PHOENIX — Hotel brand development executives have growth on their minds constantly.
Even in a high-cost economic cycle that’s not sparking a lot of hotel deals, brand development teams owe it to their stakeholders to find paths for growth. This means uncovering new demand generators, making brand options more resilient and building stronger relationships with owners.
“Momentum” was the word development executives from Hilton, Wyndham Hotels & Resorts, IHG Hotels & Resorts, Hyatt Hotels Corp. and Choice Hotels International used several times in a panel discussion at the recent Lodging Conference.
“We all started this year with great optimism, and I think the way I would describe where we started to where we are today is ‘momentum,’” said Dan Hansen, head of development in the Americas for Hyatt and global head of the company’s Hyatt Studios brand.
The hotel industry “continues to lap the barriers” of high interest rates, politics and tariffs heading into 2026, Hansen said.
David Pepper, chief development officer for Choice Hotels International, agreed, reflecting on a how a year ago hoteliers were setting budgets for 2025.
“We all knew who the president was going to be, we all thought inflation was going to come down and interest rate cuts would start happening,” he said. “What we’re seeing now is those things just got delayed a bit.”
With one interest-rate cut down and several more on the horizon, Pepper said the delayed momentum is picking back up again. He said he sees construction costs coming down “about 5% to 10%, mostly through labor.”
Growth opportunities
In terms of hot U.S. markets for hotel development and growth, speakers said it’s a combination of location and demand driver.
Areas with data-center and other infrastructure development are sparking interest right now for Wyndham, said Amit Sripathi, the company's executive vice president and chief development officer. He added Wyndham is seeing owners take advantage of projects coming up often in suburban areas around the country.
“Chip factories, battery plants, AI data centers — there’s a lot of this happening,” he said. “A data center in itself is not a demand generator, but it is something that changes the market dynamics.”
Hilton Chief Development Officer Christian Charnaux agreed, noting that “historically, the largest correlation to room-night demand growth has been non-residential fixed investment,” or businesses investing in new or existing physical assets. Current investment into data centers and energy infrastructure fall under that category.
“Looking at the markets where that money is allocated is interesting, because historically, that’s where room-night demand has come in right behind it,” he said.
Charnaux advised looking at the industries behind the hot industry, in this case data centers, which may not typically employ many people, but which require infrastructure such as power plants.
“These all ultimately create jobs that will create new markets, new cities that will come up,” he said.
This kind of market-scouting thinking extends to tax-free states, the general term for the nine U.S. states that don’t collect state income taxes, Pepper said.
“This is where people want to build factories, it’s where a lot of people are moving,” he said, citing Tennessee, Texas and Florida in particular.
Pepper also pointed out opportunities in the U.S.’s border regions.
“We’re seeing a big influx of demand on the border states, especially the south sides of the south border in Texas, Arizona and California,” he said.
Choice's hotels in Canada saw “double-digit revenue per available room increases in all the provinces” this year, Pepper said, referring to recent efforts by Canadians to travel domestically more than internationally.
Kevin Schramm, senior VP of development for IHG’s mainstream brands in the U.S. and Canada, said IHG’s partners are always looking at “markets that are on sale, long-term sustainable MSAs like Austin and Nashville.”
“Both have seen a lot of supply. Austin’s convention center is out of business for a while, and I think there are some buying opportunities in those markets that are fantastic,” Schramm said.
Conditions for confidence
With a complex 12 months behind them, speakers said they and their hotel owner partners are looking ahead to 2026 with a little more confidence.
“You can see the opportunity,” Schramm said. “We’ve weathered the storm, we’re fairly confident the bottom is behind us and now I can start investing in the future.”
The old way of thinking of industry cycles as innings in a baseball game is outdated, he said.
“Now it’s finding the time to jump back in and be optimistic. … There’s no magic potion. You just get comfortable with that feeling in your gut that tells you to move forward,” Schramm said.
Charnaux said future success is based on several factors coming together.
“Fundamentals in our industry have been challenged, especially in the last six months,” he said. "Seeing the floor there and recovery will ease some concerns. And interest rates are going to come down … it’s stabilization of fundamentals, supply still down, and that will give owners confidence.”
Sripathi advised hotel owners to remember the power of resilience.
“If I told you everything that had happened in the past six or seven months, then saw how we’re sitting here with the relative performance that we have, I’d say, ‘Wow, this is an industry with some pretty meaningful shock performance,’” he said. “Minus some black swan event, I think what we’re seeing on demand patterns and the top line, we should have a relatively better year-over-year trajectory.”