Hilton Goes All-In on a Vegas Future With $4.3 Billion Resort

It wasn’t long ago when analysts wondered what future there was for resort developers in a place like Las Vegas, where occupancy rates relied on events and gambling halls filled with crowds of people — concepts very much at odds with the pandemic’s social distancing mantra.

But that was then, and Hilton and other brands see a very different future.

The $4.3 billion Resorts World Las Vegas — in partnership with Genting Group — opening later this week includes Hilton’s eponymous brand as well as a Conrad and Crockfords, part of Hilton’s LXR Hotels & Resorts brand. The latter two brands’ arrival in Las Vegas means the city is the only U.S. market with all three of Hilton’s luxury imprints (a Waldorf Astoria is further south on the Las Vegas Strip).

Everything about Resorts World is big. Its combined 3,500 guest rooms and suites makes it on track to be Hilton’s largest property in the world. It won’t be home to one musical residency; it will be home to several: Luke Bryan, Katy Perry, Carrie Underwood, Zedd, and Tiësto will all regularly perform at the sprawling resort. Resorts World even managed to woo Celine Dion away from her longtime spot at Caesars Palace.

The splashy entertainment value of Resorts World is a bit of a Sin City homecoming for Hilton. The former Las Vegas Hilton was once the largest hotel in the world and was an early player in the artists-in-residency category as the home venue for Elvis Presley. That property is now a Westgate timeshare resort and casino.

Hilton’s Vegas growth story is more than the glitz of Resorts World, however.

“Las Vegas has been an especially bright spot in our global growth strategy, and we are excited to open thousands of rooms there just as people begin traveling again,” Hilton CEO Christopher Nassetta said in a statement.

Development Jackpot: Hilton is on track to have 30 properties and more than 11,000 rooms in Las Vegas across 12 brands by the end of the year. An additional seven hotels and nearly 4,000 rooms in development should increase the company’s size in the city by more than 50 percent by 2023.

Hilton isn’t just focused on ultra-luxury brands, either. The company partnered with Virgin Hotels on its new Las Vegas resort, which opened in June as part of Hilton’s Curio Collection. Other recent openings include properties tied to brands like Hampton Inn and Home 2 Suites.

The growth is a notable boost of confidence in the market considering Las Vegas Sands announced plans earlier this year to vacate its namesake city with the $6.25 billion sale of the Venetian Resort Las Vegas and Sands Expo and Convention Center and instead focus on growth in Asian markets.

While Las Vegas Sands leaders never badmouthed Vegas in that sales process, there was plenty of bad press about the city’s future after months of no city-wide conventions during the pandemic.

The city had 1.7 million convention-related tourists last year (all before mid-March) compared to 6.6 million in 2019. But there are signs Vegas is beginning a revival towards normal.

“Fundamentally, nothing has changed. We’re selling out 80, 90 percent weekends, 70 or 80 percent mid-week and growing consistently,” MGM Resorts CEO William Hornbuckle said last week at the Skift Hospitality & Marketing Summit. “The last 90 days have literally been on fire.”

The World of Concrete earlier this month was the city’s first major conference following the lifting of capacity restrictions, and additional events like the International Surface Event have hospitality executives bullish on the future.

“I do think it’s fair to say that the demand for groups is certainly going into 2022 stronger than we ever anticipated,” said Danny Hughes, executive vice president and president of the Americas at Hilton.

Brand Partners: One of Hilton’s Vegas deals includes an agreement with Virgin Hotels on the 1,500-room Virgin Hotels Las Vegas. The property, formerly a Hard Rock Hotel & Casino, is part of Hilton’s Curio Collection soft brand.

Virgin Hotels CEO James Bermingham previously told Skift the partnership stemmed from the property’s greater emphasis on meetings and events than a typical Virgin property. Hilton similarly doesn’t see this turning into a large number of Virgin tie-ins, but the company isn’t ruling out further partnerships.

“This is a great opportunity for us to really work with a truly iconic cutting-edge brand, plug in the power of our distribution channels, plug in the expertise of our management, and let’s see how this works in Vegas,” Hughes said. “This is not a strategic partnership where we’ve decided to aim for 20 hotels together, but we’re both open-minded.”

Tata Sees Luxury Opportunity in India

Tata Group-owned Indian Hotels Co., the company behind brands like Taj and Vivanta, sees domestic travel opportunities in India following this spring’s devastating rise in coronavirus cases across the country.

Daily infections in India are now a fifth of where they were in May, and major markets like Mumbai are beginning to relax social distancing guidelines. The lifting restrictions have company leaders forecasting a boom in domestic travel across India similar to what has been seen in markets like the U.S. and China.

“The good news is that everyone is convinced about the long-term outlook of the industry and the sector has proved its resilience,” Indian Hotels CEO Puneet Chhatwal told Bloomberg last week.

Chhatwal noted June revenue at the company is already better than last year despite India only just beginning to emerge from tougher lockdown measures. While he isn’t ruling out international expansion — the company already operates the Pierrre in New York City — it isn’t expected to be widespread.

“Overseas expansion would be opportunistic for us and very, very selective,” Chhatwal said.

Extended Stay America Deal Closes

After months of shareholder discord, Blackstone and Starwood Capital’s more than $6 billion Extended Stay America acquisition finally closed last week.

The deal marks Blackstone’s third time in an ownership position for the extended-stay hotel brand. It is also a significant boost in Starwood Capital’s holdings in the sector following months of company leaders touting extended stay as the most-resilient hotel type during the pandemic.

Just prior to the closing, “holders of record” received a $1.75 per share cash dividend, according to a filing last week with the U.S. Securities and Exchange Commission.

You can finds a full overview of the takeover and shareholder opposition here and here.

From Hotels to Affordable Housing

A bill awaiting New York Gov. Andrew Cuomo’s signature would pave the way to convert underutilized hotel assets to affordable housing across the state.

The measure, which has passed in both of the state’s legislative bodies, would give $100 million to New York’s Housing Trust Fund Corp. to purchase empty hotel and office buildings and repurpose them into apartments for low-income residents or people experiencing homelessness, the Wall Street Journal reports.

If passed, the bill would follow California’s $600 million program instated last fall that promoted similar real estate conversions to affordable housing.

The push for affordable housing comes as hotels in major cities like New York City recover at a slower trajectory than leisure destinations like Miami or Nashville. Analysts at one point in the pandemic estimated as much as 20 percent of the New York City hotel supply could permanently close.

While devastating for the travel industry, that wave of shutdowns could be an opportunity for housing. Greater New York City has a roughly 772,000-unit shortage of affordable housing for people making less than half of the area’s median income.