Hilton said it will continue to focus on the mid-market segment, adding it was also undertaking developmental work in the luxury lifestyle segment with the aim of launching a product in the next twelve months.
The hotel operator said the most significant opportunity lies in the mid-market segment due to the global trend of a growing middle class, stressing that it believes the big mass-market opportunity in every major market in the world is the mid-market.
Hilton added that while it’s currently focusing on the successful development of its premium economy Spark brand and extended stay Project H3 brand, it is also doing developmental work in the luxury lifestyle space.
Turning to its activity around H3, the company said that despite the project being in its early stages, it has been attracting a lot of institutional interest. Hilton noted it's currently negotiating around 300 deals for H3, most of which are with a limited number of “institutional-type” players.
Hilton added it’s also working to diversify its ownership base, noting that while in the past 70-80 per cent of its deals were with existing owners, deals with these owners are now down to between 50 to 60 per cent as it’s working on adding new owners around the world.
Hilton posted Q2 revenue of $2.66 billion and adjusted Ebitda of $811 million. The company now expects full-year capital return to be between $2.4 billion and $2.6 billion, up from the previous expectation of between $1.8 billion to $2.2 billion.
What they said
Chris Nassetta, president & CEO of Hilton said: “The middle class is growing all over the world and we have every intention to have the best brands in every market to serve mid-market because we think that's where the most money will be made over the next 10, 20 or 30 years.”
“We have made huge strides in the luxury space and I think there are more opportunities there. We don't have a pure hard brand in the luxury lifestyle and we're doing developmental work there. I expect that in the next year, we'll launch something in that space to add to the brands we already have in the luxury space to give us another shot on our goal for luxury opportunities around the world.”
Why it matters
Hilton’s continued focus on the mid-market signifies a continued confidence in the segment despite widespread concern about the future feasibility of the segment. It’s important however, to note that Hilton is pursuing a multi-pronged strategy, through its activity in extended stay and luxury.