TRENDING : Q1 REPORT
HILTON CEO leaks new extended-stay brand on earnings call
By DAVID EISEN
Hilton CEO Chris Nassetta wasn ’ t coy on his company ’ s firstquarter earnings call . Nassetta publicized a forthcoming hotel brand within the extended-stay space , a proclamation typically reserved for a larger stage than an analyst call .
And he wasn ’ t short on details . Though no name was given , the brand will be positioned in the extended-stay space , at the lower end of midscale and a notch below Home2 Suites , which is classified as uppermidscale , according to STR chain scales . Hilton has one other extended-stay brand in Homewood Suites , which is considered an upscale product .
It will debut officially , Nassetta said , over the course of the next 30 to 60 days and will be a 100 % new-build product , with an “ efficient build cost and high margins ,” Nassetta said .
Though design details were scarce , Nassetta described the brand as a “ hybrid efficiency ,” conjuring the notion of a studiotype apartment . He said the idea is founded on the notion of mobility that plumed out of the pandemic . He said that while most core extended-stay products have length of stays from five to 10 days long , the new brand could average stays as long as 30 days . “ It ’ s not competing with Home2 or Homewood ,” Nassetta said , adding he anticipates hundreds of hotels over time .
With a potential ADR in the range of $ 80- $ 90 , the brand is targeting younger cash-strapped travelers . Nassetta referred to the network effect and getting them “ hooked on our system .”
Hilton and its peers have pivoted in the aftermath of the pandemic and within the context of current macro-economic headwinds . Hilton , for one , has leaned into the midscale and economy spaces . In January , Hilton unveiled Spark by Hilton , a conversion product for what it calls the “ premium economy ” segment . As groundup development stalls with higher interest rates causing a credit crunch , cheaper methods of development are , in some cases , preferable .
“ Conversions are a big focus of ours ,” Nassetta said . “ Spark is the most disruptive thing we ’ ve ever done and the timing is convenient as it depends very little on financing .”
Nassetta said that many brand conversions happen on a transaction or a change of ownership . He said that it can be as cheap as $ 2 million to convert to a Spark and “ get into our system .” New builds , meanwhile , tend to need vast amounts of financing and take longer to come to market .
STRONG NUMBERS Hilton was one of the first publicly traded hotel companies to report first-quarter 2023 earnings . The numbers were strong and indicative of a strong demand from the traveling public , coupled with the importance of markets across China now opening up .
14 hotelsmag . com June 2023