Hilton's extended-stay brands take aim at Marriott's Residence Inn

Homewood Suites

DALLAS - Hilton Worldwide's extended-stay products have Marriott's in its sights, but does it have enough ammo to deliver?

That was part of the conversation during Hilton's first-ever Extended Stay Brand Conference, taking place in Dallas this week, with a gathering of more than 1,200 hotel GMs and directors of sales and marketing.

As it stands, Homewood Suites, Hilton's upscale extended-stay product, has more than 385 hotels open, while Home2, a newer, scaled-down, upper-midscale extended-stay brand, has 80 hotels open. Hilton has more than 100 Homewood Suites in the pipeline and nearly 300 planned for Home2 as of the end of 2015.

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Bill Duncan, global head for Hilton’s new All Suites brand category that launched late last year, said that Hilton will focus Home2 development in the U.S. and Canada for the time being. Homewood, on the other hand, has “great opportunity” in North America, but Duncan noted that the extended-stay concept is not established in destinations such as Central and South America. “There’s no product to serve that segment,” he said. “We can be pioneers.” The company has signed deals in Mexico, Peru and in the Caribbean. 

By The Numbers
In 2015, Homewood saw a slight uptick in occupancy, a 4.3-percent increase in ADR and a 5.1-percent increase in RevPAR. Home2 also saw solid increases in both occupancy and ADR, with RevPAR improving by more than 8 percent. 

The numbers weren't perfect, however. Both Homewood and Home2 saw a decrease in extended-stay occupancy, and Adrian Kurre, global head for Homewood Suites by Hilton and Home2, emphasized that this would be an area of focus moving forward. Problem avoidance and problem resolution also proved problematic: More than 20 percent of guests at both brands reported issues, and fewer than 30 percent of those complaints were resolved to the guests' satisfaction. This, Kurre said, would also be a major focus for 2016.

Challenges & Solutions
After several years of solid economic growth, the U.S. is facing “new economic headwinds,” Kurre said—but emphasized that a down economy could be beneficial for Homewood and Home2. “This is where extended stay shines,” Kurre said. “This is our time to shine, and this is when sticking to goals is not just important, but crucial.”

Hoteliers need to maintain focus on three key goals, he said: driving revenue, encouraging loyalty and maximizing profitability. “They are always relevant and they never go away,” he said. “They are not brand goals, they are hotel goals.” Any action not geared toward one of those three goals is a waste of a hotelier’s time, he added. 

The biggest challenge facing Homewood and Home2, Kurre continued, is how to compete with brands like Marriott’s Residence Inn. “They are bigger and they have a bigger pipeline,” he said, but assured the crowd that the extended-stay brands will fight for market share with new ideas. 

One of those new ideas is already underway. Back in December, Hilton began combining its three all-suites brands (Homewood Suites, Home2 Suites and Embassy Suites) into a single operational umbrella known as the All Suites category. All three receive support from Hilton in the areas where they share operational elements, including development, sales and operations. Hilton is also working to roll out all three brands on the same revenue management system.

Embassy Suites

The combined brands can maximize performance and guarantee that all necessary tools and resources are available to all hoteliers, Duncan said. The initiative has already been fairly smooth, he told the crowd, because the three brands have a history of working together. 

Moving forward, more properties will open as dual-brand hotels, Duncan said. Some Embassy Suites and Homewood Suites have already been combined, and the first Embassy/Home2 hotel has just been signed for Miami. “The goal,” he said, “is to ramp up new hotels and keep growing.”  

Photo (c) 2016 Homewood

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