Hotel brand companies were busy this past year preparing and launching their latest brand concepts.
These launches came in a year when new hotel development remains stymied by the high cost of debt and expensive construction materials and labor. The majority of the brands announced in 2023, however, are limited-service, extended-stay and/or conversion-ready brands, making them more enticing to developers and lenders alike.
Hilton kicked off the year with the launch of its Spark by Hilton brand, a conversion-only economy brand, with 100 deals already on the books. Spark is the company's 19th brand but its first in the economy segment, opening up Hilton to a new segment of travelers.
“The pandemic era exposed the fact that no matter your price point, people want to travel and will travel,” said Bill Duncan, global category head for focused service and all suites brands for Hilton. “That opened our eyes up to the segment.”
During the company's full-year 2022 earnings call, Hilton President and CEO Chris Nassetta said the economy segment was "ripe for disruption."
“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.”
On Jan. 19, 2023, Sonesta International Hotels Corp. debuted its Sonesta Essential brand, an upper-midscale, select-service brand that fills a white space in the company's brand portfolio.
"Initially when we launched Sonesta Select for franchising, we got a lot of what would've traditionally been limited-service or upper-midscale assets that had interest in stretching for the Sonesta name to move upmarket a bit but were sensitive to the food-and-beverage dynamic that came along with Sonesta Select," Chief Development Officer Brian Quinn said.
"We just ran into those conversations over and over again, so we were like, 'You know what? There's an opportunity here, and the market is telling us we need something that sits in this space.'"
The same day, Accor launched its new midscale soft-brand, Handwritten Collection, the company's 45th brand, with two properties already open and five more to come.
“We noticed a gap in the market with a growing number of independent and boutique hotel owners for the midrange segment looking to boost their profile, connect with more audiences and really put themselves back on the map again," said Camil Yazbeck, global chief development officer of premium, midscale and economy brands. "Yet they are cautious about the expense of adapting to new brand standards and potentially compromising their own hotel’s unique identity, which they have so carefully curated."
In early February, Starwood Capital Group and AJ Capital Partners unveiled their new hotel company and brand, Field & Stream Lodge Co. The platform is named after the Field & Stream outdoors clothing brand, and at the time of launch planned for 20 to 25 hotels near national parks, beaches, mountains and ski towns.
"As we have proven through our creation of W Hotels, 1 Hotels and Treehouse Hotels, among others, today's consumer has a strong desire to support brands that connect them with the outdoors, and this initiative with Field & Stream will provide them with authentic hospitality experiences,” said Barry Sternlicht, chairman and CEO of Starwood Capital.
In an effort to create a new entry point to its loyalty program and to be more accessible to members overall, Hyatt Hotels Corp. announced in April its upper-midscale, extended-stay Hyatt Studios. The brand launched with more than 100 signed letters of interest.
"With respect to the World of Hyatt members, we've learned a lot of Hyatt customers, loyalty members, when they're staying outside of the Hyatt system, almost two-thirds of them are doing so because there's not a Hyatt within a 5-mile radius [of where they want to be]. ... So we recognize that our core customer base that exists today would stay within network if they had an option," Hyatt President and CEO Mark Hoplamazian said.
Hilton's Nassetta teased another new brand during the company's first-quarter 2023 earnings call. It would be a lower-midscale, new-build extended-stay brand that would sit below its Home2 Suites by Hilton brand. It targets travelers looking to stay 20 to 30 days on average.
Roughly a month later in May, Hilton officially launched the brand under the working name of Project H3. It will offer apartment-style accommodations designed for the growing $300 billion workforce travel market.
Marriott International President and CEO Tony Capuano had also teased a new midscale, extended-stay brand during his company's first-quarter earnings call. In June, the company revealed more details for its brand working under the name Project MidX Studios. It is a new-build concept that is aimed at guests staying at least 20 nights with an average rate of about $80 a night.
At the NYU International Hospitality Industry Investment Conference, Marriott provided a closer look at the new brand.
“You’ve got both consumer demand and economic activity continuing that,” said Leeny Oberg, Marriott's chief financial officer and executive vice president of development. “You put those two together with the fact there’s not that much of this product out there, there’s not a ton of supply — you put all those together and you get a really strong demand picture from both investors as well as from consumers.”
Marriott in August officially revealed the brand's name as StudioRes.
In the late summer, IHG Hotels & Resorts hinted at a new midscale conversion brand during the company's half-year 2023 earnings call. A week later, the company officially announced its new brand, Garner, an IHG Hotel.
During the earnings call, IHG CEO Elie Maalouf cited the expectations that the midscale segment would grow revenue annually to $18 billion by 2023 in the U.S. He said there was strong investor appetite with 100 hotels already under discussion.
The company opened its first Garner, the 95-room Garner Auburn - Seattle, in December, three months after announcing the brand.
At part of its 2023 Security Analyst Meeting in September, Marriott announced its new Four Points Express by Sheraton, an extension of its Four Points by Sheraton brand. The brand extension is intended to increase the company's midscale offerings to meet growing demand in Europe, the Middle East and Africa.
“This new brand has been thoughtfully researched, designed and localized to deliver midscale travelers the fundamentals of a stay that meets every trip purpose at the right price point,” said Satya Anand, president of EMEA at Marriott International.
Editor’s note: Chris Nassetta serves on the board of directors for Hotel News Now’s parent company, CoStar Group.