Hilton makes lower midscale extended-stay launch official

Hilton has launched a lower midscale extended-stay brand in the U.S. with apartment-style accommodations for 20 nights or more with a working title Project H3 as it finalizes its trademark process.

Hilton said it is engaged in more than 100 active development conversations, with many owners expressing interest in multiple locations.

Signature elements include:

* Exterior design with warm wood tones and a modern farmhouse-inspired palette with light industrial touches. Outdoor patios are outfitted with grills, a communal fire pit and comfortable seating.

* Suites feature an adaptable layout with four distinct areas for guests to rest, work, cook and refresh. Ample storage space, efficient closet design, and movable, multi-purpose furniture, including a fully equipped kitchen with a full-sized refrigerator, dishwasher, microwave, two-burner stovetop and more, as well as a spacious bathroom design, focusing attention on the amenities long-stay guests value.

* A hyper-functional lobby called The Hive, providing easy access to all amenities. The Hive lobby allows sight lines from the front desk to fitness, laundry, and a simple retail market.

* The new brand prototype dedicates the majority of space to revenue-generating guest rooms, thus reducing overhead costs for prospective owners. Automated customer offerings such as digital check-in and Hilton’s Digital Key will enhance the guest experience and create efficiencies for staff.

“Hotel owners have played an integral role in the development of Project H3 and they will continue to guide us as we build this brand from the ground up,” said Kevin Jacobs, chief financial officer and president, global development, Hilton. “Project H3 has incredible growth potential, tapping into the rapidly expanding and underserved workforce travel market. The response from the hotel owner and developer community has been immediate and enthusiastic.”

Hotel Investment Today asked Project H3 Brand Leader Isaac Lake more questions about development.

Hotel Investment Today (HIT): Can you elaborate on development costs (new build and conversion)?

Isaac Lake (IL): This new brand will be a cost-effective hotel to build and operate and offer a high margin potential for owners due to the operating efficiencies of a long-stay product. This project is designed as a new-build brand that will expand Hilton’s portfolio to reach a new and growing audience with a reliable and friendly experience at an attainable price point.

HIT: Can you elaborate on the pipeline and you expect the first property to open?

IL: We are pleased with the initial response as the brand is driving strong immediate interest from owners. We are currently engaged in more than 100 active development conversations, with many owners expressing to us their interest in building in multiple locations. We anticipate the first property will break ground later this year, with a tentative target to open in mid-2024.

HIT: What is the expected ADR?

IL: While room rates vary by market and availability, we’re estimating an ADR of approximately $95-$105 per night for this lower midscale, long-stay brand.

HIT: What is the biggest challenge to meet development goals?

IL: This brand provides a great opportunity in an open space for Hilton – catering to the long-stay guest. That’s why we’ve spent a year taking an extensive look at the current market and conducting in-depth research, including consulting with existing Hilton owners and consumers, before beginning to cultivate a strategic plan around this open space.

HIT: Do you have global aspirations for the brand?

IL: The new travel trend of 'work from anywhere' makes this product ideal for nearly any geographic location where there is a need for a long-stay hotel brand, from urban centers to secondary and tertiary markets. Right now, the plan is to begin in the U.S., but this brand is built for the long-term and given the brand will be around for years to come, we expect supply to ultimately grow to more than a thousand hotels.