Hilton Hotels Corp. has launched a midprice extended stay brand, Home2 Suites by Hilton, with plans to begin constructing the first property within a year.
The brand will be at a slightly lower price point than Hilton's established upscale extended stay brand, Homewood Suites, positioning it as a competitor to such brands as InterContinental Hotels Group's Candlewood Suites and Marriott International's TownePlace Suites.
Hilton's announced design for the brand is a four-story construction with 108 guest rooms, about 80 percent of which will be studios and 20 percent of which will be one-bedroom suites.
"The mid-tier extended-stay segment accounts for approximately 42 percent of the U.S. extended-stay supply, with current brands delivering an often inconsistent and quickly aging product," Hilton global head of focused service brands Phil Cordell said in a statement. "Home2 Suites will offer developers an opportunity to enter the segment with a comfortable yet stylish product at a low cost."
Design elements for the brand include an expanded lobby with a community table and individual work zones, such amenities as complimentary continental breakfasts and fitness facilities and modular pieces in guest rooms that serve as a workspace, closet and storage areas. Development will require a minimum of two acres, which Hilton said is fewer than most competing brands in the segment.
In announcing the brand on Jan. 26, Hilton reported 10 submitted franchise applications for properties in New York; Baltimore/White Marsh, Md.; Charlotte, N.C.; Jacksonville, N.C.; Gadsden, Ala.; Alabaster, Ala.; Elko, Nev.; and three in San Antonio, Texas. The chain expects to see 10 to 15 more in the next few months.
Hilton plans on having 100 Home2 Suites properties open by 2012 and annually to open 60 to 70 in subsequent years. Its immediate focus will be the United States, though it also will look to expand to Mexico, Canada and points overseas.
Despite recent drops in demand and occupancy, forecast to continue for at least the next several months, Hilton's timing for introducing a new extended stay brand is not off-track, said Tom Botts, a partner with strategic advisory firm Hudson Crossing.
Developers will gravitate toward brands that are backed up global sales teams such as Hilton's, he said. "The hotels that are having the biggest issues are not the chains; it's the independents," Botts said.
Extended stay properties did not suffer as much as the general lodging industry as the economic downturn gripped the final months of 2008
(BTNonline, Jan. 8). While year-over-year demand growth ebbed during those months, it did remain positive, unlike the demand declines seen by the overall U.S. lodging industry, according to Smith Travel Research.