Hilton President and CEO Chris Nassetta shared more details about the company’s latest brand, the first to play in the economy segment, on the company’s 2022 earnings call with analysts, saying Spark by Hilton “should be over time the biggest brand we have” and “will have the opportunity to be worth billions of dollars to our shareholders.”
Hilton launched Spark in January, carving out what it called the “premium economy” segment, and Nassetta shared more details on just how Hilton defines those terms in relationship to the industry and its own brands.
“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.”
He said the ideation process started in earnest about three years ago as the company narrowed in on “a huge opportunity to acquire new customers” that it could help raise into the Hilton system in years to come.
Identifying the guest need was straightforward, Nassetta said, particularly in a segment he called “ripe for disruption,” with existing hotels in the traditional segment suffering from lack of consistency and other issues that can be tough to fix within large systems.
Full retrofits to Spark standards are a key part of the brand thesis.
“It’s not sexy, but in terms of an opportunity to be a value contributor in the billions of dollars for this company and its shareholders, I’m excited,” he said. “From a customer point of view, we’ll give them a high-quality experience that does not exist in this [segment] because of the way we’re retrofitting the properties. … We think we have cracked the code. We will have to prove it.”
The brand will be conversion-only, Nassetta said, and to date the company has more than 200 deals in various stages of negotiation.
Dispelling any rumor that Spark was designed as a landing pad for decades-old Hampton Inn hotels that might not be aging well, Nassetta reminded analysts that the company maintains discipline in the Hampton brand and isn’t afraid to kick properties out.
Any older Hamptons that are candidates for conversion to Spark will be “a very small percentage of the overall system,” he said, and called them “an ancillary benefit on the margin.”
“Ninety-eight percent of the Spark deals we’re processing now are third-party brands,” he said. “There are a few Hamptons in there, no other Hiltons.”
Digital tools such as 24-hour digital check-in and mobile keys are part of the model, and hotels will offer a basic breakfast with coffee, juices and a bagel bar with toppings. Plans call for the first Sparks to open later this year.
“Time will tell, but I would say this will be the most disruptive thing we’ve done in terms of brand space.”
Editor’s note: Chris Nassetta serves on the board of directors for Hotel News Now’s parent company, CoStar Group.