Hilton Has a Hit With Home2 Suites

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It's hard to believe, given the poor hotel development environment of the past few years, but Hilton may have a winner with its new-construction mid-scale extended stay brand, Home2 Suites. The first property, at 118 suites and slightly larger than most units will be, had its grand opening last week in Fayetteville, NC.

The product fills a gap the brand company felt it had below its very successful Homewood Suites upscale extended-stay flag. The idea seemed risky when Hilton unveiled the concept in early 2009 during the ALIS Conference. Yet while the industry was already feeling the effects of the historic downturn, developers, including many within the Hilton family, were clamoring for more product to build, particularly in the lucrative extended-stay tier. As we all know, the bottom completely fell out of the industry and more importantly, financing for nearly any new development dried up.

But Hilton persevered with the concept. LBA Properties developed the Fayetteville property with a guaranteed take-out at opening by Apple REIT. Other developers followed, and Home2 executives say six or seven more properties will open this year (a second one opened in Layton, UT a week after Fayetteville), and 77 deals are in the pipeline.

The product, which I saw last year in model-room stage in Hilton's Memphis offices as well as last week in the Fayetteville hotel, is light, airy and green. Overall, the atmosphere is bound to brighten the mood of any poor soul sentenced to stay in a hotel for 30 or 60 days or more. It has some unique touches not seen in other products, extended stay or otherwise. Spin2Cycle is one. It's a combination fitness center and guest laundry, a perfect marriage that promotes both multi-tasking and socialization. The large lobby, called the Oasis, is a living room-like lounge that's also conducive to socialization and doubles as the hotel's breakfast room. For a midscale property, the Home2 breakfast offering provides a lot of variety and a mix of healthy and decadent items. The main feature of the guest units is a working wall that extends the length of the suite and includes the kitchen appliances, a configurable work area, flat-screen TV, closet and lots of drawers and shelves for storage. My only problem with the guest suite: a clock radio I couldn't program for wake-up, even after 10 minutes of trying. Maybe it's my age.

The product will fit a lot of markets, but prime ones will be in secondary and tertiary cities with nearly recession-proof demand generators, e.g., military bases, universities, regional medical centers. Not coincidentally, Fayetteville is home to the massive Ft. Bragg and Pope Air Force base, while the Layton property isn't far from Hill AFB.

It seems as though Hilton built the right product for the right markets in the right time. One could say it was partially good luck, but that's not the case. If Home2 is a success, and I believe it will be, it's because Hilton did its homework and due diligence, listened to its owners and was willing to take a chance of a product that breaks ground in décor, layout, sustainability and guest comfort.

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