Known for its luxury accommodations, the new Hilton budget hotel looks to tap into a younger, more money-conscious demographic with its announced Tru line.
Hilton is making a long-term investment in the millennial generation with a new hotel chain set to open its doors by year’s end. The new Tru brand will focus on guests looking for lodging the $75 to $90 nightly price range. The brand’s aim is to compete against midscale chains, such as La Quinta and Comfort Inn, with an eye on building consumer loyalty by delivering consistent quality at a lower price.
“There’s really nobody doing it well in this price point,” Hilton CEO Chris Nassetta told Yahoo. By “doing it well,” Hilton intends to “get them loyal to our system and trade up as they move on in their lives.”
Hilton’s announcement came during The Americas Lodging Investment Summit (ALIS), which was held Jan. 25-26 in Los Angeles. The gathering is considered one of the largest conferences in the world for hotel investors.
The Tru brand, Hilton contends, offers a lot for investors to get excited about. The chain will compete in a segment of the market that commands 40% of the demand for all hotel rooms. While luxury chains tend to have the highest occupancy rates and average nightly room rates, growth in that segment over the past year has been sluggish at best. Pricier hotels have grown less than 1% in occupancy and less than 5% growth in revenue per room, the research firm STR found. As those luxury chains stagnate, economy chains have witnessed 2% growth in occupancy and 6% growth in revenue based on available rooms.
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Tru aims to appeal to younger consumers with a trendy, bold design. Its first floor will serve as “more than a lobby” with comfortable seating areas, and a redesigned front desk that includes a streaming social media wall and a 24/7 market providing refreshments and snacks for sale, a corporate media release said. Rooms won’t be exactly spartan, but economy is part of the design. Guests can expect an open space with hangers and hooks instead of a closet. Desks will be replaced by a chair that offers a tray for a laptop. While beds will be designed for comfort, to keep costs low, the platform creations won’t use box springs. The typical Tru brand hotel will feature about 98 rooms, each with a price tag of about $84,000 to build, minus the land.
Tru brand hotels are planned for a variety of markets, including airport, urban and suburban areas. The chain will include a blend of new construction and urban conversions of historic buildings, such as office buildings and banks. Already 102 locations have signed on and another 30 are in the pipeline. Intended markets include Atlanta, Dallas, Houston and Denver, among others.
The first Tru hotel should open its doors by the end of 2016, Hilton announced at ALIS. Whether the brand will position Hilton to grow with consumers as is its aim, with more than 130 locations already on the drawing board the new chain plans to take the market by storm.
