The Skift Takeaway

THE ARGUMENT

For Alan Watts, Hilton’s luxury and lifestyle push (15+ hotel openings in APAC this year) requires the discipline to say ‘no.’ Potential owners may ask to build a hotel, but the market needs the proper demand to sustain room rates and justify building costs. Watts doesn’t want to green light a property that could become a distressed asset over time. Another concern is distribution: “Niche” demand justifies a luxury or lifestyle bet only when Hilton knows it can make that property visible to relevant travelers. “Hidden gems,” he said, don’t pay yields.

THE EVIDENCE

• Waldorf Astoria “is the brand people request the most, therefore it’s the brand that we say no to the most,” Watts said.
• Watts said that “hidden gems are not great for real estate owners,” adding that hotels should aim to be “front and center” on distribution channels instead.
• The hardest part is matching the right staffing with the right owner and asset by location. That includes hiring a GM who has the right persona for the brand, because staff will take cues from them.
• Watts called lifestyle “the most misused word in hospitality” and said it really means niche demand, which creates scarcity and pricing power.
• Hilton gets volume discounts through procurement as it buys for over 9,100 hotels worldwide, helping “underwrite some of the profitability side.”
• Watts noted that hotels in Asia Pacific need to boost staff productivity. He believes AI will help.