side , higher interest rates have made it more difficult to secure financing at digestible levels to build new hotels . Furthermore , Nassetta predicted that rates would come down eventually , but not to the levels they were prior to the pandemic . “ We went through an extended period of time where fiscal and monetary policy was too stimulative ,” he said . “ It ’ s harder to get money now .”
Harder capital markets aside , Hilton , he said , is on track this year to sign more deals than it ever has in its history . One caveat : many more deals are coming through conversions , at around a 30 % clip , Nassetta and Hilton have noted . ( Some franchisors , like Choice Hotels International , comparably have conversion percentages as high as 70 %.) “ We are continuing to find ways to be able to grow because not all places in the world are created equal ,” Nassetta said .
BALANCING BRANDS Spark by Hilton is one of Hilton ’ s newest brands — it ’ s a pure conversion play for what the company refers to as the “ premium economy ” space . “ In a world where it ’ s harder to get money , conversions are easier because generally people already own [ the asset ]. They ’ re already at a point where they ’ re going to go through a renovation cycle ,” Nassetta said .
Remember the bed wars ? This is the conversions wars and heavyweights like Hilton and Marriott International are gunning for market share in what is both a fragmented
A king guestroom with balcony at the Conrad Nashville .
and more homogeneous brand environment . In the battle for conversion supremacy , it is the fittest , Nassetta argued , that will win the day . “ Our commercial infrastructure and our ability to drive revenues at a better pace than our competitors means that we attract more capital ,” he said .
Hotel development over the past several years has concentrated in the midscale and lower spaces , which makes sense since luxury developments are much more expensive to build and take longer to develop . Many lodging companies have pivoted and pushed firmly into the space . For Hilton , that means leaning hard on its Hampton by Hilton brand ( a noted category killer , Tyler Morse , the chairman and CEO of owner / operator MCR , once said that Hamptons and Residence Inns were the two
Lobby fixture at the Graduate Nashville .
July / August 2024 hotelsmag . com 35