We already knew Hilton feels it needs more brands to compete, but weaving this particular "soft brand" into the fold, for lack of a better description, feels a bit like it's more of a blanket statement kind of brand, than one with a truly carved out identity. Or one that doesn't "occupy the same swim lanes" as some of Hilton's other brands — something Hilton CEO Christopher Nassetta has been critical of, in particular, with his company's biggest rival, the 30-brand juggernaut, Marriott.
The soft-brand collection marks Hilton’s 14th brand, and it will initially debut with properties in the following cities: Syracuse, New York; Chicago; Nashville; Warren, New Jersey; Hampton, Va.; and two hotels in Indianapolis. Hilton didn’t disclose the names of those properties as of press time. The first Tapestry Collection hotel is expected to complete its conversion by the third quarter of this year, and Hilton said it has 35 additional deals in the works.
The decision to add another brand to Hilton’s portfolio was motivated by consumer and owner feedback and a desire to appeal to younger consumers, Hilton CEO Christopher Nassetta told Skift.
“As we were talking to customer groups, it became really apparent that when you look at our 13 brands, which are fabulous brands and cover a broad spectrum of the industry, that this was a type of product that I would describe as unique upscale hotels that have their own individual spirit, if you will, and that are generally smaller hotels,” Nassetta explained. “These are types of hotels that a lot of our customers don’t necessarily want every time they travel, but periodically, it’s a product they want.”
He continued, “It’s also an opportunity at the upscale price point, to get younger customers that we may not have in the system and other customers of all ages that we don’t have in the system. For certain trip occasions, people want something at this three- to four-star price point that’s something more unique. It’s not a hard brand in the sense that it relates more to its local environment. So customers told us that, and that’s what really drove it.”
The Soft Brand Concept
Tapestry Collection by Hilton, unlike a “hard” hotel brand like a Hilton or Tru by Hilton, is, by its origin, purposely meant to be a little undefined. Not necessarily beholden to the same strict brand standards as those aforementioned Hilton brands, Tapestry — like Hilton’s other soft brand collection, Curio — A Collection by Hilton — is designed to appeal to independent hotel owners who yearn for access to Hilton’s more than 50 million Hilton HHonors members and its global distribution network, without having to sacrifice their properties’ own unique branding and identities.
Whereas Curio appeals to independent hotel owners with properties in the four- to five-star range, what the industry calls “upper upscale,” Tapestry, Hilton executives say, is targeted toward that three- to four-star range, also known as the “upscale” market.
Mark Nogal, global head of Hilton’s two soft brand collections, said the idea to develop Tapestry also came from Hilton’s work in building the Curio brand.
“As we were putting Curio together, we had a number of properties that didn’t quite fit the Curio category,” Nogal said. “It was a business opportunity we had owners inquiring about. Our focus is on conversions.”
The independent hotel space is ripe with opportunity for hoteliers, too. Nogal said, “There are about 15,000 independent upscale hotels around the world. That’s a lot of properties not affiliated with any major brand. Those owners are looking for an opportunity to associate with a bigger brand to get recognition.”
According to hotel industry research firm STR, about a third of room inventory in the U.S. alone is considered independent or non-branded, and in the past year, revenue per available room (RevPAR), a common industry metric of hotel performance, was driven by increases in average daily rate and occupancy growth. In other words, non-branded independents are doing well, but as STR SVP of lodging insight, Jan Freitag, has noted, that doesn’t mean we should abandon the power of brands, either.
News of this new brand shouldn’t be that much of a surprise to industry watchers. At Hilton’s December Investor Day, the company outlined five new brand concepts it hoped to add, including the idea of a soft brand “below Curio” and “at the DoubleTree level,” according to Hilton EVP of brands, Jim Holthouser.
Tapestry Versus Curio … and Everyone Else
While the economic pros and cons of soft brand collections are fairly straightforward — they’re designed to be a win-win for both hotel management companies and independent hotel owners alike — there could be some potential areas of concern, primarily because there are a lot of hotel brands out there, and particularly soft brands.
In the 2.5 years since it launched Curio, Hilton has grown that collection to 35 properties across several countries. But Hilton’s peers also have their own growing collections of soft brands. Marriott, for example, has The Luxury Collection, Autograph Collection, Tribute Portfolio, and Design Hotels. The Autograph Collection, which debuted in 2010, had 95 hotels as of Dec. 31, 2015. Hyatt, last year, debuted The Unbound Collection by Hyatt and to date it has a total of five properties. This isn’t a trend that shows any signs of slowing down, either.
“The old model of brand uniformity, with the art on the wall being the same in New York City as it is in Honolulu, is being recognized as an old model,” said Bjorn Hanson, a clinical professor with the NYU Jonathan M. Tisch Center for Hospitality and Tourism. “Growth won’t be in those uniform design and uniform operational models. Growth will be in soft brands and collections with local tastes, preferences, art, culture, and people looking for an experience.”
What kind of experience will Tapestry Collection deliver? Perhaps the biggest challenge Tapestry will have as it enters this already crowded space is whether it can be distinguishable enough to stand out and to appeal to owners and customers alike.
From the initial outset, Tapestry Collection’s brand positioning may not seem so clear — but maybe that’s what Hilton wants, at least from a soft brand.
Nogal said the name for Tapestry Collection was whittled down from a list of more than 500 names, but that Hilton chose it because, “a tapestry is a woven piece of fabric that’s a one-of-a-kind type of element. Each of these hotels will be an individual, one-of-a-kind hotel. The Tapestry name came to the top because it can be associated with that independent traveler who’s looking to have a great experience.”
Hanson said what he thought was most interesting about Tapestry Collection is the fact that it’s purposely going after that “upscale” chain scale, whereas soft brand collections have traditionally operated more in the luxury or upper upscale space.
Nogal also said, “When you look at the segmentation within the hotel business, there are not collection brands within the upscale category. We’re carving out a niche that hasn’t existed. This is an important part of what we do. We’re going to place brands in that perfect sweet spot. When we take a look at our competitors, they are there and we respect what they do. As we looked at the information and research, we realized we were building the first collection specifically designed for the upscale segment.”
But Hanson wonders: Is that necessarily the case these days? He noted that other soft brand collections also have a mix of properties that range from luxury to upscale and yes, lifestyle, and it’s rather difficult, at this point, to pinpoint Tapestry’s comparable or competing brands.
The problem is that so many of these brands and their brand standards are, in some ways, starting to blur. And not every hotel guest is well versed in the differences between “upper upscale” and “upscale” as defined by STR.
“These soft brand hotels come with a history,” Hanson said. “Guests who stay in these hotels are used to certain things. The brand standards are going to blur. With soft brands it’s going to be harder. If anyone says it’s been figured out, they’ll say these brands will be positioned on price and service and not on design.”
In other words, are the distinctions among a hotel from Tribute Portfolio or Design Hotels or even a Kimpton all that different from a Tapestry Collection hotel? Will it matter?
Nogal said Tapestry Collection “is not being launched in direct response to any specific competitor” and “there is no true prototype for this brand.”
Going forward, Hilton will also have to be careful to ensure Tapestry doesn’t “occupy the same swim lanes” as its other brands, a favorite phrase among Nassetta, who has used it previously to contrast Hilton’s 13-brand portfolio with that of its main competitor, 30-brand-strong Marriott. The star ratings, we suppose, are certainly a start.
And given Hilton’s success with its newest brand, Tru by Hilton, it appears that the company’s approach to growing brands “organically” as CEO Nassetta described, seems to be working. Tru by Hilton, which was launched last January, is the fastest growing brand in the entire Hilton portfolio, with more than 140 executed agreements, totaling nearly 14,000 rooms, and more than 200 additional hotels.
Marketing a New Brand
If Hilton’s initial promotional images for Tapestry Collection are any indication of the brand’s distinguishing features, it’s clear this is a soft brand targeted toward a more contemporary demographic. Think guys in suits on skateboards, a young couple by the pool, a Millennial with headphones wrapped around his neck, or a chic woman artfully adjusting her hat — images unified by the pervasive presence of purple, the brand’s signature color.
Nogal said that to promote Tapestry Collection, Hilton will be investing heavily into digital marketing, making sure whatever campaigns are released emphasize “the independent nature of the properties” while also leveraging the Tapestry Collection name and Hilton’s credibility.
Brand distinctions and marketing promotions aside, the ultimate success of Tapestry Collection will be measured in the number of independent owners whom Hilton can sign contracts with, and whether Hilton can deliver the guests and that “network effect” access those owners desire.
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Photo Credit: A promotional image from Hilton's newest soft brand, Tapestry Collection by Hilton. Hilton says it's the first soft brand collection squarely for the upscale sector. Hilton Worldwide