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5 Luxury Takeaways From the Latest Hotel Earnings Season

Patrick Whyte, Skift
5 Luxury Takeaways From the Latest Hotel Earnings Season

The big hotel companies love brands. They love buying them, and they love creating them. It enables them to grow market share by cornering new parts of the market that their existing brands supposedly don’t cover, and the luxury segment remains an important battleground.

In their own way, each of the leading hotel companies that have a significant luxury presence have made big strategic changes over the past few years, making the sector more competitive than ever.

Marriott is Still Way Out In Front

Marriott’s megamerger with Starwood put it way out in front of the competition in terms of luxury hotels. The deal brought in the likes of St. Regis and the Luxury Collection to give the enlarged company a pretty forbidding high-end portfolio.

And three years later CEO Arne Sorenson believes the company is continuing to expand its lead in luxury lodging. He claims to have “nearly double the luxury portfolio of our next leading competitor.”

Marriott so far this year has added 15 luxury properties around the world and expects to open another 15 by the end of this year.

Hilton Wants Another Luxury Brand

Hilton CEO Chris Nassetta got a little bit of a grilling from one analyst over the company’s inadequate growth in the luxury market.

While it might be one of the biggest hotel companies out there, Hilton’s luxury offering lags behind its closest rivals. Although the choice to focus on other markets hasn’t necessarily hurt the likes of Wyndham and Choice Hotels, which have no real high-end offering to speak of.

Still, it’s clear that Nassetta believes luxury is important to Hilton.

“With forecasts to grow our luxury portfolio by over 15 percent this year, we’re on track to deliver more luxury properties in 2019 than any previous year in our 100-year history,” he said.

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Beyond that, Hilton hopes to add a fourth luxury brand to its roster, occupying the luxury lifestyle space, something that it has talked about for the “better part of a decade.”

“We will eventually want and be in that space, but we’ve been trying to focus on some of these other opportunities that we think — as we talk to our customers — will drive more engagement, more loyalty, and sort of help feed the network effect at a larger scale. But we will eventually get to that,” he said.

And even though Hilton is looking to add another luxury brand, Nassetta had no time for those criticizing its supposed lackluster approach.

“Since the day I walked in the door of this company 12 years ago, we have been focused on luxury,” he told one analyst.

Before adding: “What I would say objectively is we’ve made incredible progress. We went from basically nothing 10 or 12 years ago to having open or in the pipeline 110 incredible luxury hotels. I say, at this point, while we have a lot more we want to do, we have captured most of the most important urban and resort markets. We do have some gaps.”

IHG has Big Plans For Six Senses

The InterContinental brand always looked a little bit lonely, sitting alone as IHG’s sole luxury offering. Newish CEO Keith Barr has worked hard to change this, bringing in the likes of Regent and Six Senses in a relatively short period of time, taking the luxury offering to four, including Kimpton.

IHG estimates that the global luxury hospitality segment has the potential to grow by $35 billion, and it’s clear that Six Senses is a big part of its plans.

The brand currently has 18 properties but has the potential to grow to more than 60. Barr said there were 50 deals under “active discussion.”

“As one of the world’s leading operators of luxury hotels, resorts, and spas, there’s a real buzz around this fantastic addition to our brand portfolio,” he said.

Luxury is at the Heart of the new Accor

If IHG’s luxury transformation has been pretty impressive, Accor’s is even more remarkable. Just a few years ago it was firmly in midscale/economy territory with workhorse brands such as Ibis dominating.

Now the majority of the group’s fee revenue — 40 percent — came from the luxury (and premium) segment in the first half of its financial year. This compares with just 22 percent in the same period in 2016.

In its half-year report, Accor said the luxury and premium segment had grown three times faster than its overall network thanks to its strategy of targeting higher-value markets.

Hyatt Is making Big Strides in Loyalty

Hyatt might be the smallest of the five hotel companies included in this roundup, but it’s the most luxury-heavy.

The recent acquisition of Two Roads Hospitality has added several more high-end brands to its stable. This is good news for members of its World of Hyatt loyalty program, who now have more places stay. Luxury brand Alia is the latest to join

“One of the drivers of our performance is the delivery of revenue from the World of Hyatt loyalty program, which benefits all of our owners. The momentum of World of Hyatt is very strong in part due to the compelling partnerships we have initiated with Small Luxury Hotels, American Airlines, and Lindblad Expeditions,” CEO Mark Hoplamazian said.

A Note on Methodology and Definitions

In order to compare like-for-like, Skift used hotel data from each of the companies most recent set of earnings, which was correct up until June 30.

Accor’s luxury brands total includes all of SBE Entertainment Group, as it does not segment this out into the different brands. The total, however, does not include its minority stakes in Banyan Tree and Orient Express.

Below is a list of each of the luxury brands at each company. Note Skift has used each company’s own definition of what constitutes “luxury.”

Marriott luxury brands: Bulgari, Edition, JW Marriott, The Luxury Collection, Ritz-Carlton, St. Regis, W Hotels

Hilton luxury brands: Conrad, LXR, and Waldorf Astoria

IHG luxury brands: InterContinental, Kimpton, Regent, and Six Senses

Accor luxury brands: Fairmont, Raffles, Rixos, SBE, SO, and Sofitel

Hyatt luxury brands: Alila, Andaz, Grand Hyatt, Park Hyatt, and Miraval

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