There are a lot of ideas that go into brainstorming and eventually launching a new hotel brand, from identifying what customer segment it will serve to clarifying why it will appeal to owners and defining its personality for marketing.
Supply-chain management is — at least traditionally — much further down the list.
But Anu Saxena, president and global head of Hilton Supply Management, said that dynamic was turned on its head with the launch of Hilton's latest brand — Spark by Hilton.
She said her group was involved in the earliest stages of planning and brainstorming for the economy conversion brand, which marks a first for Hilton.
"We started off the entire creation and ideation of the brand with the supply chain in mind and how HSM can help all the brand pillars come to life from the outset," she said.
Saxena said the more typical process would be for procurement experts to come in later in the design process to help with "value engineering" and controlling costs.
"But that was not the case this time," she said. "We started from the outset, with a value-engineered product, so the price and price component and speed to market was something that we brought to the table early."
Indeed, one of the biggest challenges for any hotel renovation or construction product now is grappling with the supply chain to get needed materials, which Hilton wanted to avoid in order to get the Spark brand off the ground as quickly as possible.
And several things did change due to HSM's early involvement in the brand and a focus on supply-chain simplicity. Ottomans were swapped out to have more durable handles and cheaper costs. Lighting in guestrooms and corridors was changed to replaceable bulbs rather than integrated LEDs. Plastics in guestroom chairs were changed out for metal. And even the colors of case goods were chosen based on availability and how they would affect lead times.
During a recent earnings call, Hilton President and CEO Chris Nassetta said he expects the brand — and the company's entrance into the economy space — to be "the most disruptive thing we've done in terms of brand space," and keeping the price down is a big part of that equation.
“We don’t think there are any real competitors” in this segment, Nassetta said. “We will come in [with pricing] plus or minus 20% below Tru by Hilton. It will price above the traditional economy space, but will be a better, higher-quality and more consistent product.”
So in order to meet the company's lofty development goals with the brand, Hilton Supply Management committed to another first in terms of brand launches for the company: preordering the needed materials. Saxena said there's obviously a greater degree of risk in preordering, but it also takes months out of the development horizon for conversions to Spark.
Hilton executives estimate in normal circumstances, it could take as long as 20 weeks to get furniture, fixtures and equipment on site for the conversion. HSM's process — along with working with suppliers — cuts as much as eight weeks off of that and ensures operating supplies and equipment arrive together rather than in several piecemeal deliveries.
Saxena said lead times are also cut down by focus on the brand launch. HSM handles procurement for not just Hilton brand, but sells its services as a third party. She said the company "set up a dedicated team" specifically to make the Spark launch as streamlined and fast as possible.
"There is literally just a Spark team that includes a demand planner, and an inventory manager, and of course, the people that are out working on developing and sourcing the packages," she said.
All together, Saxena said HSM's focus on Spark takes "months out of the process for an owner to convert."
Asked whether HSM has prepurchased enough to keep up with demand for Spark conversions, Saxena said "that's a question we're constantly asking ourselves."
"We have a certain number of hotels that we've forecasted for the year, and we are in constant communication with our friends in the development team," she said. "So as the pipeline changes, which it already has a few times and which is great and exciting, we are getting feedback."
At the end of the day, owners appreciate the focus on costs and availability that come from being so supply-chain focused with the new Spark brand, Saxena said.
"And I think even for all the folks involved in the launch of the brand, it was helpful for them to see the value of having a supply-chain services team and that kind of value engineering at the table form the outset," she said.
Editor’s note: Chris Nassetta serves on the board of directors for Hotel News Now’s parent company, CoStar Group.