Hilton’s Plan to Dominate Middle-Class Travel



Skift Take

“Back to basics”. That’s the new focus of Chris Nassetta, as he launches a self-described ‘unsexy’ growth strategy. Spark, Project H3 and other economy brands to follow are all part of a new vision to turbo-charge Hilton’s development.

Hilton CEO Chris Nassetta opened the Skift Global Forum 2023 Tuesday in New York City. He addressed the group’s recent move to display mandatory fees; how he is working to address the greatest hurdles in travel as chair of U.S. Travel; and the introduction of its new brands Spark and “Project H3” as part of a new mission for Hilton to dominate middle-class travel.

“It is not our sexiest brand, but it is the most disruptive,” said Nassetta, speaking of the newly unveiled Spark brand. Announced in January and with its first opening in the U.S. last week, Spark puts Hilton into the $80-$100 a night tier of hotels.

According to Nassetta, this brand, and other economy brand launches to follow, present the greatest growth opportunities for Hilton. Nassetta shared: “Spark is a great example of economy. We’re not in that space yet. The biggest segment of demand is economy. We hadn’t figured out how to do it and afford to have the service levels we needed. Now, we figured it out. We figured out how to touch every element of the customer-facing experience.

“We’re going to serve tens of millions of incremental customers we’re not serving today.”

Nassetta said Spark has strict requirements when converting from other brands, which will help maintain consistency in the economy segment. He also shared his vision to use hotels such as Spark as feeders into his more expensive properties.

At a lower end of the market, Spark and other future economy launches will service young people. But, as those young people grow up, they will gravitate to grander brands such as LXR and Waldorf Astoria.

The CEO explained: “There’s a whole bunch of young people, and they will go on to stay with our other brands and move around.

“I love luxury, I love lifestyle. We’re the fastest-growing luxury brands on earth. But the opportunity on a global basis for growth is in the mid-market. It’s obvious. The growth demographically is the middle class.

“Our neural network, our bulk, should be the middle market.”

OTAs Must Address ‘Junk Fees’

During his talk with Skift Senior Hotel Editor Sean O’Neill, Nassetta touched on the “junk fee” issue sweeping across hospitality. Skift was first to report earlier in the week Hilton’s choice to “quickly” act to “ensure mandatory fees are displayed upfront on all Hilton websites and apps.”

The CEO said that Hilton is already doing its part, thus putting the onus on online travel agencies and other third parties.

He explained: “We’re going to give total transparency; we’re going over and above. In the end, we don’t want consumers confused about what they’re buying or what they’re paying for. But the issue is complicated. In the hotel space, most of us are going towards the right place, but a lot of our products are distributed through third-party channels.

“The OTAs and metasearch, we all need to be in the same place, it doesn’t matter if Hilton shows it the right way, because the majority of the population starts on Google for comparison shopping. They’re going to be misled even before they get to us. My view is an even playing field. The product is the product, and it should be displayed the same way.”

He said that laws should be put in place to regulate showcasing these fees.

He said: “We are super supportive of [new legislation]. What we need is legislation, all the other platforms need to do the right thing by customers. We will continue to advocate to say it needs to be consistent. No matter where a product is, it should be displayed consistently.”

Hospitality Must Go to Washington

In broader travel, Nassetta passionately spoke about how the industry must come together to bring about meaningful change to laws and procedures in the sector. This included the industry rallying for smoother visa processes, stronger destination marketing, money being put behind travel infrastructure, and greater support for employing overseas workers.

Made national chair of the U.S. Travel Association in February, Nassetta said: “20 years ago, we got no respect. Now, legislators broadly understand it but we have more work to do. A lot of work must be done in Washington for people to understand the depth of tourism and the positive power of it.

“We need to get visa wait times down, really great work is being done on that. There have been 600-day wait times in big markets, we need to drive that down.

“What happens at the border, so we have a welcoming, hospitable experience? That’s technology, that’s staffing, those sorts of things.

“Then when they are in the country, how do you get them around? How are destinations promoted properly? You know, we just passed a $1.3 trillion infrastructure bill before COVID-19, how do we advocate for that to be allocated into airports, ports, and other forms of infrastructure that help our industry?

“The last thing is workforce. Working with the administration and advocating for really sensible visa and immigration policies to get the people we need in the country, even if it’s on a temporary basis.”

Skift Global Forum 2023 Coverage



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