Hilton launched its latest brand, Motto, with an “affordable urban lifestyle” tilt and a big play into the hostel space aimed, it seems, at grown-up travelers who seek efficiency and affordability without the cheeky but distracting bells and whistles of some of its competitors.
The differentiator for Motto, which the company described as a “micro-hotel with an urban vibe” during its debut Tuesday at Hilton HQ in McLean, Virginia, is a customizable, flexible room with functional furniture in a small – very small – footprint, and some of the standard components expected from a modern lifestyle brand: efficient, targeted F&B, a lively lobby with space to set up for social or work purposes.
As other brands have already staked their claims in the growing micro space – think Moxy or Public – another differentiator for Motto might be the lack of a targeted age group. The press release lacked the usual oblique references to “millennial-minded” or “tech-savvy” that frequently imply, well, youth. “There are one or two other companies that are trying to get into this space in a more significant way just like we are,” said Phil Cordell, Hilton’s global head of new brand development. “A couple of those companies I think are focusing or over-indexing maybe on millennials… We see (Motto) much broader than that.”
Mottos are in various stages of signing in locations including Lima, Peru; London; Dublin, Ireland; Savannah, Georgia; San Diego, Boston and Washington, D.C. The first hotel is slated to open in the U.S. next year, with possibly a second U.S. location and European site opening in 2020, said Cordell.
“Speaking from the perception of an owner’s representative and fiduciary, new brands represent equal parts opportunity and risk,” said Chad Crandell, CEO and managing director of asset manager CHMWarnick. “For our clients looking to invest and build, fulfilling an untapped need in the market, new brands can sometimes offer that opportunity, especially given recent trends in dual-brand developments. Particularly in the instance of a micro-hotel like Hilton’s new Motto, favorable development costs and density, compared to traditional full-serve hotels, coupled with an efficient labor model could be very attractive to investors.
“On the flip side, as brands expand, we know intuitively that the distribution pie shrinks within a given market, even when the products are quite different,” Crandell added. “Further, the rate of newer, select-service hotels, as Motto is described as the ‘most affordable lifestyle brand,’ can impact price perception of higher-end, full-service properties, so it’s certainly something to keep an eye on for existing hotels that continue to be challenged to achieve meaningful rate growth.”
Details
Target audience: “Connected and confident is the framework that we’re going to try to use, and we think that transcends beyond the age or demographic. It’s very much that business or leisure traveler who is confident and connected and looking for those prime locations,” Cordell said.
Room types: Room size will average 163 square feet. “You can get three Motto rooms in the same amount of space you get two midscale rooms like a Hampton Inn,” Cordell said. The “standard” has a king- or queen-sized bed. The “flex” room has a wall-bed system (he discourages Murphy-bed references) that can fold up and convert to a fold-down table that comes with four chairs, along with a sitting area. The Bunkie has a queen bed and a perpendicular bunk bed. At least 30% to 40% of the rooms will be accessible to each other by connected door, Cordell said. The company also adds some touches around sleep, with eye mask, white noise app, blackout shades and sound-absorbing materials in the room.
The building: The hotel will average from 175 to 250 rooms, and the company expects that most will be new-builds, with a minimum of conversions.
Costs/management: ADR will depend on the market, but Cordell said he sees it positioned slightly below a Hampton Inn. Because of the urban locations, development costs are targeted at about US$165,000 per key, he says. The first few hotels will be franchised. “We have several existing franchise partners with us who were savvy and experienced enough to grow into this space,” he said. “They’ll all be franchised but they’ll with partners who have a proven record to be able to successfully operate this kind of a unique hotel.”
“Hilton has had success with Tru signings, and smaller Motto rooms in higher-ADR markets might be a way to make the development costs pencil a bit better,” commented Michael Bellisario, analyst at Michael W. Baird.
F&B element: Motto Commons, at it’s being called, will have a “big lounge-y club room area” and what Cordell described as a small “Cheers”-type bar with simple cocktails, wine and beers. The first-floor lobby space will reflect the community, with F&B by well-known local operators and a “great price point.”
Guest payment: Multiple guests will be allowed to split the bill among themselves on booking.
Technology: The rooms will have Hilton’s Connected Room technology, allowing control of temperature, lighting, TV, window coverings and other features from the Hilton Honors app.
Making of a Motto
“A motto is kind of mantra of beliefs and shared values of people,” Cordell said. “We think Motto is that. It’s about like-minded travelers who’ve looked for value in local communities where they can have a great, simple, hosted experience.”
Hilton has been hinting about the brand for more than two years now. “A couple years ago we started to kind of be intrigued by this idea of hostels in Europe,” Cordell said. “At their core, they were about simple, basic accommodations that somehow managed to draw in community or create community… As we looked at hostels in general, though, they obviously seemed to exist in a very, very base level. And there really weren’t even a ton of hostels in the U.S.”
“I can see (Motto) fitting in well in major cities where low-cost and high-quality accommodations are in limited supply, and it will also appeal in major destinations such as in South America, India and Asia, which are underserve by this type of accommodation,” said Peter Bates, president of communications firm Strategic Vision. “It attracts a new market into the Hilton family, but it remains to be seen if it will encourage consumers to move up through the brands. I am not sure if the Hilton Honors members are the target market but it does engage a new client to Hilton Honors for the future. This should appeal to millennial client that so many brands are trying to engage.”
Because of the complexity of building in urban locations, Cordell said it may take three or four years to get the first 10 or so hotels up and running. “There’s never going to be a thousand of these hotels. But surely, certainly will there be 200 or 300 of these hotels globally over a 15-year time span? Absolutely.”
Cordell said Motto falls somewhere between a CitizenM and a Yotel, and while he is respectful of Moxy – launched at about the same time as Hilton’s flashier Tru brand – and Marriott as a competitor, he says Moxy has “strayed” beyond its original scope. “I think their development strategy is a little bit different. We will be only in urban cores.” And, he added, “I think Moxy is all about prototypical design and it’s a design aesthetic and experience that we feel skews more toward a younger, specific demographic.”
“We’re not going to be that,” he said. The goal: Appealing, but “not so edgy that you could feel like you’re not comfortable being there.”