Hilton’s all-suites brands—Embassy Suites, Homewood Suites and Home2 Suites—recently celebrated a milestone 1,000 open properties when the Homewood Suites by Hilton Pleasant Hill Concord in California opened last month. And with a collective 588 properties in the pipeline, the all-suites brands from Hilton are set for continued rapid growth throughout North America, the Caribbean, Mexico and South America.
There’s no doubt that developers are craving this type of product due to its consumer demand. Dianna Vaughan, SVP and global head, all suites brands by Hilton, recently connected with Hotel Management to explain why.
1. Hilton just reached a milestone, opening its 1,000th all-suite property. To what do you attribute the success of all-suites brands? Why are they on a development tear of late?
Because they rock! Whether you are a traveler or hotel developer, we all want more for our money and these brands have always delivered that. We are incredibly proud to reach such an important milestone for our all-suites brands, Embassy Suites by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton, which comes just three years after the creation of this first-of-its-kind brand category.
The all-suites category has successfully combined the knowledge and achievements of each brand into a one-stop shop to maximize owners’ investment in the fast-growing all-suites lodging sector. Simply put, we’ve created a collective offering that is truly greater than the sum of its parts.
This approach has enabled us to capitalize on favorable market conditions and travel trends to speed the growth and expand the footprint of our all-suites portfolio. In fact, through the end of the third quarter of 2018, the all-suites brands represented over one-fourth of opened Hilton hotels and approved deals in 2018. During that time period, we have averaged opening a new all-suites hotel every three days, in locations ranging from urban centers to in-demand coastal destinations.
2. Looking domestically here in the U.S., what type of growth is in the works for these brands? Are there specific areas these brands are ripe for growing in, and why?
Our game travels and we can go anywhere there is demand, which is why we have all sorts of options that will “play” in different cities and circumstances. We see massive opportunities in urban and “surban” areas, meaning those just outside a major city that still offer many urban amenities, for our brands.
Barriers to entry and costs in these locations are typically quite high, but our flexible, scalable prototypes are making it easier than ever to build an all-suites property and thrive in competitive urban markets.
Our prototypes are the result of a collaborative effort with our owners, as we take their feedback into consideration before making updates. Homewood Suites by Hilton’s prototype, for example, allows for up to 85 percent studio suites based on market needs, resulting in a more profitable final product for our owners. And Embassy Suites by Hilton’s Design Option III’s “kit of parts” approach means owners can scale each property based on nuanced needs of the market and include the elements best suited for their specific location. We have also been very successful at employing several innovative development and construction options to help owners unlock the potential of desirable, yet competitive markets.
3. What are some benefits for owners who choose to develop these brands, in terms of return on investment?
Well, you know we are not permitted to talk specifics here, but the proof is in the pudding. There’s a reason we’ve experienced so much growth; customers like the value we give and owners like the market share we achieve. The all-suites brands by Hilton are category leaders that deliver proven and unrivaled return on investment. The brand category was essentially created to provide more value to our owners and ensure a strong ROI by bringing scale to the game and capitalizing on development, operational and marketing synergies across the three brands. Every operational, marketing, sales and development dollar we’ve saved by aligning our all-suites brands is another dollar we have put toward revenue-generating activities for our owners. Plus, we’re a part of the Hilton engine and the robust Hilton Honors program that boasts nearly 82 million members across the globe, letting us turn on the faucet of guests loyal to Hilton and our brands alike.
Embassy Suites, Homewood Suites and Home2 Suites all feature proven strategies developed over decades of experience in a category of hotels we created. But even though we pioneered the first all-suites hotel, we’ve never rested on our laurels, and constantly strive to deliver new operational solutions to evolve with the market. From innovative approaches to food and beverage like Embassy Suites’ E’Terie and Brickstones Kitchen & Bar programs to cost-effective hotel renovation initiatives to keep up with the ever-changing tastes of guests like the Homewood Suites’ Take Flight program, we’ve taken steps to ensure that our established brands remain on the cutting edge of the industry.
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4. Are these types of brands suited better for new-build or conversion, and why?
Of course, every project is different, but the all-suites brands by Hilton have flexible and versatile building and renovation prototypes, making them an ideal fit for both new-builds and conversions, depending on the investment preferences of each specific developer and opportunity. In addition to the innovative new-build strategies we’ve pursued, we have outstanding investment opportunities for owners looking to convert an existing property, including adaptive reuse conversions. In 2019, we’re opening the Home2 Suites by Hilton Atlanta Marietta, a conversion of an existing hotel through our adaptive reuse renovation program, which we utilized to recently open properties in other urban cores including San Antonio, Milwaukee and another property in Atlanta in the Historic Third Ward.
5. What is the biggest opportunity for operators of these types of brands to drive revenue?
We have so many operational innovations, but sometimes we forget about the most powerful revenue drivers: market share and pricing power. Being preferred brings pricing and occupancy premiums in any market and always has to be first and foremost. Having said that, we remain committed to continuously delivering increased profitability for owners, while adding value for guests.
To that end we are constantly looking for ways to provide cost savings and drive more revenue for owners. One of the latest examples is an update of Embassy Suites by Hilton’s food-and-beverage offerings. We created bar-centric dining concepts E’Terie and Brickstones Kitchen & Bar that deliver simple, modern food and perfectly complement the popular established evening reception, enticing guests to stay for additional drinks and enjoy a relaxing meal, helping drive additional revenue for owners.
In 2020, we’ll be extending this further with a refresh of Embassy Suites’ breakfast offering. Our beloved complimentary cooked-to-order breakfast isn’t going anywhere, but we’re also currently exploring opportunities to provide our guests with more choice, convenience and control in breakfast that would potentially create new revenue opportunities for owners through voluntary upgrades.
We recognize food and beverage is a massive revenue driver for our owners, which is why we also recently reimagined Homewood Suites by Hilton’s F&B program to make it more cost-effective for owners and are currently evaluating a few tweaks to Home2 Suites by Hilton’s breakfast offering.
Another place where we drive revenue is our meeting space. Embassy Suites by Hilton is becoming an increasingly popular place to hold business events and personal celebrations like weddings. Most Homewood Suites by Hilton and Home2 Suites by Hilton locations also have flexible meeting spaces to serve a wide range of business traveler needs.