Outset Collection By Hilton: New Brand With Focus On "Owner Flexibility"

The hotel industry has gone down the SHITTER since the halcyon days of Starwood Preferred Guest.

When I first read this, I was confused because I thought Hilton already had an upscale collection brand targeted at conversions. They do - it's Tapestry. But that apparently is for "upscale" only, this brand will target both upscale and "upper midscale," with lower brand requirements and potentially lower fees. Marriott talked about lowering fees for some of its new brands earlier this year.

Right now, people love this business model, especially for Hilton (look at its stock). But over the very long run I do wonder if this is just going to lead to hotel owners wanting lower fees from these hotel companies. If you own a Hilton Garden Inn in a market, having a bunch of new Tapestry/Output/etc just takes away your customers. Unless people are willing to pay more to stay in a Hilton hotel - and they may not - the model will start to get stressed

As a '90s kid I remember taking family vacations to Sheratons and Westins all over the country, and unfailingly, we'd receive the epitome of polite and polished hospitality from all the staff. I was an authorized user of my father's Starwood card, enshrined in pop culture by Timbaland in "The Way I Are" ("red American Express").

Hilton has always been meh. I remember saying at the New York Hilton Midtown with Gold status back when it came with breakfast. The host showing me around the breakfast area made a repeated, enunciated effort to tell me the COLD continental buffet was free, but follow her and take a look at the hot items, do I want to upgrade? (no... it's freaking Manhattan, I could have Seamless'd the most amazing poached eggs and avocado over spiced quinoa and hummus, with a side of the most delicious cold brew, for half the price of the fatty bacon and whatever other slop was on offer).

remember Hilton intro'd a $15 f&b credit toward the beginning of the pandemic as a replacement for the breakfast benefit. Despite inflation, that credit has not increased in value. Thanks for nothing, Hilton Hotels!

I was at the gym at my hotel and it looked across at the Drury across the street. It was early morning and there was a Drury truck making a delivery presumably from a Drury warehouse. As far as I know they are a vertically integrated brand right down to the trucking. And because of that they are offering a decent(?) breakfast and dinner option to guests. Meanwhile legacy properties struggle to offer the bare minimum.

It's certainly possible there is a risk to the "asset light" model. With owners getting their share and the management company getting there share and the brands getting in there share - maybe there is room in the market for vertical integration?

HILTON HOTELS SUCKS

What's the point of all these "collection" brands? The only reason to stay at a chain hotel is the guarantee that it will deliver a reliable predictable experience. "Collection“ brands are by definition diverse and don't feature any standardisation at all. So why shouldn't I simply stay at an independent hotel?

I’m trying to see how Owner Flexibility is likely beneficial for guests and I’m coming up empty. It sounds a lot more like a euphemism for offering loyal members less.

Hilton has Tapestry for upper midscale soft brands (HGI level), Curio for slightly higher scale soft brands (Hilton level), then LXR for luxury soft brands (Conrad/Waldorf level) - though you also get the branded Doubletrees and Hiltons, like El Conquistador, a Doubletree Resort. None of this is confusing, so I don't think adding another soft brand will hurt at all.

Comment about hotel groups just becoming online travel agencies rings so true especially with points devaluation and inconsistent standards across hotels

If there are holes in a hotel's footprint (e.g. Hyatt has exactly one hotel - in Florence - along I-95 between Richmond, VA and Savannah, GA along with a lot of other gaps), I can sort-of "get it". If I want to drive my business to a given chain and I just /can't/, that can result in loyalty breakage if I'm suddenly spending a bunch of nights somewhere I can't use them (which can cascade).

This was more of a "Hyatt problem" than most of the other chains over the last few years, but I think it's WLOG /somewhere/ significant for most chains - but if I suddenly have to move 30 nights from Marriott to Hilton or Choice (there's one area where this is plausibly the case for me), that could result in a "hard cut-over" in terms of loyalty if it means that now I can't make Platinum with Marriott and need to focus on Hilton Diamond or Choice Whatever.

There's also the question of "elite standards" vs "brand standards" - knowing I'll get a 4PM check-out is a BFD for me in the scheme of things, for example, so even if a lot of other stuff is loosey-goosey that might be enough.

I actually wonder what it would look like if a chain decided to abandon the "asset light" model and start trying to either (1) own more hotels outright or (2) at least have a significant equity stake in more of their properties.

This looks like a cut rate value brand and I read it initially as "Outlet Collection." Then again, that just about sums it up. They're going to slap the Hilton name on stuff that wouldn't meet Hilton standards.

Marriott and Hilton are in an arms race to the bottom. What next acquiring Motel 6 or old boarding houses with communal bathrooms? This is what happens when you no longer manage hotels. You have to constantly create new brands and add more properties to bring in revenue since your only source of money is fees for franchising and licensing.

It's not about ownership. Neither Marriott nor Hilton needs to own hotels. They just need to operate them. It would look like a St. Regis or Ritz-Carlton, which are managed exclusively by Marriott with like only three exceptions.

So basically it’s a new doubletree?

They need to own them to reduce the levels of middlemen demanding their take. A tremendous amount of management time and offer is expended managing the owners, the management company, the brand standards, etc. It would be a lot easier and allow a lot more time for addressing guest concerns if it was all one entity.

It's worse than that, the consolidation is giving hotel management more pricing power at the expense of the guests. Elites and/or those travelling for work may be able to offset some of that through the loyalty schemes, but it's still a case of reducing competition in the market.

Motel 6 used to be part of Accor, so an acquisition by another hotel group wouldn't seem to be too far-fetched.

Sounds like what Best Western used to be

Points, point, points. That's the obvious answer.

I'm a hilton loyalist (mostly) but their branding gets more and more confusing to follow.
In big cities or popular destinations, there's already "too many choices" to decipher, which gets more complicated with each new brand. Worse for somebody like me that also checks other brands...

Also wondering how the lack of standards will affect the customer experience. I see tons of reviews where people are shocked by the brand's expected standardization (the size of rooms at Motto or the simple room contents at Tru, etc). How much worse when there's literally no standard?

Have been a Hilton loyalist for decades and Lifetime Diamond for many years but have seen a rapid decline in standards. I try to differentiate Hilton as a corporation and its many brands from Hilton hotels proper as a brand and see the Hilton hotels proper especially declining in service despite climbing prices. When one pays over $ 500 for a 300 sf hotel room per night it is not unreasonable to expect something at least slightly upmarket in return but this is proving more and more elusive. I see increasingly less difference between Hilton and its lower tier brands. The loyalty program may have swelled in numbers when Diamond status was basically sold down the drain as a new credit card beggared Gold standard, but one wonders whether loyalty program new members equals NEW AND REGULAR customers. When promissory benefits don’t materialize, much as is the case at airlines too, loyalty evaporates. I certainly no longer care if I stay my 90-120 nights per year at Hilton vs Marriott vs Hyatt vs Accor and care less about the pricey but paltry benefits of the Aspire card coupons. I am just waiting for a burger chain to offer “unlimited” gold bars with happy meals (of course “if available”).

I was in contact with a hotel market analyst. When I mentioned the CEO's are only growth driven and have forgotten their customers who bring in the dough.
They explained that investment groups own the hotel companies (mostly) and they only want to see the profits. For CEO's its only one thing now, if they don't, they are out.

Thus we have what we have until the economy changes.

Right on…just got my $18 food credit at Hilton Hawaiian Village…that $18 will get you a cup of oatmeal as long as you then pay the tax and tip, so about another 5 bucks.

Gray - there are a number of small hotel chains that start with combined ownership and "brand." However, the current Wall Street model is for the brand to ultimately be sold to Hyatt / Marriott / Hilton / etc and separated from the real estate, because Wall Street strongly prefers the asset light model. Compare the stock price of Marriott (MAR) versus Host (HST), Hilton (HLT) vs Park Hotels (PK) and this becomes obvious. This is ultimately why Starwood had to sell to Marriott - Wall Street wanted the asset light model and Starwood was slow to sell its owned properties.

The new "Starwood" has elements of a combined ownership and brand model as the affiliated Starwood Capital owns some of the hotels. But even in that model. Starwood Capital has sold certain hotels (1 Hotel in South Beach, Nashville and New York, all to Host Hotels).

The major issue here is that in the asset light model, hotel owners are responsible for all operating costs (labor, energy, property taxes, insurance, food costs) as well as capital expenditures.

In order for the combined ownership/brand model to start working again, there has to be some kind of financial advantage to the company. That company would have to dominate in revenues, meaning customers would have to vastly prefer and pay more in prices for owned hotels, or it would have to have a much lower cost of capital. Given how expensive real estate ownership is perceived to be, that seems unlikely.

It used to be that hotel CEOs were judged on RevPAR (Revenue Per Available Room) growth. Now, they are judged almost exclusively on what Hilton's CEO calls "NUG" (net unit growth). High levels of NUG have made Chris Nassetta a billionaire. The model is entrenched with long term contracts between hotel owners and brands. It's not going to go the other way for decades.

What made you think guests are the customers?

The concept that these loose brand standard hotels are really about the booking platform and for Hilton (or any of the big hotel owners) to get the ancillary revenue over a booking.com, hotels.com, Expedia, etc. From the customer perspective, I can see some benefit to this. Find a boutique hotel in some area, one that you would normally get no sort of "benefit" from staying there, and at least you get to earn some points at stays at those small hotels. I've tried to stay at some of these boutique hotels more often. Having the ability to book it through Hilton and get some points is actually a benefit, at least in concept.

However, we all know that these hotel brands aren't the most forthcoming about any of the management of this, and you still won't get any promised benefits. And will they still charge the destination and resort fees when those were to trick the system so to speak when booking through an third party booking site? I think we already know the answer to that.