Hilton Q1/2015 Call: New budget brand & interest in Starwood (brand)?
May 10, 2015, 5:39 am
#1
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Hilton Q1/2015 Call: New budget brand & interest in Starwood (brand)?
A number of media are reporting that Hilton CEO Nasetta pointed toward the introduction of a new brand in the budget segment of the market - with Hampton deemed to have grown out of the budget segment. Introduction of this brand within a year, focus on the US initially.
There are also some lose reports (read: rumours?!) on a tie between Starwood and Hilton. Depending on what source is consulted, this interest may be limited to certain Starwood brands rather than the entire portfolio.
http://skift.com/2015/04/30/hilton-c...ortunity-lies/
http://www.hotelnewsnow.com/Article/...h-in-12-months
http://www.hotelnewsnow.com/Article/...rwood-CEO-says
There are also some lose reports (read: rumours?!) on a tie between Starwood and Hilton. Depending on what source is consulted, this interest may be limited to certain Starwood brands rather than the entire portfolio.
http://skift.com/2015/04/30/hilton-c...ortunity-lies/
http://www.hotelnewsnow.com/Article/...h-in-12-months
http://www.hotelnewsnow.com/Article/...rwood-CEO-says
May 10, 2015, 8:12 am
#3
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I can´t see from this article that Hilton is interested in buying Starwood or any brand of them.
While Hilton is unlikely to pull the trigger on Starwood, that does not mean the company will sit on the sidelines entirely.
“It would be silly to say we would never participate in M&A activity because you never know what opportunities might present themselves that might make a tremendous amount of sense,” Nassetta said. “We always want to remain open-minded.”
Any opportunity must meet two criteria, however.
First, the acquisition must fit strategically with Hilton’s existing offerings, Nassetta said. Starwood has three brands each in the luxury and upscale segments and four in the upper-upscale segment, including the recently announced Tribute Portfolio soft brand. Hilton counts two brands in the luxury segment, three in upper-upscale, four in upscale and two in upper-midscale segment.
“I do not think we have a strategic gap that we cannot deal with ourselves,” Nassetta added with regard to brand offerings. He pointed to the recently launched Curio—A Collection by Hilton and Canopy by Hilton as two examples of that in-house, do-it-yourself approach. Combined, the two brands have more than 50 properties and 13,000 rooms open or in various stages of development.
The second criteria before Hilton engages in M&A activity, Nassetta explained, is that each potential acquisition must provide economic drivers that show “significant” value accretion.
And there again, he said building brands in house typically generates far greater return on investment than does acquiring them. He said he knows as much from evaluating past acquisition opportunities that have come and gone.
“We have looked at those and said we’re better off doing it organically. We’re going to drive better return for our shareholders,” Nassetta said. “We have not seen returns that justify taking action.”
See more at: http://www.hotelnewsnow.com/Article/....LYCRGMtp.dpuf
While Hilton is unlikely to pull the trigger on Starwood, that does not mean the company will sit on the sidelines entirely.
“It would be silly to say we would never participate in M&A activity because you never know what opportunities might present themselves that might make a tremendous amount of sense,” Nassetta said. “We always want to remain open-minded.”
Any opportunity must meet two criteria, however.
First, the acquisition must fit strategically with Hilton’s existing offerings, Nassetta said. Starwood has three brands each in the luxury and upscale segments and four in the upper-upscale segment, including the recently announced Tribute Portfolio soft brand. Hilton counts two brands in the luxury segment, three in upper-upscale, four in upscale and two in upper-midscale segment.
“I do not think we have a strategic gap that we cannot deal with ourselves,” Nassetta added with regard to brand offerings. He pointed to the recently launched Curio—A Collection by Hilton and Canopy by Hilton as two examples of that in-house, do-it-yourself approach. Combined, the two brands have more than 50 properties and 13,000 rooms open or in various stages of development.
The second criteria before Hilton engages in M&A activity, Nassetta explained, is that each potential acquisition must provide economic drivers that show “significant” value accretion.
And there again, he said building brands in house typically generates far greater return on investment than does acquiring them. He said he knows as much from evaluating past acquisition opportunities that have come and gone.
“We have looked at those and said we’re better off doing it organically. We’re going to drive better return for our shareholders,” Nassetta said. “We have not seen returns that justify taking action.”
See more at: http://www.hotelnewsnow.com/Article/....LYCRGMtp.dpuf
May 10, 2015, 12:29 pm
#4
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What I found interesting is the statement "slightly lower price point brand in the mid-scale segment" I think if Hilton isn't offering that now in one or more of their current brands they will not be able to do it with a new brand. Also a slightly lower price point would not be low enough to draw the target market he mentions. I am wondering what competitor's brand operating now he thinks would fit lower price point mid-scale? Fairfield Inn by Marriott? Best Western?
May 10, 2015, 1:05 pm
#5
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I would welcome any additions from the Starwood family. Especially in the U.S., hilton doesn't have a lot of coverage in the luxury space and in some markets the full service brands are very dated. I'm surprised there is even demand for a brand below Hampton. I can't imagine why a business traveler would select anything lower than a Hampton Inn by choice unless they have an intense corporate travel Policy.
May 10, 2015, 1:16 pm
#6
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Those are examples of lower-midscale hotels I typically find to be lower-priced than Hampton in many locations.
Of course, how much of that lower price is simply because they're in programs less popular than Hilton HHonors?
Regarding the ones you mentioned:
Best Western hotels are independently owned and operated. Thus there is less of standard in what you get with them than with either Hampton or Fairfield. So while, yes, they tend to be lower-priced than Hampton, including in locations next door a Hampton, it's harder to pin down what they are because they vary so much from location to location.
Meanwhile, Fairfield last year moved itself up to pretty much the same as Hampton (better lobbies, expanded brearkfasts, etc). So it can no longer be looked at as "lower than Hampton".
Perhaps Holiday Inn Express is a bit lower than Hampton, but not enough probably to distinguish and not enough probably to get a noticeably lower rate.
May 10, 2015, 11:55 pm
#7
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I often find lower rates at Hampton than Fairfield or HIX by using the MVP Code.
I think something like a (new build of three years old or less...) Comfort Inn may be a decent compliment to the Hilton brand. Just basic properties that are clean and a bit bare bones. But what is the ROI on it? Will is cause current people who currently use Hampton to "trend down" or will it allow them to capture new customers? For instance in my case if a Hampton was $99 but this new brand was $79 I'd probably go with the new brand even knowing it was not "as nice" as the Hampton perhaps. Maybe it would also allow the Hamptons to up their rates a little bit when they compete against this new brand if there are enough people who will pay the higher cost for the consistency of Hampton.
This new brand may also be an option for the older Hamptons that they seem to be trying to replace.
As far as some other comments people have made I worked for an employer for a couple years who loved to put us in Best Westerns, Choice Hotels, and Super 8/Days Inn/Ramadas. Getting into a HIX was something special. Getting into a Hampton was almost unheardof. Always "too expensive." Sometimes even Comfort Inn was deemed "too expensive."
I don't see what Starwood would bring to the table. Maybe just more brands. I've been in some Sheratons and Westins via Priceline and was satisfied enough but their lack of coverage in smaller markets is what made me never really look at them for my usual travel.
I think something like a (new build of three years old or less...) Comfort Inn may be a decent compliment to the Hilton brand. Just basic properties that are clean and a bit bare bones. But what is the ROI on it? Will is cause current people who currently use Hampton to "trend down" or will it allow them to capture new customers? For instance in my case if a Hampton was $99 but this new brand was $79 I'd probably go with the new brand even knowing it was not "as nice" as the Hampton perhaps. Maybe it would also allow the Hamptons to up their rates a little bit when they compete against this new brand if there are enough people who will pay the higher cost for the consistency of Hampton.
This new brand may also be an option for the older Hamptons that they seem to be trying to replace.
As far as some other comments people have made I worked for an employer for a couple years who loved to put us in Best Westerns, Choice Hotels, and Super 8/Days Inn/Ramadas. Getting into a HIX was something special. Getting into a Hampton was almost unheardof. Always "too expensive." Sometimes even Comfort Inn was deemed "too expensive."
I don't see what Starwood would bring to the table. Maybe just more brands. I've been in some Sheratons and Westins via Priceline and was satisfied enough but their lack of coverage in smaller markets is what made me never really look at them for my usual travel.
May 11, 2015, 12:15 pm
#8
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I would welcome any additions from the Starwood family. Especially in the U.S., hilton doesn't have a lot of coverage in the luxury space and in some markets the full service brands are very dated. I'm surprised there is even demand for a brand below Hampton. I can't imagine why a business traveler would select anything lower than a Hampton Inn by choice unless they have an intense corporate travel Policy.
Maybe some Luxury Collection hotels could fit into the W=A Collection to extend it.
Also Westin could be an option. Reflag to Conrad. Sheraton as well. Turn into Hilton.
May 16, 2015, 12:25 pm
#10
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Hilton REIT Deal Seen More Likely, No To Starwood
Read More At Investor's Business Daily:
http://news.investors.com/business/0...#ixzz3aKKzAE7y
...
As for a potential transaction or combination with troubled Starwood Hotels (NYSE:HOT), she said Hilton "feels they don't need the scale or the potential distraction" and that Starwood's Sheraton brand "may actually be too big."
Starwood is reportedly seeking "strategic alternatives" that might include a sale, spinoff of certain assets or other options.
"Hilton doesn't feel the need to buy it defensively. They have enough scale that it wouldn't matter to them if (Starwood) combined with another lodging company," Farley noted.
She said a Marriott (NASDAQ:MAR) combination with Starwood also seems to make "little sense."
Among lodging companies, Marriott has the second-largest market capitalization after Hilton, followed by Starwood.
Hilton is the highest rated of the three lodging companies by IBD, with a Composite Rating of 86 out of 99 possible. Marriott is ranked 70 and Starwood 68.
Read More At Investor's Business Daily:
http://news.investors.com/business/0...#ixzz3aKKzAE7y
...
As for a potential transaction or combination with troubled Starwood Hotels (NYSE:HOT), she said Hilton "feels they don't need the scale or the potential distraction" and that Starwood's Sheraton brand "may actually be too big."
Starwood is reportedly seeking "strategic alternatives" that might include a sale, spinoff of certain assets or other options.
"Hilton doesn't feel the need to buy it defensively. They have enough scale that it wouldn't matter to them if (Starwood) combined with another lodging company," Farley noted.
She said a Marriott (NASDAQ:MAR) combination with Starwood also seems to make "little sense."
Among lodging companies, Marriott has the second-largest market capitalization after Hilton, followed by Starwood.
Hilton is the highest rated of the three lodging companies by IBD, with a Composite Rating of 86 out of 99 possible. Marriott is ranked 70 and Starwood 68.
May 16, 2015, 3:14 pm
#11
Join Date: Aug 2013
Programs: HH Lifetime Diamond, DL PM, Hertz President's Circle
Posts: 920
Hilton REIT Deal Seen More Likely, No To Starwood
Read More At Investor's Business Daily:
http://news.investors.com/business/0...#ixzz3aKKzAE7y
...
As for a potential transaction or combination with troubled Starwood Hotels (NYSE:HOT), she said Hilton "feels they don't need the scale or the potential distraction" and that Starwood's Sheraton brand "may actually be too big."
Starwood is reportedly seeking "strategic alternatives" that might include a sale, spinoff of certain assets or other options.
"Hilton doesn't feel the need to buy it defensively. They have enough scale that it wouldn't matter to them if (Starwood) combined with another lodging company," Farley noted.
She said a Marriott (NASDAQ:MAR) combination with Starwood also seems to make "little sense."
Among lodging companies, Marriott has the second-largest market capitalization after Hilton, followed by Starwood.
Hilton is the highest rated of the three lodging companies by IBD, with a Composite Rating of 86 out of 99 possible. Marriott is ranked 70 and Starwood 68.
Read More At Investor's Business Daily:
http://news.investors.com/business/0...#ixzz3aKKzAE7y
...
As for a potential transaction or combination with troubled Starwood Hotels (NYSE:HOT), she said Hilton "feels they don't need the scale or the potential distraction" and that Starwood's Sheraton brand "may actually be too big."
Starwood is reportedly seeking "strategic alternatives" that might include a sale, spinoff of certain assets or other options.
"Hilton doesn't feel the need to buy it defensively. They have enough scale that it wouldn't matter to them if (Starwood) combined with another lodging company," Farley noted.
She said a Marriott (NASDAQ:MAR) combination with Starwood also seems to make "little sense."
Among lodging companies, Marriott has the second-largest market capitalization after Hilton, followed by Starwood.
Hilton is the highest rated of the three lodging companies by IBD, with a Composite Rating of 86 out of 99 possible. Marriott is ranked 70 and Starwood 68.
May 17, 2015, 12:04 am
#12
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What I found interesting is the statement "slightly lower price point brand in the mid-scale segment" I think if Hilton isn't offering that now in one or more of their current brands they will not be able to do it with a new brand. Also a slightly lower price point would not be low enough to draw the target market he mentions. I am wondering what competitor's brand operating now he thinks would fit lower price point mid-scale? Fairfield Inn by Marriott? Best Western?
Best Western has built itself to multiple scale that has various price point, there are Best Western (lowest price point low scale), Best Western Plus (low-medium price point low-mid scale), and also Best Western Premier (mid scale). All their qualities varies hotel to hotel, not one has a standard.
A lower price point than Hampton would probably be either Comfort Inn, Quality, or Sleep Inn from Choice. Wingate or Days Inn from Wyndham.
May 17, 2015, 12:20 am
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I often find lower rates at Hampton than Fairfield or HIX by using the MVP Code.
I think something like a (new build of three years old or less...) Comfort Inn may be a decent compliment to the Hilton brand. Just basic properties that are clean and a bit bare bones. But what is the ROI on it? Will is cause current people who currently use Hampton to "trend down" or will it allow them to capture new customers? For instance in my case if a Hampton was $99 but this new brand was $79 I'd probably go with the new brand even knowing it was not "as nice" as the Hampton perhaps. Maybe it would also allow the Hamptons to up their rates a little bit when they compete against this new brand if there are enough people who will pay the higher cost for the consistency of Hampton.
This new brand may also be an option for the older Hamptons that they seem to be trying to replace.
As far as some other comments people have made I worked for an employer for a couple years who loved to put us in Best Westerns, Choice Hotels, and Super 8/Days Inn/Ramadas. Getting into a HIX was something special. Getting into a Hampton was almost unheardof. Always "too expensive." Sometimes even Comfort Inn was deemed "too expensive."
I think something like a (new build of three years old or less...) Comfort Inn may be a decent compliment to the Hilton brand. Just basic properties that are clean and a bit bare bones. But what is the ROI on it? Will is cause current people who currently use Hampton to "trend down" or will it allow them to capture new customers? For instance in my case if a Hampton was $99 but this new brand was $79 I'd probably go with the new brand even knowing it was not "as nice" as the Hampton perhaps. Maybe it would also allow the Hamptons to up their rates a little bit when they compete against this new brand if there are enough people who will pay the higher cost for the consistency of Hampton.
This new brand may also be an option for the older Hamptons that they seem to be trying to replace.
As far as some other comments people have made I worked for an employer for a couple years who loved to put us in Best Westerns, Choice Hotels, and Super 8/Days Inn/Ramadas. Getting into a HIX was something special. Getting into a Hampton was almost unheardof. Always "too expensive." Sometimes even Comfort Inn was deemed "too expensive."
So I look for Choice, found a Sleep Inn that had just finished remodeled that cost $76, I could even gone for the nearby Quality for just $49, but when I read the reviews on tripadvisor about that Quality, seems like there are quite a bit of complains, so I pay $27 more to stay at Sleep Inn, still almost less than half of what Hampton cost. Choice got my business.
May 17, 2015, 8:16 am
#14
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Well Hamptons had already up their rate for a while now even there are no new brand, good luck in finding Hampton that is still $99. My most recent overnight stay at DFW, Hampton was $135, given I am leaving the next day at 5am, I wouldn't even benefit for breakfast, all I need is a comfortable bed and shower in the morning, shuttle to and from DFW, there is no reason I am paying anything over $100 for a stay that short.
So I look for Choice, found a Sleep Inn that had just finished remodeled that cost $76, I could even gone for the nearby Quality for just $49, but when I read the reviews on tripadvisor about that Quality, seems like there are quite a bit of complains, so I pay $27 more to stay at Sleep Inn, still almost less than half of what Hampton cost. Choice got my business.
I don't think Hilton could start a new brand that can be similarly priced as that Sleep Inn you mention. Does anyone other than the CEO think they can?
Originally Posted by ORDnHKG
I often find lower rates at Hampton than Fairfield or HIX by using the MVP Code.
I think something like a (new build of three years old or less...) Comfort Inn may be a decent compliment to the Hilton brand. Just basic properties that are clean and a bit bare bones. But what is the ROI on it? Will is cause current people who currently use Hampton to "trend down" or will it allow them to capture new customers? For instance in my case if a Hampton was $99 but this new brand was $79 I'd probably go with the new brand even knowing it was not "as nice" as the Hampton perhaps. Maybe it would also allow the Hamptons to up their rates a little bit when they compete against this new brand if there are enough people who will pay the higher cost for the consistency of Hampton.
This new brand may also be an option for the older Hamptons that they seem to be trying to replace.
As far as some other comments people have made I worked for an employer for a couple years who loved to put us in Best Westerns, Choice Hotels, and Super 8/Days Inn/Ramadas. Getting into a HIX was something special. Getting into a Hampton was almost unheardof. Always "too expensive." Sometimes even Comfort Inn was deemed "too expensive."
I think something like a (new build of three years old or less...) Comfort Inn may be a decent compliment to the Hilton brand. Just basic properties that are clean and a bit bare bones. But what is the ROI on it? Will is cause current people who currently use Hampton to "trend down" or will it allow them to capture new customers? For instance in my case if a Hampton was $99 but this new brand was $79 I'd probably go with the new brand even knowing it was not "as nice" as the Hampton perhaps. Maybe it would also allow the Hamptons to up their rates a little bit when they compete against this new brand if there are enough people who will pay the higher cost for the consistency of Hampton.
This new brand may also be an option for the older Hamptons that they seem to be trying to replace.
As far as some other comments people have made I worked for an employer for a couple years who loved to put us in Best Westerns, Choice Hotels, and Super 8/Days Inn/Ramadas. Getting into a HIX was something special. Getting into a Hampton was almost unheardof. Always "too expensive." Sometimes even Comfort Inn was deemed "too expensive."
So I look for Choice, found a Sleep Inn that had just finished remodeled that cost $76, I could even gone for the nearby Quality for just $49, but when I read the reviews on tripadvisor about that Quality, seems like there are quite a bit of complains, so I pay $27 more to stay at Sleep Inn, still almost less than half of what Hampton cost. Choice got my business.
May 17, 2015, 11:31 am
#15
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*Hilton is already familiar with varying quality, courtesy of DoubleTree, so why should that stop them?
