Exclusive: Hilton’s development strategy drives growth in Asia Pacific
The APAC hotel development landscape has seen significant growth over the past year, reflecting the region’s dynamic and resilient tourism and hospitality market.
Hotel investment volumes in the region this year are projected to reach US$10.4 billion, up from US$9.8 billion in 2023, with the first quarter of 2024 seeing hotel construction pipeline at an all-time high and record-high levels seen in the luxury, upper upscale, and upscale segments. Additionally, while management agreements remain the dominant model in Asia Pacific, the appetite for franchising is on the rise, particularly in South East Asia, and the benefits are becoming increasingly attractive to owners in the region.
Hilton has an ambitious strategy to capture these critical opportunities. We are accelerating our growth as the fastest growing hospitality company in Asia Pacific, with almost one in four hotel rooms under construction bearing a Hilton flag. Having now surpassed 800 trading hotels, we will open a new hotel every two days this year, putting us well on course to exceed 1,000 properties in APAC by 2025.
South East Asia continues to present a positive outlook for the industry. The strong demand for travel has prompted significant interest in hospitality real estate, with four of the top five APAC cities with the largest hotel development pipelines located in South East Asia.
Currently, we have 58 hotels trading and 47 in the pipeline. Our plan is to double our presence in this region in the coming years, and the signings of 11 new properties across Thailand, Indonesia, and Vietnam, which includes the debut of Tapestry Collection by Hilton in South East Asia, provide a significant boost to this goal. We tap into the region’s continued upward trajectory and bullish investment sentiments, ensuring that we deploy the right brand in the right location to generate best in class owner returns.
Part of this wave of signings are several Hilton Garden Inn properties that underscore our strategy to expand our focused service footprint in South East Asia. We are upbeat about the opportunities in this segment, and we are focused on growing our Hilton Garden Inn brandat scale to cater to the region’s booming middle-class demand. This will provide a great boost to our growth platform, and we are confident that it will be a substantial accelerator of our presence across South East Asia and the broader APAC region.
Luxury continues to be a priority for Hilton, and South East Asia offers immense opportunities. The signing of Conrad Jakarta builds on our broadening collection of luxury brands and properties in the region – from the recent openings of Umana Bali, LXR Hotels and Resorts, Conrad Singapore Orchard, to the upcoming openings of Waldorf Astoria Jakarta, Waldorf Astoria Kuala Lumpur, and Waldorf Astoria Hanoi in the coming years. Today, Asia Pacific accounts for 40% of Hilton’s luxury portfolio and half of our global luxury pipeline. With 34 luxury properties and another 34 in the pipeline (seven in South East Asia), our luxury brand presence is set to double over the coming years.
We are also building our growth momentum across multiple brands and emerging destinations, including new market entries into Laos and Timor-Leste later this year.
Another market showing great promise in the region is India, which currently leads the Asia Pacific region (excl. China) in hotel development projects. With its hospitality market projected to reach US31.01 billion by 2029, Hilton envisions playing a pivotal role in this growth by strategically positioning itself as a key player in the market and bringing its international best practice to the fore.
2024 is poised to be a significant year for Hilton’s expansion in India as we continue to power our growth narrative with brand launches, new market entries and marquee openings in key gateway cities. Our ambitious long-term strategy involves exploring numerous opportunities in India’s diverse landscape to cater to different customer segments – from upscale luxury to mid-segment and focused service. With five brands currently operating across India, we are focused on building and diversifying our brand portfolio further to leverage the evolving business and leisure consumer market. We are on track to triple our trading estate to 75 hotels in the coming years.
Franchising has been a significant part of Hilton’s growth globally, with more than 90% of Hilton’s portfolio in the Americas being franchised. This is a platform that we seek to expand in Asia Pacific to provide more opportunities for owners in the region to be part of Hilton’s story, and for more guests to gain greater access to the Hilton experience.
We know owners that prefer to operate hotels independently are keen to leverage Hilton’s iconic brands, powerful commercial engine, robust supply chain, and extensive support network. Our award-winning Hilton Garden Inn brand, in particular, offers an efficient kit-of-parts prototype and greater flexibility, making it an ideal fit for franchising among local owners seeking agility in the Asia Pacific hospitality market.
We launched our Hilton Garden Inn franchise model in Greater China in 2021, and are now focused on expanding it in Thailand and Australia. The brand continues to be primed for expansion, focusing on regionalisation to cater to diverse guest needs and highlighting tremendous growth opportunities across the region.
Following the success of franchising Hilton Garden Inn, we recently expanded our franchise model in Greater China into the upscale full-service segment with DoubleTree by Hilton. This widens the spectrum of opportunities for developers and owners to drive further growth in more brand segments.
With franchising, we continue to affirm our value to our owners who can trust in the power of our brands, our sound strategy, and our ability to deliver exceptional returns.
We have been unlocking the potential of strategic partnerships and acquisitions. Our partnership with Small Luxury Hotels of the World will add hundreds of luxury hotels to our portfolio over the next couple of years. This will complement the world-class luxury experiences offered at our Waldorf Astoria, LXR and Conrad hotels. The acquisition of the NoMad brand accelerates our expansion in the luxury and lifestyle segments, and reflects our focus on expanding our offerings for guests in the fastest-growing markets and segments. These partnerships allow us to expand our reach to new target audiences, fill gaps in our portfolio, and stay ahead of industry trends.