06/17/2026
New-build stopped penciling. So the smart money stopped building — and started converting.
In Q1, conversions climbed while the overall hotel pipeline shrank. Capital didn’t disappear. It moved to buildings that already exist, because that’s where the returns still clear.
But “convert instead of build” is the headline, not the decision. The decision is four variables:
1️⃣ Basis — are you buying below replacement cost?
2️⃣ PIP scope — the real number once the walls open up
3️⃣ Brand fee delta — net of fees and CapEx, not the rate card
4️⃣ Time-to-revenue — every month of transition is carrying cost
Miss on any one and “conversions are hot” quietly stops being true for your building.
What’s the variable you’ve seen blow up a deal after close?