Hilton Worldwide is reportedly looking to introduce an economy brand to add the segment to its global hospitality network.
According to a report by Hotel News Now, Hilton executive vice president of global brands, Jim Holthouser hinted the hotel chain could introduce a new brand targeting the economy niche market as soon as over the next two to three years.
Speaking to the news site at Americas Lodging Investment Summit last week, Holthouser said: “we’ve looked at the economy segment many times. This isn’t something that we’ve just unintentionally not done. We’ve looked at it many times. And it’s an important one for us to get right”.
According to Holthouser, midscale and economy segments account for around 40% of hotel demand, but as per the report, he said, “we really have no product to serve that”.
“Unfortunately, the model you find in economy doesn’t throw off enough profit to be able to keep the hotels in the kind of condition that we would want, especially if we would put the Hilton name on it,” Holthouser said, the paper reports.
Holthouser claims the hotel chain has instead been focussing on other segments of the industry, and follows the introduction last year of lifestyle brands Canopy and Curio and an expansion in its luxury segments with additional Waldorf Astoria and Conrad properties in the pipeline.
However, Holthouser did concede to the paper that he was encouraged to see “some different models emerge in our business that will prove much more profitable”, referring to the economy segment.
“Essentially it creates a portal for next-generation travellers. If we think about millennials today—I know there’s a lot of hype about that generation—they’re a third of the adult population and 8% of lodging demand. That will change,” Holthouser said.
“Where you look at where that 8% largely stays, it’s really in economy and midscale. By the time a company like Hilton works to develop a brand, get it out there, get 1,000 units, we’re not going to be talking about millennials because they’re going to be on their second, third or fourth job and moving up. It will be whatever comes after millennials.”
“That’s how we need to think: Build an entry product, a portal if you will, for next-generation travellers, get them hooked into Hilton HHonors, and then as they go through the various life phases then you’ve got all kinds of really cool products you can serve them with over time,” he said to the paper.