Many of today’s travelers crave more individualized experiences at hotels, but they also seek the comfort of consistency and quality that familiar brands have to offer and the ability to earn points through loyalty programs. That’s why so many big hotel companies are getting into the soft brand game, curating collections of independent and boutique properties that want the expertise and support of a global brand. The most recent company to hop on the soft brand bandwagon is Hilton Worldwide, which announced the launch of Curio during the NYU International Hospitality Industry Investment Conference June 2.
“The merger of that is really some of these more customized brands,” said Jonathan Gray, global head of real estate at Blackstone, at the conference. “Marriott has done a very effective job with Autograph, and Hilton will as well with Curio. I think there will be more boutique introductions under the face of customers looking for independents but the backdrop is powered by one of these large distribution systems.”
Major hotel companies will continue to gain share around the world, but they will probably do so under a greater number of brands, Gray added. For example, Hilton Worldwide accounts for about 4.5 percent of the hotel rooms that exist in the world today, he said, but close to 20 percent of the hotel rooms under construction. Blackstone purchased Hilton Worldwide in 2007 with the intention of taking its family of brands and growing aggressively around the world. The firm’s total investment of more than $6 billion in the hotel company is now worth more than $17 billion.
During a CEO panel at the conference, Marriott International President and CEO Arne Sorenson said hotel companies are creating new brands faster than ever before. Over the last few years, Marriott has launched the Autograph Collection, Edition Hotels, and Moxy Hotels brands and acquired Gaylord Hotels, Protea Hospitality Group, and Spanish brand AC Hotels. At last year’s NYU Investment Conference, Marriott announced that it would import AC Hotels into the Americas. By the end of this year, the company will have either signed or have in negotiation 100 AC Hotels in the United States, he said. “These are core deals for us, but they’re not cataclysmic as far as the industry is concerned,” Sorenson said. “I think we’ll continue to play in that space, and I think we’ll see some of our competitors do the same thing.”
A LOOK AT CURIO
Curio will be a carefully selected, global collection of distinctive four- to five-star hotels. Letters of intent have been signed for SLS Las Vegas Hotel & Casino; The Sam Houston Hotel in Houston, Texas; Hotel Alex Johnson in Rapid City, S.D.; The Franklin Hotel in Chapel Hill, N.C.; and a soon to be named hotel development in downtown Portland, Ore. Hilton introduced Curio because owners and customers expressed a strong interest in a brand that includes hotels that can retain their unique identity but also deliver the benefits of Hilton’s system, including its HHonors guest loyalty program.
“In the past, we took these independent and iconic assets and pushed them into one of our brands,” said Rob Palleschi, global head of Hilton Hotels & Resorts. “We made the Arctic Club and the Fess Parker fit DoubleTree, and we made the Drake fit Hilton.” He adds that while these worked, it just wasn’t what Hilton wanted to do going forward. “We needed a product in that space to serve the hundreds of millions of customers that go to Hilton every year,” Palleschi said. “And a product for our owners that operate in this segment. That was the genesis of putting this thing together.”
During a Curio launch event in Manhattan, CEO Chris Nassetta said that what Hilton had been hearing from both existing customers and prospective customers was the need for a high-end urban or resort hotel that might not have the rigid brand standards of Hilton’s existing brands. “A unique hotel, a curio, something of interest, something special, is something they are looking for, that they’d be very interested in us being able to provide for them.”
Arash Azarbarzin, president and CEO of SBE Hotel Group, said Hilton’s Curio brand was a great match for the SLS Las Vegas, which will open Labor Day weekend. “For us to be able to keep our personality was very important,” Azarbarzin said. “We weren’t about to give up the work we have done just to have a brand name on the door. With Curio, we can continue to operate the hotel, have great service standards and great luxury, but keep the essence and the soul of the property and take advantage of one of the best distribution channels that’s out there.”
Hilton sees a lot of opportunity for its new brand. “If you look at the global landscape of four-to-five star independent hotels, there are about 1,500 properties out there,” Palleschi said. “All we want is our fair share of that business, and we’re willing to work hard for it.”
IMPACT ON THE BOUTIQUE SECTOR
The launch of Curio was certainly a hot topic during the NYU Investment Conference, and that intrigue carried over into discussions at the Boutique Hotel 2014 Investment Conference on June 4 in Manhattan. Several speakers commented on how Hilton’s new brand would impact the boutique sector.
The move doesn’t concern Gansevoort Hotel Group Founder and President Michael Achenbaum, who said mega companies couldn’t deliver a personalized guest experience to the same level as boutique hotels. “I’ve never been afraid of big brands doing boutique style properties,” he said. “In the long run, certain brands turn out to be what the master brand is at the end of day.”
Brad Wilson, president of Ace Hotels, said the introduction of Curio is a brilliant move by Hilton but likely a reaction to Marriott’s Autograph Collection, which was in response to Starwood’s Luxury Collection. “I think this is a product for these kind hotels that essentially want to link into that distribution, so it’s an interesting play,” he said. “But distribution isn’t necessarily tied to differentiation.”
Tom Gottlieb, managing general partner at Geolo Capital, said he expects every single brand to have at least one if not more boutique lifestyle brands, but the building alone won’t create enough of an experience for guests. “We think they may be able to design products that look and feel to some extent like a boutique or lifestyle hotel, but whether they can operate, the jury is still not in.”
Additional reporting by Sean Downey.