Hilton launches budget hotel aimed at young guests

Scott Mayerowitz
Associated Press
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Los Angeles — Hilton is launching a new hotel brand, focusing on budget travelers looking to spend $75 to $90 a night.

Tru aims to compete with economy and midscale chains like Comfort Inn, Fairfield Inn and La Quinta.

Hilton Worldwide — which has more than 4,500 hotels globally — already has “limited service” brands like Hilton Garden Inn, Hampton Inn, Homewood Suites and Home2 Suites. This would be a new market for the chain.

Hilton CEO Chris Nassetta notes that 40 percent of the demand for hotel rooms comes in this price segment, the largest of any market. He also says many of the economy and midscale chains offer an “inconsistent product and service delivery,” giving Hilton the opportunity to build loyalty among younger travelers whose spending is limited right now, but could afford a more upscale location in the future.

Tru properties won’t have had a prior life as a hotel. They will be mostly new construction with the others being urban conversions of historic buildings — banks, office buildings.

Hilton is launching the chain at a large conference for hotel investors — The Americas Lodging and Investment Summit — with 102 locations already signed and an addition 30 deals in various stages of negotiations and approval.

While chain luxury and upscale hotels have the highest occupancy rates and average nightly room rates, their growth in the past year has trailed the lower end of the market. Midscale and economy hotel chains, however, have seen roughly 2 percent growth in occupancy and more than 6 percent growth in revenue per available room.

The hotels will be in a mix of markets including Atlanta, Dallas, Houston, Chicago, Denver, Portland, Oregon, Charlotte, North Carolina, San Antonio, Texas and Nashville, Tennessee.

Rooms will be different. Don’t expect a closet. Instead there will be an open space with hangers and hooks on the wall. And the traditional hotel desk is replaced with a chair that includes a spot for a tiny laptop or tablet.

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