Hotel developers are increasingly converting historic buildings rather than building new properties, according to a report by CoStar, the commercial real estate data firm.

The shift rests on two pressures. Guests want character — buildings with history, distinct architecture, a sense of place that standardized new construction struggles to deliver. Developers, meanwhile, face mounting hurdles to ground-up construction that make adaptive reuse (the conversion of an existing structure to a new use) the more workable path.

What is driving developers away from new construction?

CoStar's reporting identifies new-construction hurdles as a primary push factor. The headline claim is structural, not aesthetic: building hotels from the ground up has become harder, and developers are responding by changing what they buy.

Historic conversions let owners sidestep some of those obstacles while acquiring an asset that new builds cannot replicate — provenance. The trade-off is well known in the sector: older buildings arrive with irregular floor plates, permitting complexity and renovation unknowns. Developers accepting those terms are signaling that the demand side now justifies them.

Why do guests matter to the decision?

Guest desires form the second driver in CoStar's account. Travelers increasingly favor properties with distinctive character over interchangeable product, and a converted bank, warehouse or office tower supplies that differentiation at the brand level.

For operators, the calculus is commercial. A historic building functions as a marketing asset, supporting premium positioning on the menu of room rates and experiences before a single interior decision is made.

What comes next?

The report suggests the trend has momentum: as long as construction barriers persist and guest preference for character holds, expect more developers to shop for old buildings rather than break ground on new ones.