Marriott vs. Hilton: What Their 2024 Hotel Pipelines Reveal

Marriott and Hilton joined all the major hotel groups this week in providing updates on their hotel development pipelines as they gathered at the Americas Lodging Investment Summit (ALIS) in Los Angeles.

Here are the biggest takeaways:

Marriott

• It has 573,000 rooms in development. If all of those are built, its worldwide room count will rise by 36%.

• Marriott has a barbell strategy that emphasizes development in luxury and midscale (while not neglecting other segments).

• It claimed to have the most luxury hotels, with 623 open — and another 245 on the way.

• This month, the group saw construction start on the first hotel for StudioRes, its new brand in the “affordable midscale” segment of extended stay brands. It said it had “approximately 300 other potential deals under discussion in 150 markets.”

• Marriott has signed deals to open Apartments by Marriott Bonvoy — a brand launched a year ago — in Detroit and St. Louis; Courmayeur, Valle D’aosta in Italy; and NEOM in Saudi Arabia.

Skift Take: Marriott previewed StudioRes last June and officially launched it in August. So it’s mildly disappointing that, in January, it’s only reporting “potential deals” rather than actual contracts.

Has Marriott set up this brand for success in wooing owners? Its sales team receives compensation for completing deals, and the incentives for selling this midscale brand are lower than for the fancier products.

That may lower the motivation to get StudioRes properties signed. However, Marriott’s recent move to lower the cost to owners of flagging with StudioRes may help generate seller interest.

On the luxury side, this week’s surprise was Marriott executives talking up the W brand of luxury hotels. Fashionable frequent travelers have liked to gripe that W has lost its mojo since Marriott acquired it in 2015. (When hotel impresario Barry Sternlicht’s team originally created the brand, they chose W as a brand partly to symbolize an upside down “M” – a signal that it would be the opposite of a Marriott in coolness.)

Marriott execs touted this week that they’ve devised a successful formula that works for guests and owners. Despite ordinarily being an asset-light company, Marriott bought the W Union Square in New York and has used it as a prototype for reinvention that it will formally unveil in June. Owners seem interested, given that W hotels have opened recently in Rome, Budapest, the Algarve in Portugal, and Chengdu in China.

As for Apartments by Marriott Bonvoy, it’s been a year since the brand launch, and it’s only opened one: Casa Costera, Isla Verde Beach, in San Juan, Puerto Rico. That feels like a slow pace of openings, deal talks, and contracts for a brand that involves conversion, rather than new construction.

The company touted that it has lots of “organic” growth, rather than growth through acquisitions. But roughly a third of its organic growth in the U.S. came through a licensing deal with MGM Resorts that is temporary and mainly just a loyalty program tie-up.

Marriott has a lot going for it on multiple fronts, but its hotel pipeline picture may be slightly underperforming what’s possible.

Hilton

• Hilton said the fourth quarter of 2023 was the strongest for signings in its history.

• The company’s pipeline is now the largest in its history, with 462,000 rooms in the works. If they’re all built (roughly half are “under construction“), the company’s room count will expand 39%.

• The company recently added two new brands: Spark by Hilton and LivSmart Studios by Hilton.

Skift Take: Of all the hotel brands that have recently launched, Spark had the most buzz at the ALIS event. Hilton executives said about 400 deal talks for Spark are underway — higher than all the other recent launches by other companies. Executives also said a majority would be re-brandings of hotels currently flagged with Wyndham, Choice, and BWH (Best Western).

Like Marriott, Hilton faces a challenge in getting its development teams to push brands that won’t be as personally lucrative to them in terms of sales incentives. The company has apparently found ways to get its business development teams to be enthusiastic about the Spark product.

However, the headline Spark numbers ought to be taken with a pinch of salt. Only about half of those deal talks will likely result in actual Spark openings, partly because some of the properties may not meet Hilton’s standards upon further vetting.

CORRECTION: This article originally said, “Hilton has been vague about how many of the potential Spark properties are new to the group.” But a spokesperson responded: “We’ve told the development community that approximately 95% of Spark deals are new to Hilton [meaning they’re coming from other brands or from independents].” That’s promising, as the alternative would be a kind of cannibalization, or swapping, of existing owners.

A long-term question is the company’s leadership.

Hilton’s CEO and president, Chris Nassetta, didn’t attend ALIS. Hilton was represented by Kevin Jacobs, chief financial officer and president of global development, and Chris Silcock, president of global brands and commercial services.

Nassetta has said he has no plans to leave the top job, but his reign is closer to its end than to its beginning. Jacobs is the analysts’ favorite to succeed Nassetta. But there appears to be jostling. Silcock recently took over management of global brands after Matt Schuyler, who had been leading global brands, is being separated from the company without explanation.

Hilton’s recent strong momentum is partly due to Nassetta’s ability to assemble a team of top talents and support their most promising initiatives.