Hilton has launched Curio, its new boutique brand, one of two new flags promised for launch this year. The newly listed group is looking to plug gaps in its brand portfolio as it continues to drive for growth for its existing offerings.
Curio aims to draw together independent hotels in the four and five star segments, under a brand umbrella that aims to celebrate difference, while providing the assurance that Hilton has given each property its seal of approval. The Curio name was chosen, said Hilton, as a way of suggesting “something of interest, unique or even rare”.
Several US hotels have been signed to launch the brand, including the SLS in Las Vegas (the refurbished and rebranded Sahara), which launches in September; the historic Sam Houston hotel in Houston; and the Franklin Hotel in North Carolina. In 2015, the Alex Johnson near Mount Rushmore will link with Curio after a refurbishment. In 2016, there are plans for a new build hotel in Portland to open as a Curio.
Hilton has said the focus will be on mature markets, adding properties in the US and Europe. Media reports suggest international destinations where Curios are in discussion include Doha and Dubai, and ultimately Hilton has said the brand could support “hundreds” of member hotels.
“Our customers and owners have expressed strong interest in a brand from us that includes hotels that can retain their unique identity but also deliver the many benefits of our system, including our Hilton HHonors guest loyalty program,” said Hilton CEO Christopher Nassetta. “That desire, combined with the current size of the independent hotel market and demand for differentiated hotel stays around the world, made for the right timing for this launch. Curio is an exciting new brand for us — one of two unique concepts we’ll introduce this year.”
Jim Holthouser, executive vice president, global brands, Hilton Worldwide, said, “Curio expands our portfolio to a total of eleven exceptional brands and creates additional opportunities to serve our existing customers even better, attract new customers and grow our pipeline. With Curio, we can help owners leverage our scale, scope and expertise while keeping intact each hotel’s individual character.”
In addition to Curio, Hilton has promised to reveal details later in the year of its new budget level brand for “tech savvy” younger generation travellers, lined up against rivals such as Marriott’s new Moxy.
HA Perspective [by Chris Bown]: Hilton’s announcement follows hard on the heels of Rezidor revealing Quorvus, the most recent launch of a boutique brand by a major hotel group, gathering independents under its wing.
With its finances now in the public domain, Hilton is under a new pressure to explain its strategies, with shareholders and analysts poring over growth plans and the pace at which they deliver returns. Hence Curio is announced, along with a new generation Y proposition due for reveal later this year. And it wants to make up for time lost when its earlier attempt to get into the lifestyle space in 2009, with Denizen, was thwarted among allegations of corporate espionage; and a ruling that forced Hilton to sit on the sidelines until 2013.
Curio steps into a space where Marriott already has Autograph, with 62 hotels – mainly in the US – signed, Starwood has 102 properties in its Luxury Collection, and Quorvus is looking to gain traction. With a similar philosophy, albeit outside the luxury category, Choice is also growing its Ascend collection. An independent looking for affiliation has some choice.
The Curio launch suggests hotel groups are detecting a core of customers who want something a bit more individual and locally connected than their chain properties; a backlash against interiors that can look and feel the same anywhere in the world. Or it could simply be that this is the ultimate expression of asset-light, delivering a sales and marketing support package and loyalty programme to independent owners that guarantees them more guests and revenue.
Is this a lifeline for independents, one that will stop their predicted general demise? Linking with a major global brand is one solution, but not necessarily the only one. Smaller umbrella marketing groups such as Small Luxury Hotels and Preferred have reported strong figures recently, suggesting they are more fleet of foot when it comes to marketing in the increasingly online world. They are also growing their own loyalty programmes.
[Andrew Sangster adds] The emergence of what are sometimes called “affiliation brands” like Curio or Marriott’s Autograph further puts the spotlight on what hotel brands are for.
The key short-term attraction is the big reservation system that delivers the heads in beds. When coupled with an effective loyalty scheme it is easy to see why hotel owners’ heads are turned.
But how effective are hotel brands in driving demand? And how effective will they continue to be? The Preferred Hotel Group in June publicised a report it commissioned from HVS which showed that its hotel brands were achieving a revpar premium over competitors, many of whom (in fact 60% of the room stock) were the global majors.
Leaving aside the issue of how the peer hotels were selected and whether the ranking is fair (note that we are not saying it is either fair or unfair), the fact that a consortium is prepared to make the case of its outperformance indicates that the global majors are hardly leaving their rivals in the dust.
To date, the strategy of the majors has been to rely on their traditional demand drivers, using rate parity as a tool to ensure that their pricing structure is not under mined by online rivals.
This strategy is beginning to unravel. More and more, the global majors are intimating that maintaining the same price across all channels is no longer appropriate. One idea that is being kicked around at Hilton’s HQ is to sell certain brands through particular channels, restricting the availability in the others.
“Ralph Lauren does not sell its different ranges at all stores, it has some for the mass market and some that are exclusive,” explained one Hilton executive to Hotel Analyst.
While global majors are not publicly admitting it, the harsh reality is that they have fallen massively behind in the race for transient travellers relative to the much higher spending online intermediaries. And increasingly the group and business segments are slipping out of the grasp of hoteliers.
The role of hotel brands is being rethought. This is going to reshape the industry just as much the bricks and brains separation that began a couple of decades ago.