Launch of Spark by Hilton begins with some 100 deals in the
pipeline and an extended opportunity to grow in some 700 markets, according to
brand leader Klees.
With 43% of the U.S. hotels sitting in the inconsistent economy
segment, Hilton has a very long runway to sell its first entry into the premium
economy space, conversion brand Spark by Hilton. Brand leader Alissa Klees told Hotel Investment
Today that while last week’s brand launch came with some
100 deals in the pipeline, predominantly driven by existing Hilton owners, the
expectation is to grow quickly and significantly with some 700 markets
identified where Hilton doesn’t have a presence.
“The feedback from our recent global owners conference was ‘this
is simple, this is smart and why didn’t we do this 10 years ago?’” Klees said
of the brand with conversion costs in the $20,000/key range.
The lobby will serve as the breakfast hub featuring bagels with spreads.
ADR is projected to range from about $85 to the high 90s,
according to Klees, with some hotels recording higher rates. She would not
commit to a projected ROI on the investment but did say the timeline will be
“variable and personal, based on their individual hotels, including the age of
building, square footage requiring renovations, core infrastructure and more.”
Potential growth primarily targets secondary and tertiary
markets, but Klees added that urban opportunities are also in the cards. “I
spoke with the guys up in New York and our East Coast developers, and they are
clamoring for this. They have deals for us to look at,” she said. “This brand
will serve all markets, whether urban, suburban tertiary or even beach destinations
where we have seen some early interest.”
What Spark will not do is develop from scratch, leaving
those opportunities to Tru by Hilton and Hampton by Hilton. “We will be looking in
the midscale category – aging assets that be
coming up on the end of their license,” Klees explained, adding that even an
aging Hampton or other internal brand properties could be candidates for Spark
conversions. “Hotels in the midscale or economy space are going to be great
candidates because the structure of those hotels, or the simplicity and the
nature of what they’re delivering, match what we’ve tried to create in terms of
a conversion package.”
Guestrooms will include simple, streamlined furniture, an open closet, a mini-refrigerator and a multi-purpose work surface.
Klees said about 60% of the conversion cost will go into
guestrooms, 20% into the lobby area and 20% to the exterior with colorful walls
and artwork. Guestrooms will include simple, streamlined furniture, an open
closet, a mini-refrigerator, a multi-purpose work surface and bright bathroom.
Complimentary breakfast will feature coffee, juice and a signature bagel bar
with spreads. There will also be a 24-hour retail market.
Among the brand differentiators, according to Klees, is the
requirement to complete a full renovation, including the tech stack, prior to
joining the Spark by Hilton system to deliver a reliable and consistent experience.
Spark by Hilton brand leader Alissa Klees
Very cognizant of today’s inflation and supply chain issues,
Klees said the Spark package has been boiled down to what Hilton calls the
“thoughtfully essential,” what the traveler needs and what the owner will
invest. “From a supply chain perspective, we partnered with Hilton Supply
Management as the sole procurement agent for this brand,” Klees said. “The
reason we did that was not only to make sure that we could negotiate and
deliver the best cost possible to our owners but also the best timelines. We think
this will with the value proposition of converting to Spark by Hilton.”
Klees added that the conversion process will take seven to
eight months on average, depending on how fast the owner moves. “But we’ve
really focused in on the parts that Hilton influences and controls, the design
and supply chain process, and tried to streamline that so it doesn’t get in the
way of an owner and we can deliver exactly what we’ve committed to deliver.”