Hilton sees growth for its all-suites brands

Homewood Suites Silao Lobby
The Homewood Suites Silao Airport in the Mexican state of Guanajuato was the first to use a new prototype that Hilton will use to guide the brand's rollout across Latin America. Photo credit: Jena Tesse Fox

Hilton's all-suites brands—Embassy Suites, Homewood Suites and Home2 Suites—had a strong start in Q1, opening 21 properties and signing deals for 37 more and remains on track to open 130 by year's end. 

In all, the Hilton's brands have nearly 1,050 open properties and a pipeline of close to 600.

Development Strategy

Dianna Vaughan, global head/SVP, All Suites Brands by Hilton, told Hotel Management the segment's growth reflects overall demand trends for both leisure and business travel. "The extended-stay concept began in the suburbs and near airports and thus continues to have a strong footprint in secondary markets," she said.

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While such locations remain targets for growth, they are no longer Hilton's sole focus. The brands have expanded into urban and "surban" (between urban and suburban) locations as well as coastal and resort destinations. "First, travelers’ mindsets began to shift, and it was no longer only the extended-stay or business guest who wanted to stay at an all-suites property," Vaughan said, noting extra space and amenities are convenient to short-term leisure guests as well. 

The second factor, she continued, was the combination of "innovative building models" and flexible prototypes. "By utilizing everything from adaptive reuse to multi-brand builds to modular construction, we’ve been able to grow in various markets, including traditionally high-barrier-to-entry urban city centers, both in North America and beyond," Vaughan said. Embassy Suites by Hilton’s most recent prototype, Design Option III, works for adaptive-reuse projects by allowing for a mix of up to 20 percent studio suites. Room configurations also can be tailored to specific market demands. At the same time, the company recently opened a Home2 Suites by the San Francisco Airport using modular construction. Last February, the Homewood Suites Silao Airport in the Mexican state of Guanajuato opened as the first to use a new prototype that Hilton will use to guide the brand's rollout across Latin America.

Vaughan said as the all suites expand globally, Hilton takes a range of factors into determining what brands fit where, including the local competitive set, proximity to key business hubs and leisure destinations and the amount of space available. "Often times, an owner will come to us with an idea for a particular location and our development team is able to adapt it to the needs of the market to make it work," she said. For example, the property at Chicago’s McCormick Place combines a Hilton Garden Inn, Hampton Inn by Hilton and Home2 Suites by Hilton into one building as the first Hilton tri-branded property. "We realized this spot made sense for all three brands to come together as the perfect one-stop-shop location, not only for convention-goers, but for guests traveling in larger groups who may not all have the same room preference or price-point to be able to stay under one roof," she said. 

Putting together three hotels at similar price points (one upscale, two upper-midscale) was not a concern. In fact, competition among brands in similar segments is not one of the factors Hilton considers when selecting locations for its all-suites properties. "Our brands are developed to be complementary, rather than competitive," Vaughan said. "In practice, we have found that many of our owners who have several all-suites brand properties tend to have them focused in the same market." 

Global Growth

Hilton has been targeting several international destinations for its all-suites brands. "Lately we have been expanding in Canada, recently opening our 30th all-suites property in the country," Vaughan said, citing Canada's record visitor numbers and growing revenue per available room (RevPAR) and average daily rate (ADR).

Similarly, Hilton has seen expansion opportunities improve across the Caribbean and Latin America. "We have several debut properties coming up, including the first Homewood Suites by Hilton in the Dominican Republic, while we continue to expand our footprint with properties like the recently announced Embassy Suites by Hilton Aruba Eagle Beach," she said. 

Alternatively, developers have approached Hilton with suggestions for projects on specific sites. "In those cases, our development team will again review the area and determine whether the proposed brand is the right fit or whether a different brand would be better suited instead," said Vaughan. "We also rely on recommendations from our owners, who are often local to the market and have a wealth of knowledge about the nuances of a specific neighborhood." Vaughan cited Richmond, Va.-based Apple Hospitality REIT, an ownership group that has several Hilton properties in the Atlanta area, as a valuable partner. "Since they are so familiar with the area, they also provide hyper-local insights," she said.

New Openings and Pipelines

The Home2 Suites brand has just hit its 300th property milestone. At the same time, Homewood Suites, which has increased in brand value by 99 percent year over year according to Brand Finance’s Hotels 50 2019 annual report, is nearing its milestone 500th property just ahead of its 30th anniversary. In its 35th year, Embassy Suites has new signed deals for properties in the Caribbean and EMEA.
 
Embassy Suites has signed its debut property in Aruba and the Embassy Suites by Hilton Aruba Resort is scheduled to open in mid-2021. The Embassy Suites by Hilton Plainfield Indianapolis Airport opened close to both the airport and the Indianapolis Motor Speedway

Poised to celebrate its 30th anniversary, Homewood Suites by Hilton is getting ready to open its 500th hotel. The brand currently has 485 hotels open and more than 100 in the pipeline. Recent openings include the Homewood Suites by Hilton Austin Downtown and the Homewood Suites by Hilton Providence Downtown,
 
Not to be outdone, the Home2 Suites by Hilton opened its 300th property, the Home2 Suites by Hilton Chicago River North, this quarter, as well as a hotel along San Antonio's Riverwalk and the Home2 Suites by Hilton Orlando Near Universal.

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