To appeal to a fast-growing contingent of travelers who seek authentic and unique hotel experiences, Hilton Worldwide announced a new lifestyle brand called Canopy by Hilton. The company unveiled the upper upscale concept to nearly 1,900 owners and development representatives at its Global Partnership Conference in Orlando, Fla., this week.
“As we talk to new generations of travelers, the tried-and-true cookie-cutter room—even though it may be very well done—may not be exactly what they’re looking for,” said Jim Holthouser, executive vice president of global brands for Hilton Worldwide.
But rather than targeting a specific demographic, Hilton is more interested in the mindset of today’s business and leisure travelers. “We try to stay away from simple segmentations like age and income, because those things are not reliable indicators of who customers are and how to best understand them,” Holthouser said. Mindsets that Canopy targets include “originals” who want to stay in hotels that reflect the local neighborhood, as well as “cultured vacationers” who crave intellectual stimulation.
Location is paramount to the success of the brand. That’s why travelers won’t find Canopies near shopping malls, in suburbs, or at airport locations. “The proper way of locating Canopy is smack in the middle of a really great neighborhood,” Holthouser said. Canopy has signed 11 letters of intent to open in such destinations as the Pearl District in Portland, Ore., Bricktown in Oklahoma City, Okla., and the Historic District in Savannah, Ga.
Each hotel’s programming will pull inspiration directly from the neighborhood. For instance, guests will receive a local welcome gift, such as chocolate fudge in Denver or gourmet popcorn in Chicago, upon arrival. Breakfast will incorporate local ingredients, and evening tastings will introduce guests to local beers, wines, or spirits. Guestrooms will feature large corkboards where housekeeping staff can keep guests informed about area happenings, such as concerts, new restaurant openings, lectures, and art exhibits. “If you don’t have a great neighborhood to work with, you’re not going to have a very interesting hotel,” Holthouser said.
Great design is also imperative. Each hotel will have an eclectic, natural, and organic feel that takes on the character and personality of the locale, ensuring no two Canopies will be the same. The brand is suitable for new builds, adaptive reuse, and conversions. “It’s a very flexible brand,” Holthouser said. “You can do that because we’re not working with a prototype. We’re giving every one of these hotels an opportunity to be unique and to take on the character and flavor of the market. The physical box will be different each and every time.”
Although there isn’t a prototype, Hilton will still exercise some degree of control in the design process. New York City-based designer Mark Zeff will likely design the first 10 to 20 properties to ensure owners get all the key ingredients right, Holthouser said. From there, Zeff and the brand design team will likely train a half-dozen other design companies that owners can work with on future projects.
Although Canopy will compete in the upper upscale arena, Holthouser said it shouldn’t replace demand for the Hilton Hotels & Resorts or Embassy Suites brands. “We believe it’s really additive,” he said. “There will always be a need for meetings, big conventions, and big city center hotels, and that’s what Hilton does so beautifully. I don’t think you’ll ever find a product that can claim ownership of the family market the way Embassy does. And now you’ve got this new brand, Canopy, which I think will do a really nice job of helping us to bring in different kinds of customers.”
While the customer segment will skew somewhat millennial, Holthouser stressed that Canopy is not a millennial-only brand. Millennials represent 30 percent of the U.S. population but only account for 8 percent of overall lodging spend, he added. “It’s a slippery slope if hotel branders begin building products just for millennials. You do run the risk of turning off other customers.”
Cost per key will vary based on the type of project and location, Holthouser said, but owners can anticipate relatively high rates since the brand will be built in predominately urban markets. “We would expect in most cases that these are going to be well over $200 a night,” he said. Basic Wi-Fi, breakfast, the welcome gift, and evening tastings are included as an added value to guests.
In addition to commanding Hilton- and Embassy-level price points, Holthouser said Canopy has been engineered to yield focused-service margins. This is achieved through a streamlined F&B program with self-service components and a mobile straight-to-room check-in process.
Canopy will be marketed with the “by Hilton” extension to give it a seal of approval with consumers, but hotels won’t carry the moniker on signage or inside the property. “That’s a deliberate strategy on our part,” Holthouser said. “We’ll bring all the power of our sales and marketing engines to bear for this brand, but at the same time, we want to downplay the Hilton affiliation at the property level.”
In developing the brand, Hilton Worldwide surveyed more than 9,000 consumers and sought feedback from 150 hotel developers who regularly work with the company, Holthouser said. “If you don’t get the economics right for the owner, this is never going to fly, and if you don’t get the value proposition and nail it for the customer, it’s not going to work either. You really have to make sure you’ve got both sides of the economic equation right.” Because of these efforts, he believes Hilton really got the brand right.
In the words of John T.A. Vanderslice, global head of luxury and lifestyle brands for Hilton Worldwide, “This is a measure twice, cut once brand.”
