Hilton Garden Inn To Expand Into Germany

BEVERLY HILLS, CA— Four months after completing its $5.71 billion acquisition of Hilton International, Hilton Hotels Corp. in June announced the first deal to expand its select-service Hilton Garden Inn brand internationally. It’s been awarded a long-term management contract to operate a 314-room HGI on a site outside Frankfurt International Airport in Frankfurt, Germany. The new construction hotel, which is scheduled to open in mid-2009, will incorporate all the brand standards that have come to define HGI in the U.S., Canada, and Mexico. But the significance of the deal for Hilton goes way beyond simply signing another HGI management contract. Both for Hilton and other U.S.-based hotel companies, the deal is the latest evidence that the lodging industry has become increasingly global and that brands at all price points have the potential of becoming powerful global brands. As it happens, the fact that Hilton Hotels Corp. was prevented from expanding HGI, along with Embassy Suites, Doubletree, Hampton, and other of its brands, outside North America was one of the key motivators driving the U.K.-based Hilton International acquisition in the first place. “We knew we had successful brands and have been frustrated in not being able to take them to other parts of the world,” said HHC president/ COO Matthew Hart. “Hilton International was a solid business, but this was an added opportunity.” With the acquisition, the two parts of the Hilton enterprise have been reunited for the first time in 40 years. While exploratory discussions have been going on concerning Embassy Suites and other Hilton brands, the only development deals that have been announced so far concern HGI. Industry-wide, a forerunner in taking a popular U.S.-bred brand international has been the positive experience Marriott International has had with Courtyard, which coincidentally also operates in the select-service tier. Of the 672 Courtyards that were open at year-end 2005, 10% or roughly 70 are located in international markets. Hilton is counting on HGI’s popularity being two-fold. “We have more than 275 hotels open already, mostly in the U.S., so we have a large number of satisfied repeat guests who tell us they’d like to stay at a Garden Inn when they travel internationally,” said HGI senior vp for brand management Adrian Kurre. “Up to now, we’ve been losing those bookings because we haven’t had hotels in those markets.” In addition, the HGI model should find favor with international travelers who have had no prior experience of the brand. “Our services and amenities are geared to keeping travelers productive while they’re on the road, things like free wired and wireless high-speed Internet access, a 24-hour-a-day complimentary business center, and on-site guest laundry facilities. When you think about it, that model should work for any travelers, whether they’re European, Asian, or whatever,” Kurre said. Another benefit for members of Hilton’s frequent guest program, called Hilton HHonors, is that they’ll now be able to earn points for these HGI stays. Other brand standards to be built into the Frankfurt property include the Pantry Pavilion grab-and-go food and beverage outlet, a full-service restaurant, and limited room service. The HGI in Frankfurt is actually going to be part of a two-hotel complex that in turn is part of a larger mixed-use development. Next to the HGI will rise a 247-room full-service Hilton, also scheduled to open in mid-2009. The two hotels will have totally separate facilities with the exception of a fitness facility and swimming pool, which they will share. As with any multi-brand complex, whether in the U.S. or an international market, travelers will tend to book the brand that best serves the needs— including the budget— of the particular trip they’re on. The owner of both hotels is Airrail Consortia. At the airport, the two hotels will be located next to a high-speed train terminal that abuts the main airport terminal, noted Ian Carter, CEO of what is now HHC’s Hilton International subsidiary. “It’s a high-visibility location at the airport, which is the second largest in Europe and the eighth largest in the world,” Carter said. “Both hotels will also draw business from other components of the Airrail Consortia development, which include offices as well as conference and business centers.” Hilton International already operated a full-service hotel in downtown Frankfurt as well as 10 other hotels in Germany, so the Hilton name is already established in that market.