Hilton today announced that it had reached an agreement with a Chinese company to develop perhaps 1,000 or more Home2 Suites in the country.
The press release talks about a “shared vision” to build up more than 1,000 of these hotels in China that certainly is possible considering the size of the market.
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Here’s the announcement from Hilton:
Hilton (NYSE: HLT) today announced the signing of an exclusive management license agreement with Country Garden to introduce and develop the Home2 Suites by Hilton® brand in China. The agreement with Funyard Hotel Investment (Asia) Limited, a subsidiary of Country Garden, further expands the strategic cooperation between Hilton and Country Garden.
“As our second largest market globally, China has consistently seen rapid growth and is forecast to become the world’s largest lodging market,” said Alan Watts, president, Asia Pacific, Hilton. “We know from our success with several existing properties that Country Garden is one of the strongest players in the Chinese property market. We are thrilled to continue working with them to introduce a new Hilton brand to China and realize our shared vision to build more than 1,000 Home2 Suites by Hilton® together.”
With the rise of the Chinese middle class, room supply in the upper midscale hotel segment has experienced corresponding growth of more than 10 percent annually during the last five years. Following the growing spending power of consumers in China’s smaller cities, demand for quality travel and hospitality is expected to increase, creating opportunities for the entry of properties such as Home2 Suites by Hilton® in the midscale segment.
As one of Hilton’s fastest growing and award-winning midscale brands, Home2 Suites by Hilton® is well-positioned to capture these opportunities as an affordable upper midscale offering. The brand currently has approximately 400 operating hotels and over 450 hotels in the pipeline across the US and Canada, and its introduction to the Chinese market represents the first major extended stay play for Hilton outside of North America.
“We are delighted to have continually strengthened our cooperation with Country Garden over the years, with six Country Garden-owned hotels now operating or in the pipeline that are currently managed by Hilton. As one of the largest real estate developers in China, Country Garden’s extensive legacy makes them well-equipped to operate expeditiously in the Chinese market,” said Qian Jin, area president, Greater China and Mongolia, Hilton. “In light of the current climate, we expect domestic tourism to be a key pillar of China’s economy and hospitality market. Home2 Suites by Hilton® aims to provide consumers with a well-trusted product that is market-relevant at a great value and we look forward to working with Country Garden to bring that to our consumers.”
“We are excited to continuously explore new opportunities with Hilton, one of the world’s leading hospitality brand and a storied company with over a century of history,” said Ji Hongjun, president, Funyard. “China’s massive infrastructure development will further drive demand for products like Home2 Suites by Hilton® and we look forward to working together to address the fast-growing demand for midscale hotels against the backdrop of this region’s increasing urbanization.”
Home2 Suites by Hilton® is an innovative, modern upper midscale lodging brand that caters to travelers eager for life and adventure. The brand provides stylish and flexible amenities to meet the needs of different travelers, offering homelike conveniences that are valued by both short and long stay guests. The guest experience promise of Home2 Suites by Hilton®, combined with its focus on cost effectiveness through an effective build design and economical operating model also provides potential owners with a strong return on investment.
This strategic cooperation by Hilton and Country Garden to introduce Home2 Suites by Hilton® to China will fill a gap in the midscale hotel segment and provide consumers with more diverse, richer stay options. The introduction of Home2 Suites by Hilton® will also further enhance Hilton’s existing brand portfolio in China and satisfy the rising demand for family travel with kids or parents. Hilton is optimistic about the upper midscale hotel segment in China, as a growing number of consumers put more focus on the quality of services at hotels, and China’s hospitality market continues to demonstrate great potential.
I have yet to stay at this Home2 Suites brand that looks to me like a refreshed version of the Hampton Inn.
You have to remember that there is very little that elite members get at these limited-service brands points and benefits wise.
It remains to be seen how many of these 1,000 hotels the Chinese developer ends up building. The number is not set in stone but rather a “shared vision” per the Hilton’s release.