In a recent earnings call, Hilton CEO Chris Nassetta announced an exclusive partnership between Hilton and Small Luxury Hotels of the World (SLH). Nassetta described the collaboration as “a perfect combination” and expects it to significantly expand Hilton’s luxury distribution. With over 500 hotels, the majority of which will be added to Hilton’s system, Nassetta believes that SLH’s unique and hard-to-duplicate locations will complement Hilton’s existing luxury brands: Waldorf Astoria, Conrad, and LXR.
Under the agreement, SLH member hotels that choose to join the program will become bookable across all of Hilton’s channels. Moreover, Hilton’s more than 180 million Hilton Honors loyalty program members will be able to earn and redeem points at these participating SLH properties. Nassetta announced that Hilton plans to start incorporating SLH hotels into their system starting this spring. He emphasized that participating properties will only be required to pay fees on business generated through Hilton’s channels, highlighting the compelling value proposition for the SLH system. Nassetta expressed confidence in the majority of the SLH system eventually opting into the partnership, expecting Hilton to drive a significant portion of system revenues for SLH.
Despite the partnership with SLH, Hilton remains committed to further luxury expansion. Nassetta revealed that the company is currently developing a luxury lifestyle concept, which they hope to introduce this year. He emphasized that this concept is distinct from their collaboration with SLH, highlighting Hilton’s ongoing efforts to explore new avenues within the luxury market.
Founded in 1989, SLH consists of 560 member hotels, characterized by their smaller size and averaging 50 guestrooms. SLH ensures the quality of its member properties through an annual inspection process, which includes a thorough checklist of over 750 criteria. Prior to partnering with Hilton, SLH had joined forces with Hyatt Hotels Corp. in 2018, enabling members of Hyatt’s loyalty program, World of Hyatt, to earn and redeem points at select SLH properties.
During the earnings call, Nassetta faced questions regarding Hilton’s rumored interest in acquiring Graduate Hotels, which focus on serving college towns. While Nassetta did not directly address the rumors, he acknowledged that an acquisition would be a different approach for Hilton. He stated that Hilton’s stance on mergers and acquisitions (M&A) has remained consistent over the years, with a “never say never” attitude. Nassetta highlighted Hilton’s stringent filtration system for potential acquisitions, emphasizing that nothing has passed through this filter in the past 16 to 17 years. However, he hinted at potentially favorable market conditions, such as interest rates and increased stress in the system, which may alter Hilton’s approach to M&A.
Hilton’s exclusive partnership with SLH represents an opportunity for both companies to expand their luxury offerings. With SLH’s unique locations and Hilton’s robust distribution channels, the collaboration is set to benefit both travelers and loyalty program members. While Hilton continues to explore new frontiers in luxury with their lifestyle concept, the partnership ensures a diversification of options for luxury-seeking guests. Moreover, Hilton’s potential interest in brand acquisition suggests a willingness to adapt to changing market conditions and expand their portfolio. The future looks promising for Hilton as they continue to innovate and grow within the luxury hospitality industry.
Leave a Reply