We hope you enjoy the complimentary continental breakfast as the hotels that serve them are taking over the US hotel development pipeline.
IHG’s Holiday Inn Express has long been a leader in the affordable mid-range space segment, but in recent years, Hilton’s Home2 Suites has risen to the top thanks to the number of hotels the brand is hosting. deployment.
Home2 Suites was the hotel brand outside of any valuation sector with the most properties in various stages of growth in the US at the end of the first quarter of this year, according to Lodging Econometrics. The mid-range hotel chain, launched in 2009, has about 56,000 rooms under development across 546 hotel projects.
One of its top competitors, Marriott’s TownePlace Suites, comes in at a close second with about 31,000 rooms across 333 properties in various stages of development. Holiday Inn Express makes the top three with more than 28,300 rooms across 301 hotels in various stages of development.
Combined, the three affordable brands accounted for 21% of total US hotel construction at the end of March. This is the highest construction and development activity of all time for Home2 Suites and TownePlace Suites, and signals the sustainability of developers and tourist preferences for the Holiday Inn Express, which has been around since 1990.
It also says a lot about the level of interest in more budget-friendly brands. While hotel executives often boast of their expansion into lucrative luxury and lifestyle hotels, it seems the more affordable segment is development engine drives growth. Bring what?
Look at Hilton’s logic to launch spark, a new brand the company announced earlier this year will operate in the so-called “premium economy” segment. Hilton leaders predict this will eventually become the company’s largest brand by total hotels.
“There are 70 million or 80 million people traveling in this segment, half of them young people traveling and this is all they can afford,” said Hilton CEO, Christopher Nassetta, said in an investor call late last month. “Although we serve some of them, we do not serve many of them. So the opportunity is for us to attract them to our system early by giving them the best product they can find in the economic space.”
Long story short: Engage younger customers earlier with affordable brands, get them hooked on loyalty programs, and grow with them as they have more disposable income to spend, such as Conrad or St. Regis in the future.
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Hotel Development Dumbbell
Development trends speak for analysis in recent times TPG Tourism Trends Report 2023noted the barbell effect in hotel development concerns focused on the priciest end of the market with ultra-luxury brands and the more affordable end of the hotel food chain.
Because it’s so much cheaper to build mid-range brands, cater to a wider audience, and generally perform well, even during an economic downturn, there is an expectation to build more and launch more. more brand. Hyatt launches an affordable extended-stay brand, Hyatt Film Studiojust last week, and Marriott And Hilton Hotel each suggests that they are working on their own respective version.
“The launch of Hyatt Studios is part of our broader strategy to create a portfolio that fosters loyalty, stronger connections, and more frequent engagement with our members. me,” Hyatt CEO Mark Hoplamazian said on an investor call Thursday.
On Mondays, Marriott is closed on City Express is based in Mexicoa mid-range brand that brings Marriott’s total number of brands to 31. Anthony Capuano, Marriott’s CEO, says the brand will fill a gap in the company’s overall product offering.
“In the past, when we talked about the scope of our portfolio, we used to answer questions by saying we loved the breadth of that portfolio because of the way it met expectations and needs of both our guests and our owners and franchisees,” he said on an investor call this week. “Midscale is a level where we hear demand from both of those components.”
It may lead some to wonder why these companies, many of which have long advertised that they focus primarily on higher-paying travelers, are turning more to budget focus.
But think of it like this: They’ve got luxury facilities covered. There is nothing left to grow except for the more budget-friendly hotel segment.
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