McLEAN, Virginia—Hilton Worldwide is continuing to develop its portfolio of luxury properties.
The McLean, Virginia-based company’s luxury footprint, which includes 22 Waldorf Astorias and 17 Conrad Hotels & Resorts, is continuing to expand throughout North America with the help of Matthew Sparks, who joins Hilton as senior VP of luxury and corporate development.
The new senior VP’s strategy relies upon streamlining Hilton’s efforts in the luxury segment both domestically and globally. Sparks, who previously was senior VP of acquisitions at Sage Hospitality Resources, plans to work with assets available to him instead of new construction to spread the Hilton brand from Chicago to Jerusalem.
A global brand strategy
Hilton previously was a bifurcated company comprising two independent and separate companies: Hilton International, which operated international hotels under the same name; and Hilton Hotels Corporation, which initially focused on the American hotel industry. Prohibited from using the Hilton name in international development, Hilton Hotels Corporation, instead, created the Conrad brand for its overseas luxury ventures.
Merging the companies in 2005 meant executives at Hilton Worldwide were tasked with integrating its two luxury segments, Waldorf Astoria and Conrad, without having one brand dominating the other.
“We have a really impressive story,” Sparks said of the Hilton brand. “Hilton Worldwide is a strong and large company, deep and rich in talent and already successful in the luxury segment globally.”
Differentiating two well known brands in the industry, however, is no easy task, but Sparks’ career in hospitality real estate means he understands “the business, the product, the real estate,” as he hopes to “augment a fantastic team in operations, development and the brand.”
“I’m really just another tool in the toolbox,” he added.
With a team already in place, Sparks’ plan for Hilton’s luxury segment revolves around maintaining Hilton’s brand reputation as a stellar asset in key North American and global markets.
North American development
With new construction limited to specific markets and situations, Sparks’ strategy for Hilton is to seek out existing hotel properties (especially in the United States), acquire the assets and convert them into either a Waldorf Astoria or Conrad. “That’s where the capital markets are going with in regards to hotels right now,” he said. “There’s growth for us through acquisitions and conversions.”
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Sparks said he’s looking at establishing the Waldorf and Conrad brands in key markets including Boston, San Francisco, Washington, D.C. and Los Angeles, where Hilton’s luxury brands have a limited presence.
The company has 14 Conrad hotels in the pipeline and seven Waldorf Astorias.
“We’re not in places we need to be,” he explained. “These are all markets where there’s a need for a luxury product, and we have a great deal of interest in existing real estate.”
This mentality comes from the successful acquisition of The Elysian Hotel Chicago in November. The Elsyian will be rebranded as a Waldorf Astoria Hotels & Resorts property by 1 February 2012.
“This is a very unique and fantastic hotel in Chicago. This hotel was not broken. It’s a fantastic facility; it was sought after when it came to market by international operators,” Sparks said. Yet, Hilton was selected to take over the property. Sparks and his team plans to take the property, where guest service already is a high priority, and use Hilton’s global distribution system to bring additional revenue to the hotel.
“We’re not fixing something that’s broken, we’re taking advantage of a well thought and managed hotel and taking it to the next level,” he said.
Looking ahead
Both Waldorf Astoria and Conrad bring a unique perspective to domestic and international markets. Waldorf has a name that resonates globally—one that epitomizes luxury—whereas Conrad skews younger with a more contemporary aesthetic.
“There’s been significant growth in our hotel program, especially new construction in Asia/Pacific and the Middle East, augmented some by Latin America,” Sparks said. “With us, and most of our competitors, that’s where there’s been a huge amount of growth in the last few years.”
This especially is true with the Conrad brand, which is more widely known in the Asia/Pacific region. However, its introduction to the United States with the Conrad Indianapolis in 2006 created a strong foundation and cultivated support for the brand to grow throughout the U.S.
For Sparks and his team, Conrad’s U.S. staying power depends upon the opening of the 463-room Conrad New York in 2012. Located in Manhattan’s financial district, adjacent to the headquarters of Goldman Sachs, which also owns the asset, Conrad New York will be the brand’s fifth property, including hotels in Miami, Chicago, Indianapolis and San Juan, Puerto Rico, to open in the U.S. or its territories.
With the development of the Conrad New York in the same city that is famously known for the Waldorf Astoria, Sparks’ plan also involves using the familiarity of the Waldorf name to help expand the brand, noting that because of Waldorf’s name recognition it hasn’t been difficult for the brand to grow internationally.