SHERIDAN, WYOMING – Feb. 17, 2025 – The hospitality industry has historically focused on primary markets, but exciting opportunities lie in secondary and tertiary markets. These markets offer a balanced approach to risk and the chance to contribute to local economies while meeting evolving traveler preferences. This combination makes them valuable for the future of hospitality.
Why Focus on Secondary and Tertiary Markets?
Our philosophy at Edgewater Group centers on risk management. Secondary and tertiary markets offer a more predictable risk-return balance. Unlike primary markets with extreme value fluctuations, these smaller markets offer stability and steady, sustainable growth. This stability makes hotel investments less vulnerable to economic downturns.
Accessibility is another key factor. Many secondary and tertiary destinations are easily reachable by car or short flights, appealing to travelers who prefer convenience. This accessibility is a significant advantage over primary markets. While major cities rely on international travel, secondary and tertiary markets cater to regional travelers with consistent travel habits, making them more resilient in various economic conditions.
Traveler preferences have shifted towards convenience and shorter trips. The rise of remote work and road trips has reinforced the appeal of destinations that don’t require extensive planning or long travel times. Secondary and tertiary markets meet these criteria perfectly. For example, travelers seeking a quick weekend getaway might drive to a charming small town rather than fly to a bustling city. This shift highlights the importance of developing hotels in accessible and convenient markets.
Hotels as Catalysts for Local Growth
In these markets, hotels are more than just accommodations; they become integral community parts. We believe hotel development should positively impact local ecosystems. This means partnering with local businesses, creating jobs, and fostering growth. A thoughtfully developed hotel in a smaller market becomes a hub for visitors and residents, driving economic and social growth.
Revitalizing a historic hotel in a smaller town by integrating locally focused retail or food and beverage offerings addresses community needs while enhancing the guest and resident experience. This ensures the hotel becomes a community asset. For example, a farm-to-table restaurant supports local farmers, while a boutique retail space provides a platform for local artisans, creating a mutually beneficial relationship.
Our market selection process prioritizes community impact. For example, after taking over a historic hotel, our team invested in the community by opening a new restaurant, leasing space to a pecan farmer, welcoming an upscale footwear and apparel retailer, and purchasing a nearby building for renovation and repositioning for another hospitality use. This strategy supports local entrepreneurs and fosters economic growth by attracting residents and visitors. The success of these businesses often contributes to the hotel’s success, creating a thriving local economy.
Hotels that actively engage with their communities become central gathering spaces, reinforcing connections and contributing to the area’s social and cultural vibrancy. These hotels become destinations in their own right. The sense of community creates a unique selling point that cannot be easily replicated in primary markets, helping hotels in smaller markets differentiate themselves and build lasting relationships.
Meeting Modern Traveler Expectations
Today’s travelers seek authentic, less crowded experiences. Secondary and tertiary markets are well-positioned to offer this. Hotel offerings must reflect local character and culture. Travelers are no longer content with generic experiences; they want to feel connected to the places they visit.
This might mean operating a mix of boutique, independent properties and soft-branded hotels. Soft brands offer the best of both worlds: brand recognition and loyalty programs with the flexibility to preserve the property’s unique identity. This allows hotels to offer distinctive experiences, enhancing the traveler’s sense of exploration. By retaining a property’s charm and history, soft-branded hotels appeal to travelers who value authenticity while providing the reliability of a well-known brand.
Food and beverage offerings highlight local culture. Researching community needs and incorporating regional flavors satisfies guests and supports local suppliers and artisans. For example, a hotel in a coastal town might feature a seafood restaurant sourcing ingredients from local fishermen.
Today’s travelers are also interested in sustainability and responsible tourism. Secondary and tertiary markets offer opportunities to implement eco-friendly practices. Hotels can adopt green building practices, reduce waste, and promote local conservation efforts, attracting environmentally conscious travelers.
Navigating Challenges in Smaller Markets
Working in secondary and tertiary markets presents challenges. Limited tourism budgets require hotel developers to step in. For example, in a small community, our team manages two hotels, and our strategy centers on highlighting local activities and destination experiences. Our role extends beyond hotel operations to include public relations and destination marketing.
Promoting the entire community is critical for attracting travelers and driving sustainable growth. This requires a longer timeline, but the mutual benefit makes it worthwhile.
Another challenge is accessibility. While many locations are easy to reach, infrastructure limitations can be a barrier. Selecting properties in regions with reliable transportation is key. Hotel developers can work with local authorities to improve accessibility or offer transportation solutions.
Looking Ahead: The New Frontier of Travel
The future of hospitality is shifting. Travelers are drawn to authentic experiences. Secondary and tertiary markets are uniquely positioned to provide these. By balancing risk, supporting local economies, and tailoring offerings, we can unlock the potential of these markets.
For those in hospitality, this means contributing to the growth and resilience of the communities we serve. These markets represent a new frontier for travel, full of untapped potential. By investing in them, we can create meaningful experiences for travelers while fostering economic growth.
The hospitality industry has a significant opportunity to redefine its focus. These markets offer stability, authenticity, and the chance to make a positive impact. The future success depends on thoughtful development, community engagement, and a commitment to providing unique experiences. By doing so, we can unlock a new era of growth and innovation.
Mr. Vora has over 25 years of experience in restructuring, turnaround, operating, capital raising, high growth, and M&A. His experience spans multiple asset classes and industries. He received an MBA from the University of Scranton and a BS in Accounting from the University of Mumbai. He serves on the Villanova University Daniel M. DiLella Center for Real Estate Advisory Board and the Advisory Owner's Council for the Ascend Collection Brand.
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