Hilton just debuted its newest brand — the budget-friendly Spark

It's a new year and time for a new brand at one of the world's largest hotel companies.

Hilton Wednesday morning launched Spark, its 19th brand and one targeting a more affordable spot in the hotel food chain.

Spark, which Hilton calls a premium economy offering, is geared toward simple, reliable and clean stays and will grow entirely through renovating existing hotels and converting them to the new brand.

There are currently more than 100 deals for Spark hotels in various stages of development across the U.S. The first properties are expected to open later this year.

"We looked out over a market and saw an opportunity and put the two together and developed this brand over the past year," Matt Schuyler, Hilton's chief brand officer, said in an interview with TPG ahead of the launch. "The impetus was the notion that the consumer is evolving post-pandemic. People are looking for bargains. They're traveling in record numbers, but they want to do so on a budget."

Rates at a Spark hotel will typically run between $85 and $105 a night, Schuyler added. Ideal candidates for a conversion to Spark branding will likely be roadside hotels, or those off interstate highways found amid a cluster of restaurants and gas stations.

Other potential locations include "an urban location where maybe Main Street has moved a little bit and left some infrastructure behind," Schuyler said.

He emphasized Hilton will be very discerning about what makes the cut, and it's likely Hilton will probably reject more potential conversion candidates than it approves.

Part of the opportunity the Hilton team found in pursuing a brand like Spark is that there is so much volatility regarding customer experience when it comes to economy hotels. An economy brand usually offers minimal services and not much in the way of public areas, and the properties aren't always well maintained.

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Having a major company like Hilton attached — and the rigorous brand standards typically applied to a property operating under one of its brands — can bring standardization to this space, the thinking goes.

Spark guest rooms will feature clean design schemes with an open closet, in-room refrigerator, bright bathrooms and a workstation with a swivel surface that can double as a dining table.

The hotels will offer a simple free breakfast with coffee, juice and a bagel bar. There will also be a 24-hour market for grab-and-go food options.

The hotels will offer other Hilton brand features like mobile check-in and digital keys. Daily housekeeping is available for guests who opt in, and you'll be able to earn and redeem Hilton Honors points for stays at Spark.

It usually takes three to six months to renovate a hotel to Spark specifications, Schuyler said. It's also a brand that could quickly become one of the largest in the more than 7,000-hotel Hilton network.

"We'll be able to convert very quickly, and the market opportunity is certainly well into the hundreds, probably into the thousands over time," Schuyler added. "We expect hundreds of hotels cycling into this brand over the next 10 years."

No sibling rivalry between Tru and Spark

There has been a swell in critique and concern about brand bloat amid all the additions to the hotel orbit in recent years. Does anyone really know the difference between an Aloft and a Moxy? What about Hyatt Place and Hyatt House?

The frequent use of "simplicity" in the branding lingo for Spark might have some scratching their head, as Hilton's existing Tru brand — per company language — "embraces vibrant simplicity and is fun and engaging." What's the simple difference?

While developers will renovate an existing hotel to become a Spark, Tru hotels are built from the ground up and include beefed-up amenities compared to its sibling.

Additionally, Tru hotels offer more in the way of breakfast service and activities in the lobby, as well as jazzed-up bedrooms and bathrooms — thus, you can expect to pay a little more for a Tru room.

Spark hotels will also have more of a standardized build-out, while Tru properties have a few nods to their surrounding location, like a mural of the community in which the hotel is located.

Why affordable hotels suddenly have va-va-voom factor

The Spark announcement comes a couple of months after Marriott announced it was acquiring the Mexico-based "affordable midscale" City Express brand.

Take the two announcements together, and it's a bit of a departure from broader big-brand logic over the last year that they were more immune to price sensitivity stemming from inflation because they weren't that exposed to low-cost travelers.

You can usually find an affordable room at a hotel tied to major conglomerates like Marriott, Hilton, Hyatt and IHG. However, it isn't so common for any of these companies to offer anything in the actual no-frills economy segment of the market.

Residence Inn and Hyatt Place are considered upscale by hotel data firm STR. Holiday Inn Express is considered an upper-midscale brand. Hilton's Tru is considered midscale.

So why rock the boat and get into more affordable options? Hotel companies posted massive profits last year amid the pandemic recovery, and it wasn't like occupancy rates drastically dropped amid rates soaring higher and higher.

"All that discretionary money that was funding the revenge travel in the early surges post-pandemic? It's now coming back down to earth a little bit, so people are looking for more bargains," Schuyler said. "I'd say they still want the experience, and they're willing to spend. But, if they had an alternative that was quality [and] at a more affordable price, they would defer to that versus the rate surges we're seeing in the midscale and above chain scale types of products."