Conversions, extended-stay bolster Hilton through downturn

Hilton crossed the million-room mark in Q4 2020, including the Canopy by Hilton Baltimore Harbor Point. Photo credit: Hilton (Canopy by Hilton Baltimore Harbor Point)

Throughout the challenges of 2020, Hilton has been able to deliver positive net unit growth, with further global expansion projected in 2021. 

As Hilton crossed the 1 million room milestone in the fourth quarter, the company continued to expand its footprint, ending the year with 397,000 rooms in its pipeline, 10,000 more than at the end of 2019.
 
Two areas that contributed to Hilton’s performance in 2020 include the increased conversion of non-Hilton properties and the role of extended-stay brands in drive-to markets.

Conversion Growth

In 2020, conversion signings increased more than 30 percent compared to the previous year. Hilton’s Collection Brands—LXR Hotels & Resorts, Curio Collection and Tapestry Collection—and established brands such as DoubleTree by Hilton, have seen sustained interest and growth in the conversion category.
 
“Conversions are particularly relevant given the recent business environment, as they allow our hotels to benefit from the strength of Hilton’s network effect,” said Gary Steffen, category head, full-service brands, Hilton. “With the power of the Hilton name comes more than 112 million Hilton Honors members and a high-performing commercial engine, allowing us to serve as a trusted partner and help owners and operators navigate through uncertain times.”
 
Through Dec. 31, 2020, more than 80 percent of Tapestry Collection openings around the globe were conversion properties. As part of Hilton’s Collection Brands, hotels join the Hilton portfolio while retaining their character and individuality.

Related: Hilton opens new soft-branded properties

“Not only have the Collection Brands grown in popularity with our customers looking for more unique properties and experiences, we also continue to see these brands as an attractive opportunity for owners who are accustomed to operating as an independent. Recent signings have reflected the demand for a balance between flexibility and Hilton’s established brand awareness,” Steffen said.
  
In January, LXR celebrated its U.S. debut with the opening of the recently redesigned Oceana Santa Monica, owned and operated by JRK Property Holdings. Also in January, Pacifica Hotels converted four California properties to join Tapestry Collection: The Belamar Hotel Manhattan Beach, Redondo Beach Hotel, Jamaica Bay Inn Marina Del Rey and The Kinney San Luis Obispo. And in December, the Curio Collection got its first hotel in Colombia. The 49-room boutique Nacar Hotel Cartagena is located in the center of the UNESCO World Heritage Site of Cartagena.

Extended-Stay 

Hilton’s extended-stay brands, Homewood Suites by Hilton and Home2 Suites by Hilton, have performed positively during healthy travel cycles and also during challenging times.
 
Homewood Suites and Home2 Suites experienced some of the highest occupancy rates among the Hilton portfolio in 2020, as the brands appealed especially to new guests who were seeking long-term accommodations, additional space and value-added amenities. Combined, the two brands currently span across 974 hotels in North America in both urban and regional drive-to markets. Additionally, as part of Hilton’s All Suites category, Embassy Suites by Hilton delivered upscale accommodations for travelers in leisure destinations, especially those looking to work remotely in a new place.
 
“We’re proud of our suites product, offering value-driven, spacious accommodations with all of the amenities needed to make these brands a true home away from home for guests,” said Bill Duncan, global category head, focused service & all-suites brands, Hilton. “Our extended stay category shone this past year, with distribution across the United States, we were able to meet the needs of our guests on the road.”

According to STR, Home2 Suites saw the most supply growth industrywide of any brand in the U.S. last year, with nearly 80 openings, and also commands the largest development pipeline industrywide in North America with nearly 410 hotels and more than 40,000 rooms in development. Homewood Suites has more than 100 hotels in development, currently offering more than 500 open locations across the U.S., Canada, Mexico and the Caribbean.  

During Hilton's Q4 and full-year 2020 earnings call last month, President and CEO Chris Nassetta was upbeat about the company's prospects in the U.S. and for the group as a whole. There is “massive” pent-up demand in the leisure and business segments, he said. Travel spending is likely to rise as health scenarios allow, he added, and nationwide personal savings ratios had risen to make it affordable for many people.