Hilton CEO mulls over new lifestyle brand

Hilton Worldwide, operator of 10 brands including Conrad and Doubletree by Hilton, is set to launch a new brand “in the not too distant future,” president and CEO Chris Nassetta has told Hotelier Middle East.

“We are working on some ideas. We will likely do something in the lifestyle space at some point in the future,” he said. “There’s likely at least one new brand.”

Back in 2009, Hilton Worldwide launched a boutique brand, Denizen, which it was later banned from rolling out as part of a settlement in December 2010 over an industrial espionage suit by Starwood Hotels.

Starwood said Denizen was designed by two of its former employees who defected to Hilton and took with them confidential material used to develop Starwood's W chain. At the time, Hilton was ordered to cease development of Denizen and wait two years before developing anything similar.

W arguably leads the international chains in the boutique luxury lifestyle segment, having launched back in 1998, though Marriott is expanding Edition and IHG is moving forward with Hotel Indigo. Carlson Rezidor is the latest global operator to launch in the lifestyle market, with Radisson Red, a “lifestyle select” brand.

But industry experts are divided as to whether the hotel industry needs more brands from the international operators.

Shaza Hotels CEO Simon Coombs, himself responsible for creating an Arabian brand in partnership with Kempinski, said: “There are opponents to the 'supermarket of brands' approach, and these opponents believe essentially that particularly in the luxury segment, such brand diversification ultimately dilutes the core brand, and if not handled correctly can lead to brand confusion. Similarly, it is interesting to consider the motivation for the creation of this segmentation approach by major brands, which I would argue is driven by the need to grow EBITDA”.

Generally, owners and operators agreed more brands were inevitable. JA Resorts COO David Thomson said: “Nothing could be worse than an industry without fresh blood and fresh ideas”, while Skai Holdings CEO Kabir Mulchandani said: “I think the more brands that are available for consumers to choose between, the better for the industry”.

Kingdom Hotel Investments CFO and head M&A Gordon Drake acknowledged a traveller trend for boutique hotels and a strengthening of loyalty to larger hotel chains, suggesting boutique brands from existing leaders could be successful.

“My sense is that while new brands will be launched under the umbrella of the larger hotel groups to cater for the changing guest preferences, there will also be consolidation in the industry to create synergies and allow hotel brands to expand their footprint through M&A activity,” said Drake.

However, ARTIC CEO Rutger Smits said there was a need to “distinguish between brand and operator”, and Aecom global practice leader leisure and cultural Kevin Underwood warned that “the existing brands need rationalising to show clear differences between star ratings”.

For a full interview with Hilton Worldwide CEO Chris Nassetta, see the May issue of Hotelier Middle East.