After a banner year marked by strong growth in RevPAR, loyalty, and market share, Hilton Garden Inn has hit a sweet spot. In fact, 2014 shaped up to be the focused-service brand’s best year yet, according to Don Willingham, vice president of Hilton Garden Inn brand performance support and sales.
“Notice that I said yet, I did not say ever. That’s an important distinction,” Willingham said at the Hilton Garden Inn Brand Conference, which drew nearly 1,500 general managers and directors of sales to Orlando, Fla., this week. “We are a brand that always looks for ways to improve to better serve our owners, our team members, and our guests. Now, as we enter 2015, we are poised to continue what we started.”
Year-to-date through September 2014, Hilton Garden Inn’s occupancy increased 3 percent to 76.9 percent, ADR went up almost 4 percent to $126.81, and overall RevPAR rose by more than 8 percent to $97.54. “You guys drove hotel sales, you made smart revenue management decision,” Willingham told attendees. The brand also received the highest ranking in J.D. Power’s North America Hotel Guest Satisfaction Index Study in the upscale segment for the 11th time.
With the addition of 38 locations in 2014, Hilton Garden Inn now has 618 properties in 22 countries. “Our brand has really taken off over the last few years,” Willingham said. And more growth is on the way. Sixty new hotels will open in 2015, with 30 in the United States, four in China, seven in Turkey, three in Russia, three in the United Arab Emirates, two in Indonesia, two in Italy, and one each in Saudi Arabia, Qatar, Costa Rica, Uruguay, Zambia, Peru, Mexico, Spain, and Chile.
To build on last year‘s success, Hilton Garden Inn will continue to align its key tactics and initiatives with three strategic priorities: driving revenue, encouraging loyalty, and increasing profitability.
In addition to leveraging its global presence, Hilton Garden Inn intends to capitalize on revenue opportunities by going after the leisure market, pursuing tours and meetings and events business, and improving sales training. While the brand already pushes about 90 percent occupancy on Tuesdays and Wednesdays, Willingham said there is an opportunity to drive more revenue on shoulder nights and weekends.
Hilton Garden Inn’s new revenue management system, GRO, played a major role in the brand’s RevPAR growth in 2014, Willingham added. According to company data, the average RevPAR index among the 524 hotels that implemented the system increased by 1.6 points.
But the biggest opportunity to drive revenue this year is in charging higher rates. “Right now, we’re still in a period of great growth and demand and limited supply,” Willingham explained. “This is the perfect scenario for our brand, and we really should be taking advantage of it. Now is the time to grow rate. I cannot say that enough.”
Hilton Garden Inn’s loyalty score in 2014 grew by 0.2 points compared to the prior year. When customers are made aware of Hilton Garden Inn’s satisfaction promise, guest loyalty climbs 20 points higher, Willingham said. Another way the brand builds loyalty is by recognizing Hilton HHonors members—who account for 60 percent of bookings—so they feel valued and appreciated. Brand studies show that when loyalty members are recognized, 68.1 percent are happy compared to only 42.3 percent when not recognized, Willingham said. (Recognition can be as simple as thanking guests at check-in for being an HHonors member.) Later this year, the brand plans to roll out HHonors guest floors to strengthen loyalty and encourage enrollment of new members, said Mark Nogal, regional head of focused service brand management, EMEA.
Hilton Garden Inn also is in the early stages of development on a new premium room type that will command higher rates, Nogal revealed. “The premium room options will help you take advantage of upsell opportunities, grow your mix of business, and also attract new business to your hotel,” he said.
Executives declined to elaborate on what the room might look like, but Adrian Kurre, global head of Hilton Garden Inn, told a group of journalists, “It’s not about a fluffier bed or nicer pillows, it’s about giving guests the choice and control of the experience they have in their room.”
To help hotels save money and increase profitability, the brand has been modifying its operating standards over the last two years. Through the “Show Me the Savings” initiative, in which 500-plus team members shared profitability-enhancing ideas, the brand uncovered more than $150,000 per hotel in potential operating savings. In North America, hotels are trending 170 basis points ahead in terms of gross operating profit, Willingham said.
“We can’t rest on our 2014 accomplishments,” he stressed. “It’s a new year, we have to take our success and build upon it. We have to take advantage of the upmarket that we’re in right now and ask for the rates we deserve.”
IMPROVING DIGITAL CHECK-IN
In addition to driving revenue, loyalty, and profitability, HGI is committed to improving the digital check-in experience. In December, Hilton Worldwide’s digital check-in and room selection technology went live across more than 4,100 hotels. This allows Hilton HHonors guests to check-in via desktop, mobile, and tablet devices, and to choose their exact room from digital floor plans. Guests who use this method receive an expedited check-in at the front desk and should not have to present their credit card, sign a registration card, or show ID (in the United States).
As with any major operational shift, the digital check-in experience is not yet consistent across all hotel properties. During a “Digital Lobby” breakout session at the conference, Hilton Worldwide team members shared eCheck-in best practices and addressed common concerns about potential fraud and misrepresentation, room key mix-ups, or an increase in charge back disputes.
The session also covered mobile key technology, which will allow guests to bypass the front desk entirely and unlock their hotel room doors with their smartphones. Straight-to-room will be available across the majority of Hilton’s rooms worldwide by the end of 2016. From there, the traditional function of front desk agents will need to evolve.
“In order to do this, we need to change from a transactional workforce to a personalized hospitality workforce. In that process, we have to win the hearts and minds of our team members, owners, and stakeholders so they understand where we’re going,” Kurre said. “And at the end of the day, we enrich the lives of everyone we come in contact with.”