Luxury and lifestyle hotels may be the shiniest assets in a hotel company’s portfolio, but investors want to be where the travelers are. That means pumping money into more affordable offerings like Hilton’s Tru, IHG’s Holiday Inn, and Marriott’s Fairfield Inn — all concepts that snapped back fast from the pandemic.
Investors aren’t turning away from a market segment analysts see as the workhorse for major hotel companies — even if there are shinier places to park capital.
Resorts and lifestyle hotels were the hotel industry’s rare growth story during the pandemic. But construction and development activity at companies like Hilton and IHG show mid-scale brands like Tru, Home2 Suites, and Holiday Inn account for some of the largest shares of the industry’s development pipeline.
Hilton added nearly 100 hotels to its Tru portfolio since the beginning of 2020. Home2 Suites, with 379 projects in development at the end of the second quarter, accounts for the biggest share of Hilton’s U.S. development pipeline, according to Lodging Econometrics. Just three brands — Home2 Suites, IHG’s Holiday Inn Express, and Marriott’s Fairfield Inn — comprise 20 percent of the total hotel construction pipeline in the U.S.
Hilton leaders point to Tru as one of the company’s most resilient brands during the pandemic in terms of dealmaking, as the entirely new-build concept — first launched in 2016 — appeals to travelers with its minimalist design.
“All of those things that we've been touting as part of the brand all of a sudden had new meaning during Covid for travelers, so it kind of created this opening for the consumer side of things to maybe accelerate some brand awareness,” said Talene Staab, global head of Tru by Hilton.
New franchisees like the brand because Tru properties are generally more affordable to build than some of Hilton’s other offerings. Tru’s per-room construction costs at its launch ran at roughly $83,000 compared to more than $100,000 for Hampton. The brand essentially doubling its p