Hilton's Expansion in Lifestyle Hotels: A Strategic Move for Higher Revenues
Lifestyle Hotels Driving Growth
Hilton Worldwide is making significant strides in the lifestyle hotel sector, a move that promises to enhance its portfolio with properties that command higher daily rates. The company aims to double its current count of lifestyle hotels to 700 by 2028, highlighting the importance of this category in its growth strategy.
Leadership and Strategic Acquisitions
To spearhead this expansion, Hilton appointed Kevin Osterhaus as the new global lifestyle president. Osterhaus, previously president of Graduate Hotels, will now oversee the growth, design, and development of Hilton's lifestyle brands, including the Curio Collection by Hilton. This year, the soft brand will expand to nearly 30 properties, making its debut in countries such as Croatia and Lithuania.
Andrew Zobler, founder and CEO of Sydell Group, will lead the NoMad brand, focusing on design, branding, and hotel management. This aligns with Hilton's strategic acquisitions of Graduate Hotels in March and NoMad Hotels in April, which underpin its aggressive expansion in the lifestyle category. Hilton's booking channels will soon integrate over 30 existing Graduate locations and NoMad's flagship London hotel.
Growth Trajectory and Market Impact
Hilton plans to open more than 100 lifestyle hotels this year, bringing its total to over 400. This rapid expansion reflects a broader trend in the hospitality industry, where lifestyle hotels are becoming increasingly significant. STR projects that by 2025, lifestyle hotels will account for 23% of the global hotel development pipeline.
What Defines a Lifestyle Hotel?
Despite operating under major chains, lifestyle hotels distinguish themselves with a boutique feel. These properties often feature eye-catching decor, such as local artwork, and typically include amenities like cocktail bars or cafes. This unique appeal allows lifestyle hotels to command a premium over traditional hotels. According to STR, over the past decade, average daily rates for lifestyle hotels have maintained a $33.60 premium compared to non-lifestyle hotels.
Financial Performance and Industry Trends
The emphasis on lifestyle hotels is not just a branding strategy but also a financial one. These properties have higher average daily rates, which contributes to better financial performance. The Skift Travel 200 (ST200) index tracks the broader accommodations sector, which includes hotels and short-term rental sector stocks, reflecting this trend. The ST200 consolidates the financial performance of nearly 200 travel companies, providing a comprehensive view of the industry's health and growth prospects.
Conclusion
Hilton's aggressive expansion in the lifestyle hotel sector underscores a strategic pivot towards properties that offer higher daily rates and unique guest experiences. Under the leadership of Kevin Osterhaus and Andrew Zobler and supported by strategic acquisitions, Hilton is well-positioned to capitalise on the growing demand for lifestyle hotels. Lifestyle hotels will play a crucial role in driving growth and enhancing brand differentiation as the hospitality industry evolves.