Hilton plans to add a lot of new hotels and loyalty members in 2024 (oh, and yet another new brand)
If you listen to economists, you might expect the hotel development cycle to start slowing down in light of high interest rates making it unfeasible to build new projects.
Hilton apparently didn’t get the memo.
The hotel giant had plenty of financial bragging rights Wednesday on its third-quarter earnings call, including a $379 million profit. But perhaps the most surprising boastful arc entailed future growth: Hilton’s development pipeline, at 457,000 hotel rooms, is the highest it has ever been.
More than half of that is already under construction, and the company expects to see net room growth increase next year. Hilton anticipates it will grow its portfolio by about 5% this year before rising to between 5.5% and 6% in 2024 — not exactly a signal high interest rates are deterring owners from embarking on a new hotel project.
“We wouldn’t say it if we didn’t believe it,” Hilton CEO Christopher Nassetta said on an investor call Wednesday morning in response to a query about the growth forecast appearing at odds with current construction and financing conditions in the U.S. “It's possible next year a few things go our way.”
While boosting real estate growth targets might seem like a head-scratcher at a time when construction costs are so high, it’s not entirely out of left field.
Hilton’s new Spark brand, which officially opened its first hotel earlier this month, is expected to quickly bring in a slew of new hotels for the company thanks to it being a conversion brand — owners of existing hotels can renovate, rather than build from the ground up, into Spark affiliation within nine to 12 months.
The company also has a new extended-stay concept, dubbed Project H3, in the works. Home2 Suites, the company’s all-suite extended-stay brand, is the hotel brand with the largest U.S. development pipeline, according to Lodging Econometrics.
Long story short: Travelers are likely to have many additional Hilton options when booking a stay in the coming years.
“When I look at all of the data in a granular way, I think there's probably more upside potential than downside risk at this point,” Nassetta added.
More Hilton Honors members
The development uptick wasn’t the only growth signal touted by Hilton executives Wednesday. Nassetta also noted the Hilton Honors program is on track to hit 200 million members sometime next year.
By comparison, the Marriott Bonvoy program had 186 million members at the end of September. Bonvoy is also seeing rapid growth, so don’t necessarily take this as a sign Hilton Honors is going to leapfrog over Bonvoy — but it will be worth observing Bonvoy’s growth rate when Marriott reports earnings next week.
Hilton Honors, which currently has more than 173 million members, is 19% larger than it was a year ago, Nassetta said. That’s a big deal, as Hilton Honors members account for 64% of the occupancy at Hilton hotels around the world.
Another new brand is coming
Nassetta also reiterated the company’s plan to launch a luxury lifestyle brand next year. This would mean a Hilton brand that could go head-to-head with Marriott’s Edition brand.
Why does Hilton need another brand? It appears company leaders saw they were losing business to competitors by not having an offering in this space.
“Not only do we want our customers to have more opportunities at the high end, but we're just giving away, if I'm being honest, we're just giving away development opportunities,” Nassetta said. “We have owners that are super loyal to us, and many of them want to build a luxury lifestyle hotel, and we don't really have a product for them.”
But don’t expect this unnamed brand in the works to flood the world with thousands, or even hundreds, of new hotels. Edition launched in 2008, and there are still less than 20. Hilton’s growth trajectory in this sector is likely to look very similar.
“Look at people that have been at it for a long time,” Nassetta said. “You will be fortunate to have dozens of them.”
Related reading:
- The award travelers guide to Hilton Honors
- How to choose the best Hilton credit card for you
- What is Hilton Honors elite status worth?
- The best credit cards to reach elite status
- Which credit cards offer the most lucrative rewards for hotel stays?
- The best hotel rewards programs in the world
- Best hotel credit cards
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- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
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Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
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You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.