Hilton is making good on its promise to grow its luxury lifestyle hotel portfolio.
The McLean, Virginia-based company on Wednesday acquired a majority controlling interest in Sydell Group to expand Sydell's luxury lifestyle NoMad Hotels brand.
NoMad currently has two open and operating hotels, the brand's flagship property NoMad London that opened in 2021, and the NoMad Las Vegas that opened in 2018. The Las Vegas hotel is excluded from the deal with Hilton and will undergo a rebrand.
Sydell's other hotels and hotel brands — including Line, Freehand and Saguaro, among others — also are excluded from this deal, a spokesman for Hilton confirmed.
Through the deal, Sydell will be responsible for design, branding and management of the NoMad brand while Hilton will lead all development. All NoMad properties will remain independently owned but rolled into Hilton's commercial platforms, including Hilton Honors.
Hilton projects that as many as 100 NoMad hotels will be developed across the globe over time. Ten are already "in advanced stages of discussion with Sydell," according to a company news release about the deal.
Hilton President and CEO Chris Nassetta has declared in past company earnings calls that luxury growth is a priority for the company, particularly in the luxury lifestyle space.
He said in an October 2023 earnings call that "we're just giving away development opportunities. Many of our owners want to build luxury lifestyle hotels and we don't really have a product for them, so they're doing it with other people because we don't have a product and that makes me crazy."
Then in February 2024, Nassetta reiterated on the company's 2023 full-year earnings call with analysts that expansion remains high on Hilton's priority list and would be executed through launching new brands, affiliations and overall net unit growth, he said.
Also during that call, he said the company's established plans to launch a new luxury lifestyle brand would occur "sometime this year."
Hilton in recent months has veered from its long-held practice of launching new brands from scratch, instead acquiring existing brands and forging partnerships that expand distribution.
Recent plays to build on its strategy include Hilton's exclusive partnership with AutoCamp, its partnership with Small Luxury Hotels of the World to expand luxury distribution, and its agreement to acquire the Graduate Hotels brand from AJ Capital Partners for $210 million.
Hilton's existing luxury brands include Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, LXR Hotels & Resorts and Signia by Hilton.
In a published note, Truist Securities analysts said Hilton has historically lagged its peers in the luxury space, and the deal with Sydell helps fill that gap, especially for Hilton Honors loyalty redemptions.
"As far as development growth, we think this partnership is another 'brand in the quiver' for Hilton to maintain 6%-7% net unit growth over time. All that said, we do not know how quickly NoMad will grow in the next few years despite the Hilton affiliation," Truist's note said. "Whether hotels are converted or are built new, the process for adding hotels to a nascent lifestyle luxury brand likely takes more time due to developing or adjusting brand standards than a select-service hotel."
"Perhaps Sydell's existing brand management quickens the timeframe for new deals to go from signing to opening," the note further explains.
About Sydell Group
Andrew Zobler founded Sydell Group in 2005 to include boutique brands and hotels focusing on lifestyle trends. In addition to the NoMad brand, Sydell's portfolio includes the Line brand, the Saguaro brand, Park MGM in Las Vegas and The Ned in London. It also operates mixed-use hotel and shared accommodations brands Freeland and the Penny hotel.
NoMad hotels are known for being "grand and intimate, fun and elegant, classic and playful."
“Grounded in the idea of the hotel as a great home, the NoMad brand is dedicated to providing guests with accessible luxury, exceptional design and award-winning food and beverage," Zobler said in the news release. "Hilton’s expertise in both luxury and lifestyle, paired with its track record in scaling brands, makes for an exciting opportunity."
Chris Silcock, president of global brands and commercial services at Hilton, added that bringing NoMad into its system "will create new offering for guests seeking unique luxury experiences in some of the world's most desirable locations."
"We are accelerating our ability to drive growth in the luxury lifestyle segment," he said.
Editor’s note: Chris Nassetta serves on the board of directors for Hotel News Now’s parent company, CoStar Group.