Hilton has grand visions for small NoMad brand

Note: This story first appeared on Travel Weekly

Hilton provided some color about its acquisitions of Graduate Hotels and NoMad Hotels during its Q1 earnings call last week.

Noting that the addition of NoMad was a “pretty small change at the moment,” Truist analyst Patrick Scholes asked where Hilton sees NoMad going in the next five years.

Hilton CEO Chris Nassetta said the acquisition was a “very efficient way” for Hilton to get in the luxury lifestyle space. He noted that he's been talking about adding a luxury lifestyle brand for “what seems like time and eternity.” In 2019, Nassetta said Hilton was preparing to introduce an upscale lifestyle brand, but that never materialized.

Although Hilton traditionally likes to create its own brands, Nassetta noted, there were pluses in acquiring NoMad. He said founder Andrew Zobler and his team are “a really talented team of people who are steeped in the luxury lifestyle space.”

Nassetta also said NoMad “already has a pipeline, let alone what we are adding to it.”

When Hilton announced the NoMad acquisition earlier this month, the company said it envisioned amassing “100 hotels over time.” But it will be a long way to 100 hotels for NoMad.

The luxury lifestyle brand has hotels in London and Las Vegas, and the Las Vegas property wasn’t included in the Hilton deal because it soon will be rebranded. NoMad hotels in New York and Los Angeles closed during the pandemic and have since reopened under new brands.

“Yes, it's very small,” Nassetta said. “But hey, the good news is, it’s very small. We didn’t pay a whole lot for it, and that means great organic growth going forward.”

Hilton CFO and President of Global Development Kevin Jacobs said during the Q1 call that Hilton expects NoMad to expand via a combination of conversions and new hotels.

Graduate Hotels is much further along in development. The boutique brand, which specializes in hotels in college markets, has 30-plus hotels in its portfolio, plus a handful of others coming soon.

Hilton is purchasing the brand for $210 million, and the company expects to close the deal before June.

Nassetta called Graduate Hotels “a unique opportunity to serve more guests, especially in markets where we're not present today.”

He added that with thousands of colleges and universities around the world, Hilton sees potential to grow the Graduate brand to 400 to 500 hotels globally.