This article first appeared in City & Country, The Edge Malaysia Weekly on June 22, 2026 - June 28, 2026

Hotels are no longer just a place to stay and dine. As travellers increasingly seek unique experiences, lifestyle hotels are now one of the fastest-growing segments of the global hospitality industry, according to CBRE Research.

In a May 28 report titled Gen Z Checks In: The Rise of the Lifestyle Hotel, the research firm notes that the overall hotel supply in Asia-Pacific expanded at a compound annual growth rate (CAGR) of about 5% between 2015 and 2025. However, the number of lifestyle hotels grew nearly four times faster at 19% annually.

This trend is expected to continue, says the report. While overall hotel supply across the region is forecast to grow about 2% annually between 2025 and 2030, lifestyle hotels are projected to expand by about 10% a year.

CBRE attributes this rise to a shift in consumer behaviour that accelerated after the pandemic. “Demand is being driven by post-pandemic consumer preference for experiential travel featuring authentic cultural immersion, unique and striking designs, as well as community-focused spaces.”

Gen Z preferences may be the driving force behind the boom in lifestyle hotels, CBRE observes. This generation, born between 1997 and 2012, is currently the largest population group in Asia-Pacific.

According to the report, Gen Z accounted for 25% of the region’s population in 2025, ahead of millennials (23%), Gen X (20%) and baby boomers (15%). Gen Z is expected to make up 27% of the Asia-Pacific population by 2030.

CBRE’s research found that spending on experiences outpaced spending on physical goods across the region. Spending on experiences is expected to grow 7.3% annually, compared with 6.5% on physical goods, between 2025 and 2030. Spending on hotels is projected to grow even faster, at 9.1% annually.

Gen Z spending globally is forecast to grow by 27.6% between 2024 and 2030, the fastest of all the generations, outpacing that of millennials (26.6%), Gen X (16.7%) and baby boomers (15.2%).

The report suggests that Gen Z’s influence on travel demand is likely to increase. “Gen Z are increasingly opting for lifestyle hotels as the category appeals to their taste for experiential travel, authentic local culture and seamless technology over standard midscale offerings or formal luxury,” it says.

The research firm’s findings reveal that Gen Z, more than the other generations, prefer to travel for experience, inspired by social media and people of the same age group. “Discovering options and booking through digital channels is their norm. They have no strong attachments to any brand and constantly seek new and unique experiences.”

Unlike standard business hotels, lifestyle hotels are designed around storytelling. These hotels typically feature bold architecture and interiors, locally inspired concepts, unique food-and-beverage offerings and public spaces that encourage social interaction, which resonate strongly with Gen Z consumers, says the report.

CBRE highlights that social media plays a significant role in driving the demand. Visually aesthetic spaces, rooftop bars, creative design elements and experiential programmes provide guests with highly shareable content, helping hotels to attract attention organically through various online platforms.

Gen Z do not seek aesthetics alone. They also look for authentic cultural experiences to engage with local communities, discover new neighbourhoods and participate in activities, says the report.

Technology is another differentiator. Brands such as citizenM and YOTEL have built a reputation for seamless digital experiences, including mobile check-in, self-service processes and smart-room technology. These features align closely with the expectations of a generation that has grown up with smartphones and on-demand services, says the report.

Despite their rapid growth, lifestyle hotels remain relatively underpenetrated across Asia-Pacific, says CBRE.

Markets such as Singapore and Hong Kong have emerged as regional leaders in the lifestyle hotel trend. In contrast, penetration is relatively low in larger markets such as China, India and Japan, where domestic hotel operators still dominate.

The report says lifestyle brands have historically concentrated on the luxury and upper-upscale segments. About 75% of lifestyle hotel rooms in Asia-Pacific fell in these categories in 2020.

Hotel operators are increasingly recognising that lifestyle experiences appeal to travellers across a much broader range of budgets. As a result, the concept is gradually moving downmarket, says the report.

The luxury and upper-upscale segments saw their market share fall to about 70% by 2025, which translates into growth for the upscale, upper-midscale and midscale segments.

CBRE notes that new brands and concepts are being introduced specifically to attract younger travellers seeking experience-led accommodation but are still price-conscious. This shift could prove particularly important for Gen Z.

“While younger travellers are drawn to lifestyle hotels, many [of them] cannot yet afford luxury products. Midscale and upper-midscale lifestyle brands offer a more accessible alternative while preserving the design, community and experiential elements that define the segment,” says the research firm, adding that the trend presents one of the biggest growth opportunities in the market.

The strongest results were recorded by the upper-upscale segment, where lifestyle hotels generated a revenue per available room (RevPAR) premium of 13% over traditional hotels. Upscale lifestyle hotels achieved a 7% premium, while luxury lifestyle properties recorded a smaller 2% premium.

The report says these findings indicate that travellers are willing to pay more for distinctive experiences and design-led accommodation, particularly in the upper-upscale and upscale categories. “These hotels are also benefiting from stronger occupancy levels and higher average daily rates, despite often offering smaller rooms than traditional hotels.”

While opportunities are aplenty, the hospitality sector does come with its own challenges. The report says rising construction costs across Asia-Pacific have made new hotel developments increasingly challenging. The challenge is prompting many owners to consider conversion opportunities, rather than building completely new developments.

For investors, the conversion of existing buildings offer a faster and often more cost-effective route into the lifestyle hotel segment. CBRE notes two primary approaches, the first of which involves joining collections of independent hotels affiliated with major hotel companies.

“This strategy allows owners to access global reservation systems, loyalty programmes and marketing platforms while retaining much of their property’s original character,” it says.

The second approach involves converting an existing property into a core lifestyle brand. “While this typically requires greater capital expenditure and more extensive design upgrades, it can also deliver stronger brand recognition and customer loyalty benefits,” it adds.

Meanwhile, broader hotel investment activity is creating a favourable environment for repositioning opportunities.

The report has data showing hotel transaction volumes across Asia-Pacific have surpassed pre-pandemic levels, with a growing proportion of deals involving smaller assets. Properties valued below US$100 million accounted for 42% of the total hotel investment volume in 2025, up from 31% in 2020.

“Many of these assets are independent hotels that may be suitable candidates for lifestyle repositioning. Strategic renovations, refreshed design concepts and affiliation with a recognised lifestyle brand can potentially unlock higher rates, stronger occupancy and improved asset values,” says the report.

According to CBRE, Asia-Pacific had around 120,000 branded lifestyle hotel rooms developed as new builds as at May 2026, compared with about 49,000 rooms added through soft-brand conversions and 17,000 rooms via core-brand conversions.

While the number of new-build rooms was much higher than those that had undergone soft-brand and core-brand conversions, the growth in the number of converted rooms had been particularly strong over the past decade. The number of rooms created through core-brand conversions had increased 2.5 times since 2015, while those via soft-brand conversions had expanded by more than two times. The number of new-build rooms grew roughly 3.4 times during the period.

“The trend reflects a broader shift in investor thinking. While purpose-built lifestyle hotels remain attractive, rising land, labour and construction costs are making conversions an increasingly compelling alternative. Existing hotels can often be repositioned as lifestyle brands more quickly and with lower capital outlay than developing a new project from scratch,” says the report.

The report says the growth of lifestyle hotels indicates that it is more than a passing trend.

“For hotel operators, this means designing spaces that feel local rather than standardised. For investors, it means identifying assets that can be repositioned to capture evolving demand. And for global hotel brands, it means building portfolios that extend beyond traditional luxury and business travel models,” it adds.

CBRE encourages hotel owners to consider third-party operators (TPOs), which can provide more bespoke and highly competitive offerings than brand-managed options. It says brands are also more open than ever to owners working with TPOs.

As Gen Z become wealthier and more influential, the momentum created by this demographic is likely to strengthen, says the research firm.

“The industry’s next growth cycle may not be driven by larger rooms, grander lobbies or more extensive amenities. Instead, it may be powered by experiences, community and a stronger sense of place — the very qualities that define the lifestyle hotel movement,” it adds.

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