Another new brand is on the way for Hilton, this time a lower-midscale, new-build extended-stay offering designed to sit below Home2 Suites by Hilton, with an official debut within a few months.
Hilton President and CEO Chris Nassetta teased the yet-unnamed forthcoming brand on the company’s first-quarter earnings call with analysts, calling it a “brand that can deliver just astronomical margins on a very efficient per unit build cost.”
Nassetta called the new brand a hybrid of efficiency apartment and hotel, particularly addressing unmet workforce housing needs for travelers who need to be in one place from one to six months.
“We’re talking about an average length of stay of probably 20 to 30 days on average, versus most of the core extended-stay brands with five to 10 days, in that range,” he said. “It’s a different demand base, different types of locations, which is why we love it because we’re not already serving it. It’s not competitive with Home2 and certainly not competitive with Homewood.”
Nassetta said the brand is expected to grow to “hundreds and hundreds of hotels over time.”
Hilton’s current extended-stay brands, Homewood Suites by Hilton in the upscale segment and Home2 Suites by Hilton in the midscale space, had 1,125 hotels comprised of more than 124,000 rooms open globally at the end of the first quarter of 2023.
Hilton joins a recent wave of extended-stay brand launches from companies that cite similar demand drivers that were growing before the COVID-19 pandemic and have since sped up. The trend is designed to cater to travelers looking for longer-term stays because their work has become more flexible, or their living situations have changed.
“We already saw pre-COVID a demand for workforce housing and people with more mobility in their lives [who] wanted to be different places and work from different places and not be one place long enough to commit,” Nassetta said. “And then COVID hit … and more people are going to be remote as a percentage of the workforce permanently, more are going to have flexibility … and as those patterns shift, it’s building more and more demand against a limited amount of supply.”
Hyatt earlier this month launched Hyatt Studios, an upper-midscale extended-stay brand in part to fuel growth in secondary and tertiary markets for the brand. At launch time, Hyatt CEO Mark Hoplamazian said the company had letters of interest signed for more than 100 projects.
Last September, Wyndham Hotels & Resorts launched Echo Suites, its latest extended-stay offering, in the economy space. Wyndham Chief Development Officer and Executive Vice President Chip Ohlsson said in March the brand has 200 signed agreements and 200 deals in the pipeline.
Veteran of the segment Extended Stay America has launched two new brands in recent years — Extended Stay America Premier Suites in 2021 at a higher level than its core brand; and Extended Stay America Select Suites last fall, which sits below, with a stripped-down labor model and no food and beverage offerings.
Editor’s note: Chris Nassetta serves on the board of directors for Hotel News Now’s parent company, CoStar Group.
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