Hilton Worldwide CEO Christopher Nassetta said during Wednesday's investors call that the global hospitality company will launch a new midscale brand in the first quarter of 2016.
The announcement appears to be related to a drop in demand for Hilton's Hampton Inn brand, which Nassetta said has experienced some growing pains after increasing its average daily rate (ADR) and becoming more of an upper-midscale brand.
Nassetta said that the new brand could become the next big brand for Hilton. It will launch in a similar way as Hampton Inn did, but will ultimately have a lower price point and potentially grow larger than the Hampton Inn portfolio with 1,000 properties or more.
The decision to make a concerted effort in building another midscale brand is a bit unconventional, compared to much of the hotel industry these days. Many hotel companies, Hilton included, are focusing on the building and further development of upscale and luxury brands.
Nassetta said during the call that while many hotel companies aren't focusing on the midscale segment today, he sees an opportunity there, noting that many midscale brands simply aren't doing it right.
Hilton's CEO said that the target market is "40 percent of U.S. room night demand," adding that Hilton owners have shown "tremendous interest" in the new brand.
According to Hilton's second-quarter earnings report, occupancy, ADR and revenue per available room all increased, year-on-year, by 1.3 percent, 3.4 percent and 5.2 percent, respectively.
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