When I started K&K Hotel Group in 2008, my goal was to build a company that delivered both an extraordinary guest experience and exceptional investment returns. That meant always looking for new opportunities—sometimes outside the obvious. Over the years, one of the smartest moves we’ve made has been developing hotels in secondary and tertiary markets. These are places that don’t always make the headlines but have strong long-term potential.
Let me walk you through why this strategy matters, how it works, and what hotel owners need to know before jumping in.
Why Look Beyond the Big Cities?
It’s easy to be drawn to major metro markets. They’re glamorous, they have a steady flow of tourists, and big brands want a presence there. But they’re also extremely competitive, land and construction costs are high, and labor is expensive. That makes it tough to turn a solid profit unless you’re operating at full throttle year-round.
Secondary and tertiary markets—think mid-sized cities, growing suburbs, or business hubs near interstate corridors—can offer better margins, lower startup costs, and more stable long-term returns. These places may not have the foot traffic of New York or Dallas, but they have growing demand, especially when they’re near medical centers, universities, manufacturing plants, or logistics hubs.
Doing the Homework First
Success in these markets starts with research. You can’t just build a hotel and expect people to show up. You need to know the area inside and out—what’s driving the local economy, who’s traveling there, and what kinds of hotels already exist.
We always start with market feasibility studies. Are there large employers nearby? Is a new factory going up? Is the local airport expanding? What’s the occupancy rate in the area for existing properties? These are the kinds of questions we dig into.
For example, when we developed a property in a small Texas town, it wasn’t because the town itself was a tourist destination. It was because a distribution center had recently opened and was bringing in hundreds of contractors, truck drivers, and visiting executives. That’s the kind of insight that can make a project successful.
Designing for the Market
Another lesson we’ve learned: tailor the product to the market. Travelers in these areas aren’t necessarily looking for luxury, but they do want consistency, comfort, and value. A well-run midscale or upper-midscale hotel—like a Holiday Inn Express or Fairfield Inn—can outperform a fancier property in the wrong location.
We focus on efficient design, modern amenities, and top-tier service. Just because a hotel is in a smaller market doesn’t mean it should feel outdated. Guests still expect fast Wi-Fi, clean and modern rooms, and friendly staff who go above and beyond.
Hiring and Training Locally
One of the best parts of operating in secondary and tertiary markets is the ability to connect with the local community. We make it a priority to hire local talent and train them to deliver the kind of guest experience we’re known for.
It’s not just about filling positions—it’s about building a culture. When employees feel invested in the property and understand the brand’s mission, they take pride in their work. That directly translates into guest satisfaction and repeat business.
Staying Lean While Maintaining Quality
In smaller markets, profitability often comes down to efficiency. You have to be lean but never cheap. That means using technology to streamline operations, investing in preventative maintenance to avoid big repairs later, and keeping a close eye on labor scheduling and inventory.
But there’s a balance. Guests can tell when a hotel is cutting corners, and that’s never the right move. We’ve found success in focusing on high-impact areas—things like breakfast quality, housekeeping speed, and front desk service—while trimming costs behind the scenes in ways that guests don’t notice.
Long-Term Strategy Pays Off
Developing in secondary and tertiary markets isn’t a get-rich-quick plan. It’s a long-term strategy that requires patience, vision, and commitment. But when you do it right, the rewards are real. Properties tend to face less competition, maintain higher occupancy rates year-round, and appreciate steadily over time.
At K&K Hotel Group, we’ve reinvested our profits consistently into expanding our portfolio in these markets. That disciplined growth strategy has helped us stay resilient through market cycles and economic shifts.
Final Thoughts
Big cities will always be attractive for hotel development, but the real growth potential is often hiding in plain sight. Secondary and tertiary markets offer lower costs, solid demand, and room to build something meaningful—not just financially, but for the communities you serve.
If you’re willing to do the homework, build smart, and run with excellence, these markets can be some of the best places to grow a hotel portfolio. They’ve certainly been key to our success at K&K.