the top three trends in the region’s hotel development scene, executives at four hotel groups, IHG Hotels & Resorts, Radisson Hotel Group, Centara Hotels & Resorts and Accor, each placed conversions in first or second place on the list.
At IHG Hotels & Resorts, conversions accounted for about 30 per cent of openings in 2019 and reached 50 per cent last year, according to Bryan Chan, the group’s vice president of development for South East Asia and Korea.
“Conversions are increasing, reflecting a shift in owner priorities towards assets that deliver minimum downtime, higher returns and lower costs,” Chan said.
The capital case for conversions
Chan noted the momentum was strongest in the premium segment, where independent owners compete against global loyalty networks.
“The premium segment is one in which we see some of the strongest momentum, supported by the demand for high-quality, value-for-money stays. This creates significant opportunities to convert either independent hotels into branded assets, or non-hotel real estate such as underutilised office spaces into hotel assets,” he explained.
The strategy is concentrated in voco, which Chan shared is now IHG’s fastest-growing premium brand, with nine hotels open in South-east Asia and eight more in the pipeline.
“Its appeal lies in its cost-effective conversions and new builds that combine operational efficiency and distinctive guest experiences,” Chan added. “This includes the most recent opening of voco Kuching, a conversion of a former independent hotel into a mixed-use destination, integrating the voco hotel with East Malaysia’s largest seniors wellness centre.”
Horwath HTL’s pipeline tracking shows the same pattern reshaping deal flow beyond the region’s gateway cities.
“New-builds still dominate our secondary-city deal data however it is declining from around 80 per cent in 2019 to around 60 per cent in 2025 and Q1 2026. Conversions have been steadily eating into new-build’s share of secondary-city deals for six straight years,” said Matt Gebbie, Horwath HTL’s director for Pacific Asia.
At Bangkok-based Centara Hotels & Resorts, chief development officer Andrew Shaw ranked conversions as the top trend in the region’s development scene, saying the capital environment had forced a re-evaluation of long-term construction projects.
“Conversions are taking priority over ground-up development,” Shaw said. “With debt and construction costs still high, and development timelines stretching, new-build projects are becoming harder to justify. Rebrandings, renovations and adaptive reuse projects are more attractive because they can be delivered faster and with less capital risk.”
The country split
Horwath HTL’s deal tracking shows the shift is far from uniform across Asia-Pacific.
Gebbie explained: “The conversions are more in the developed markets. If you are looking at Australia, Malaysia, New Zealand and even Thailand, there is a heavier proportion of conversions than there are in countries like Pakistan, Cambodia, the Philippines and Vietnam.”
Across the full 2019 to 2026 period, new builds still dominate in Pakistan (92 per cent), Cambodia (81 per cent), the Philippines (78 per cent), South Korea (76 per cent) and Vietnam (73 per cent).
Mature and leisure-led markets sit at the opposite end, with conversions and adaptive reuse taking close to half of all activity in the Maldives (42 per cent new build), New Zealand (50 per cent), Australia (52 per cent), Malaysia (52 per cent) and Thailand (55 per cent). A middle group holds a clearer new-build majority: China (71 per cent), Indonesia (69 per cent), India (68 per cent) and Japan (60 per cent).
Narrowing the window to 2024 to 2026 sharpens the divide. Australia’s new-build share falls to 34 per cent, with conversions taking 56 per cent of deals, and Thailand and Japan both drop to about 41 per cent. China, India, Indonesia and Vietnam hold in a band of 60 to 63 per cent, which Gebbie attributes to their position as earlier-stage growth markets.
Within secondary cities, conversions remain the smaller share of deals but the faster-growing one, rising from about 18 per cent in 2019 and 2020 to about 25 per cent by 2024 and 2025 once adaptive reuse is counted alongside them. That growth is concentrated in China’s already-built secondary cities, among them Hangzhou, Suzhou, Chengdu and Nanjing, where owners are repositioning older stock into international brands.
Space, yield and second winds
According to Armand Steinmeyer, vice president of development for South-east Asia at Radisson Hotel Group, the region’s hotel development conversation now splits into two for owners and investors.
“There are two conversations: greenfield versus the existing. With existing assets, it is about changing the programming and ensuring the hotel is evolving to demand. It boils down to how these assets can perform better,” he said.
That question of performance has moved beyond the traditional rooms-led model.
Steinmeyer elaborated: “It is not just about building a hotel and selling rooms any more. Today it is a bit more complicated. People look at how you can unlock value, and the owner-operator dynamic reflects that. There is greater sophistication in the market, with more variables.”
Converting an existing building into a branded hotel also forces operators off their standard architectural prototypes.
“Greenfield is theory; conversions are reality. It demands a lot of creativity. Just a conversion in itself is good, but bigger questions remain for how to change a property’s identity and give it a second wind,” Steinmeyer reflected.
That discipline has changed how Radisson Hotel Group measures a property: “We have a new metric with square metre yield – the software matters more now. In fact, it is healthy that we have brought it back to how we use space effectively,” he said.
He added that flexibility now runs through the group’s brand standards.
“As a developer-operator, we have to constantly reinvent ourselves and reinvent how space is used. Brands can be adjusted to make something come alive. That is how you can bring relevance,” he shared.
The trend is also spreading beyond hotel-to-hotel deals.
“Conversions of existing hotels are growing, but our adaptive reuse data – meaning non-hotels converted to hotels, whether they are apartments or offices – is also rising from a small percentage, particularly in China. This adaptive reuse sector never really got ticked before in our surveys, but it is increasingly prominent now,” Gebbie noted.
The soft-brand route
The rise in conversions is feeding growth in collection and soft brands, which let owners keep a property’s identity while plugging into an international operator’s distribution and loyalty platforms.
“Owners are prioritising flexibility, speed to market and capital efficiency. As a result, conversion of existing properties is becoming more prominent. Collection brands, like MGallery Collection and Emblems Collection, are particularly suited to this trend, as they allow hotels to retain their individual identity while benefiting from the support of a larger network,” stated Xavier Grange, Accor’s global chief development officer for Sofitel, Emblems and MGallery.
Grange added: “This model is gaining traction as it provides a balance between independence and access to distribution, loyalty ecosystems and operational expertise.”
Shaw noted that the pressure on brand relationships extends to contract terms.
“With hotel management agreements coming up for renewal across the region, owners are becoming more assertive. They want fee structures that are better aligned with NOI (net operating income) and bottom-line performance, rather than simply rewarding top-line growth. This is why performance-linked incentive fees, soft brands and franchise models are gaining appeal. They allow owners to retain control while still accessing global distribution and loyalty platforms,” Shaw stated.
Gebbie highlighted that the same flexibility is what makes the most complex conversions possible.
“Using the collection brands certainly makes adaptive reuse a distinct possibility. For the hard brands with a lack of flexibility, adaptive reuse is far more difficult. Collection brands make rebranding an office building into a hotel much easier,” he said.
“Brands aren’t sterile; brands should never be fixed in stone – because a brand is something that people live in; it’s something that they embrace. That is an opportunity to showcase it in a conversion,” Steinmeyer concluded.
