Hilton to announce boutique brand, but are they too late?
Thursday, 27th November 2008
Source : Passions Of A Zealot by Andrew Calvo
During the ALIS Conference Hilton Hotels is expected to finally announce details on their boutique hotel brand.

The ALIS Conference is one of the major lodging industry conferences where industry players are expected to announce new brands, or give strategic details on the direction of their company. One of the biggest announcements at last years ALIS was Marriott & Ian Schrager's Edition Hotels, so it would be fitting to see Hilton do the same.

Hilton has announced a press event during the conference about their "new development concept", and one of their executives has stated how the announcement may be one of the "worst kept secrets in the industry". Hilton took Ross Klein from Starwood Hotels earlier this year to spearhead the creation of a much needed boutique brand.

Hilton is in the minority at this time by not having a boutique brand - every one of Hilton's competitors has a boutique brand and it is a market that Hilton is noticably absent from.

Is Hilton Too Late?

With the economy and the credit markets in the toilet (to be nice about it), why would Hilton want to announce a brand new hotel brand? The boutique hotel customer now has alot of choices both high end and low end (NYLO/aloft), and with Marriott & Schrager's Edition - the possibility arises of competitor who will once again re-define the boutique hotel industry. What can Hilton and Klein possibly offer?

Everyone knows that this economic downturn will not last forever, and in order for companies to grow in the future - they have to plan for the future, and anticipate what their guests and customers will want in the future (unlike.. GM… Who still has zero clue as to what their customers want.) so Hilton is making the right move by developing a boutique product and even announcing it in this type of market. Yes, they are very very late - W Hotels has had a 10 year start, but in 20 or 30 years it wont matter, and developers who like working with Hilton will want a boutique product from them.

Not much has been said about the brand, but its been the worst kept secret because everyone knows they are going to announced a boutique brand, but thats about all the industry knows. I've found out that the food and beverage service will probably be outsourced by a well known chef or culinary company. That's a great idea if they pick a high caliber name, but it also runs the risk of diluting the brand of whoever they choose, making it not as exclusive as they'd want.

I've also been able to find out that the brand will be 4.5 stars and each property will contain on average 200-300 rooms. Lastly, it will be very "conversion friendly" which is great for Hilton because it will allow new hotels to be added to the system very fast since a renovation will take much less time than a completely new-build hotel. By going that route Hilton walks a thin line because a hotel may have originally been designed as a Sheraton, or a Hilton, or even a Courtyard so that the layout and building construction fit that brand identity - being rebranded as this new brand may confuse and dilute the brand identity they are trying to achieve. One of the most important parts of creating or building a brand is having the same look and appearance in their buildings - picture a McDonalds in a building originally designed for Wendys, or a Taco Bell in a building originally designed for a Dunkin Donuts.. It can happen, but it's going to look funny.

I'm very interested to see how this will pan out - focusing on conversions will ensure a quick and relatively inexpensive growth, but the core DNA of the brand may be hurt.

Hilton has alot on their plate right now - I think one of the biggest issues is public perception and the difference between some of their brands and the individual identity of those brands, specifically Doubletree, Waldorf=Astoria & Conrad.

According to their CEO, that is something they are aware of and working on - in 2009 Hilton is expected to increase the brand identity of Waldorf=Astoria & Conrad - hopefully that will go for the Doubletree brand as well. Now more than ever branding is important to ensure that customers will keep coming back to your locations - and pay more for your services because of their perceived value.

Prior to Blackstone's purchase of Hilton, the company never seemed to have a clear direction - demonstrated by the fact that until just prior to the Blackstone acquisition, the Hilton in North America was different from the Hilton in the rest of the world - severely limiting the growth and the ability for the different hotels to work together. Now with Blackstone Hilton is finally getting back on the right foot - including the creation of a boutique brand.

Andrew Calvo is a 26 year old Commercial Real Estate Advisor in New Jersey. I live in Tinton Falls, NJ. This blog is about my passions - primarily hotels, commercial real estate, and development, etc.

Since I have been in High School I've had numerous jobs, but the field which has always interested me is Real Estate, Hotel Development and Construction. I consider myself a zealot in that area - I try to absorb as much as I possibly can, take the experiences that I learn, or read about and use them in my life.


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