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Every big chain needs a lifestyle brand, or so goes the thinking, but Hilton Worldwide will launch one this year with a twist, going after a broader market segment with a lower-priced brand.
Hilton Worldwide sees an opportunity in going where its competitors allegedly fear to tread — namely, the launch of an “accessible lifestyle” brand that would attract guests for stays at lower price points than the likes of Marriott’s Edition Hotels, Hyatt’s Andaz, and Hyatt’s Element and Aloft.
Speaking during Hilton Worldwide’s first-quarter earnings call May 9, CEO Christopher Nassetta provided a few details on two new brands Hilton Worldwide plans to launch this year: the lifestyle brand in the fall, and “unique iconic hotels” during the summer.
Both brands would be launched with minimal expense to Hilton as they won’t be on the balance sheet, adhering to Hilton’s capital light philosophy.
The “accessible lifestyle” brand, with its lower price points, would enable Hilton to “service more customers better and build a brand that is much bigger than we’ve seen others being able to do,” Nassetta said.
Hilton’s previous attempt to launch a lifestyle brand called Denizen ended after a lawsuit by Starwood over corporate espionage. The settlement prevented Hilton from developing anything until January 1, 2013.
The lifestyle brand will consist of new-builds, leveraging some of Hilton’s 10,000 owner relationships worldwide, Nassetta said.
The other brand that Nassetta discussed would be a four-star brand consisting of urban resort hotels that don’t fit into the standards of Hilton Worldwide’s existing brands, Nassetta said, characterizing them as “unique, iconic hotels.”
These unique hotels will be conversions of existing properties, and they too will be financed off the balance sheet, Nassetta said.
Neither brand will contribute much to Hilton Worldwide’s earnings in 2014, but would have a “good impact” starting in 2015, Nassetta said.
Hilton Worldwide has been on a tear, opening 9,000 rooms in the first quarter.