Hilton Worldwide is about to embark on an interesting African roll-out of its Hilton Garden Inn brand, with the letters ‘HGI’ set to feature in locations across the continent. The group’s Executive VP of Global Brands, Jim Holthouser, was recently in South Africa and took time out to further explain the thinking behind this roll-out.
Q: So, what is Hilton’s portfolio strategy?
A: Our central strategy is to develop a portfolio that will serve any customer’s needs wherever he or she may be going. When a portfolio is strong, broad and compelling enough, you want to consolidate all of your business into a single portfolio. The breadth of this portfolio, with 12 different brands across different price points, covering all types of travel occasions across 97 countries, gives customers a ton of options.
Q: Where did the idea for developing different brands start?
A: Some of the brands were a product of acquisition. Fifteen years ago Hilton Worldwide bought a company called Promus which had a number of hotel brands under its banner, and we picked up Hampton and Embassy Suites among others. Since then we’ve carefully added brands to the initial portfolio. Four of those brands are serving markets in Africa – Hilton, Hilton Garden Inn, Conrad and DoubleTree.
Q: What other brands would you consider bringing to Africa?
A: One brand we think would do well in Africa is Canopy, which operates at a Hilton price point but is situated in destination neighbourhoods. Cape Town has some lovely opportunities for this brand, as does Durban and downtown Johannesburg.
Q: How does Hilton ensure it places the right brand in the right location?
A: We start by assessing the quality of the demand. If the potential customer is not price sensitive and offering group business with a demand for upper-end food and beverage offerings, Hilton might be the right fit. In an airport location, with people popping in and out, looking for the basics, a Hilton Garden Inn might well be the answer. Everything depends on who the customers are and why they’re travelling.
Q: How does the economic climate in a particular market affect your decisions?
A: We’re building hotels for long-range operational periods – 20, 30, 40 years. We do take the current economic climate into account, but you have to be more visionary than that. Sure, today’s economy in South Africa is a little tight, but the occupancies of hotels like this (Hilton Sandton) tells us that there is still business to be had.
Q: What makes the HGI brand suitable for Africa?
A: Not only are there appropriate pockets in more advanced economies in South Africa, but HGI is perfect for more emerging markets where the price point for a fully-fledged Hilton may not be appropriate. It’s a good fit for the mid-priced traveller. Whether you stay at a Hilton or a Hilton Garden Inn, you always get a comfy bed in a great room. The facilities at a HGI are just on a different level. The restaurants are smaller and more focused. There will be meeting space, but nothing on par with a full-service Hilton. And an HGI can be built more cheaply than a full-service brand, because you don’t need as much space and the facilities aren’t as grand.
Q: Is it fair to say that Hilton is currently more focused on the HGI brand in Africa, than other brands?
A: We are focused on the potential of Africa and matching that potential with the right brands. In some cases it’s been a full-service Hilton. In a few cases it’s been DoubleTrees, and in a small handful of cases the Conrad brand has been the right fit. In some markets HGI was simply the best fit for the time and the demand.
Q: How has the Hilton strategy changed?
A: Our strategy used to be to have a full-service Hilton in the capital city of a country. At the time Hilton was a stand-alone one-brand company. It’s still a great strategy. We want to get into those centre city locations with the commercial and leisure demand, and we’d love to introduce our portfolio with a full-service hotel – our flagship brand. But in some emerging markets it’s not the right fit. HGI gives you a lot of the Hilton advantages at a lower price point and a lower cost of investment.
Q: Is the Chinese box-build specific to the HGI brand?
A: We are trying it out with the HGI roll-out. With border and import complications as well as the lengthy building time in much of Africa, opening a new hotel can take a long time. This solution allows us to control the project costs and timing. It’s a fantastic solution for the big roll-out of a brand.
