Hilton plans for new midscale hotel brand next year. Hilton CEO Chris Nassetta does not want to buy Starwood Hotels with its Four Points hotel brand when the company can create its own new midscale brand for less money.
By new midscale brand, Hilton is talking a hotel brand at a lower price point than the 2,000 hotels of Hampton Inn & Suites, which are an upper-midscale brand based on average room rates. The hotel midscale market are hotel brands like Best Western, Candlewood Suites, La Quinta, Quality Inn and Vagabond Inn.
In the past year Hilton has launched Curio Collection for independent hotels and Canopy by Hilton in the upscale and upper upscale hotel market segments. A new midscale brand will fill out the missing market segment for Hilton, now that Hampton Inn has moved up into the upper midscale market segment.
Smith Travel Research, a hotel rate data company compiles a hotel chain scale based on average daily rates for hundreds of hotel brands.
President and CEO of Hilton, Chris Nassetta states,
So it is always from an organic growth point of view, in terms of numbers of rooms and hotels, the most significant opportunity is taking what we already have and deploying it really strategically and intelligently around the world. And we think that is a massive opportunity for growth. In addition, there are opportunities to — we added two brands last year, which I talked about in my comments. We have some other opportunities and I have talked about those probably. I think, particularly an entry-level brand that would replace what space Hampton with all of its amazing success has exited as it’s moved up. And I think we could stand to have a slightly lower price point brand in the mid-scale segment and price point, that would allow us to capture customers earlier in their lifecycle and garner their loyalty to allow them to grow up and grow up with us in our system and shop in and around our system with our other brands. So, we are very hard at work, whether it’s this year or early next, sometime I’d say in the next 12 months. For sure, you are going to see us do something in that category. And we think that could be a mass scale brand globally. I mean, it will start likely in the U.S. But given the scale of the Hampton brand as an example, we have 2,000 hotels, over 2,000 hotels open. This could be amongst the largest brands by hotel count that we have. And I think we will be a very powerful driver of bringing new customers in and continuing to build loyalty.
Hilton Worldwide’s (HLT) CEO Chris Nassetta on Q1 2015 Results – Earnings Call Transcript
SeekingAlpha – April 29, 2015