It’s a great time to operate a hotel in Canada and for Hilton Canada, Hotelier’s Company of the Year, which celebrated 100 years of operation this spring, the Canadian hotel-development landscape is still quite attractive, especially in Ontario, Quebec and B.C.
Today, Hilton oversees 17 distinctive brands across 114 countries and territories. It operates almost 5,900 properties with more than 939,000 rooms and continues to grow, with a new hotel opening somewhere in the world every day. In a Q2 2019 earnings call, Christopher J. Nassetta, president and CEO for Hilton, said of the more than 450 hotels Hilton opened in 2018, roughly 75 per cent have already reached a RevPAR index of 100 or greater, with those hotels achieving fair market share within just four months of opening, on average. For the full year, said Nassetta, the company is on track for record signings, construction starts and openings. Forecast signings of more than 110,000 rooms in 2019 would mark Hilton’s ninth-consecutive year of record signings and perpetuate continued growth in the company’s development pipeline, which currently totals approximately 373,000 rooms or more than 40 per cent of its existing base.
At the end of Q2, Hilton’s portfolio included 144 properties in Canada (up from 137 at the end of Q4 2018) with recorded gross sales of US$618 million, up 11 per cent year over year, with RevPAR up 1.4 per cent. Hilton has the largest hotel-construction pipeline in the country, with its nearly 70 hotels and 8,000 rooms accounting for 22 per cent of the total hotel pipeline in the market. And, says Andy Loges, area general manager for Hilton Canada East, Hilton was included on Great Place to Work’s 2019 list of the best workplaces in Canada with more than 1,000 employees for the first time last year. It was ranked the top hospitality com- pany in the country.
“It’s never been a more profitable time in our industry,” enthuses Alam Pirani, executive managing director, Colliers International Hotels. He credits growth in not only major markets, but some secondary and tertiary counterparts, to a strong economy that’s produced a scene that’s “never been more liquid with availability of financing and a lot of equity.” Hilton’s strong brands, he says, have been able to take advantage and owners have been able to grow their portfolios in turn.
Pirani singles out a range of Hilton brands as poised for particular growth, thanks to a fortuitous intersection of current demand and supply. Hampton Hotels — whose massive growth in the U.S. has spurred the same in Canada — is a well-distributed brand travellers in smaller markets are looking for, he says. “And it’s also very attractive from a developer’s perspective. You know exactly what you’re getting — the basics, the clean, standardized guestrooms that meet Hilton standards.”
Pirani also predicts expansion in the mid-market extended-stay space, where Hilton’s stylish Home2 Suites is in a position to capitalize. There are only a few markets where you can justify building an upper-tier extended-stay property such as the Homewood Suites, he says. “Having an additional mid-tier extended-stay product is a great opportunity.”
Finally, he anticipates Hilton’s lifestyle brands Tapestry and Canopy are bound for big growth in this country. “There’s a need for that type of product in markets with an appetite for hotels that are distinctive, but have the reassurance of the Hilton name behind them.”
In fact, Hilton made an announcement in late September about robust Canadian expansion plans for its Tapestry Collection by Hilton and Canopy by Hilton brands. In the next four years, it will open three Tapestry hotels — in Moncton, N.B., Mississauga, Ont. and Calgary. The first, Canvas Moncton, plans to be online before the end of the year. And Hilton will debut Canopy in Canada in 2022 with Canopy by Hilton Toronto-Yorkville.
Vito Curalli, executive director, International Sales and Industry Relations for Hilton Worldwide, says this continued growth “will benefit our customers across Canada who get the opportunity to experience more of our hotels and the different brands we have from coast to coast.”
With that growth, Curalli says Hilton is giving its customers more products in markets to which they’re travelling. “As Hilton continues to increase its brand offerings, they will fit a certain type of traveller and we’re starting to finally see that [growth] in Canada. In 2022, we’ll introduce the Canopy brand in Toronto and that will give them an option in the lifestyle-luxury segment that’s unique for us within Hilton in Canada. Right now, our customers don’t have an upscale-lifestyle brand in Canada. It’s important for us as a company because we’re not catering to that market yet, but are about to.”
He says the company looks forward to introducing other new brands in Canada to fit more of its customer profiles.
While the company has its sights set on expansion, sustainability, headlined by Hilton’s Travel-with-Purpose program, is central to all the company’s development. Since its inception in 2011, Travel with Purpose has overseen more than 1.3-million hours of its team members’ volunteer service and invested tens of millions of dollars in the communities its properties serve. The company has committed to double its investment in social impact and cut its environmental footprint (carbon emissions, water usage and waste to landfill) in half, all by 2030. To mark its 100th anniversary, Hilton launched The Hilton Effect Foundation, an initiative aimed at improving the world through investments in organizations and people affecting a positive impact on the communities Hilton serves. These include those focused on creating opportunities for youth, aiding in disaster recovery and supporting water stewardship and sustainability.
But, at the frontlines of everything are Hilton franchisees, a population, says Jeff Cury, senior director, Development, for Hilton Canada, whose needs dominate corporate decisions. As a matter of course, Hilton refreshes prototype drawings every five to seven years, often to produce cost savings for franchisees without moving any level of guest service. “We grow off our development community,” says Cury. “If we weren’t doing it right, they wouldn’t be coming back to us for more. That says everything.”
Indeed, agrees Steve Gupta, founder and chairman of Easton’s Group of Hotels Inc., which owns and manages seven Hilton properties, mostly in the Greater Toronto Area. “It’s like any marriage, any partnership, it’s a two-way street. If you’re good to them, they’re good to you.”
Bhulesh Lodhia, who owns seven Hilton properties in and around Toronto, agrees. He was on the owners’ advisory council for Hilton Garden Inn for four years and started a new tenure representing owners of Home2 Suites by Hilton in January. “The hospitality Hilton extends to ownership groups cannot be understated,” he says. “It’s tremendous. They treat us like partners and listen to us.”
Lodhia’s ownership portfolio includes three dual-brand arrangements — a Homewood and Hampton Inn in Markham, Ont.; a Hilton Garden Inn and Home2 Suites in Brampton, Ont.; and, by the end of next year, a Home2 Suites and Tru by Hilton, also in Markham — which are unique arrangements with unique requirements. One is the hotels’ ability to extend entry access to common spaces — such as pools, fitness centres and meeting rooms — to guests staying at different hotels. When Lodhia introduced this quandary at a recent owners’ conference, management listened and set about developing card-reading technology that would accommodate two different entry systems on a single door. “Times are changing, technology is changing and Hilton wants to hear from us, right where the action is,” says Lodhia. “That means everything.”
A company with 100 years of history, Hilton understands the importance of giving back. For example, every shift, when members of the housekeeping staff at a Hilton hotel clean a room, they gather up the used bars of soap to be repurposed for a grander application — a new life helping less fortunate people. “That’s a slam dunk, an amazing way to show Hilton cares,” says Lodhia. He calls this corporate partnership with Clean the World — a social organization that distributes soap that’s been crushed, sanitized and cut into new bars to communities in need — a precise explanation for his loyalty to, and respect for, the hotel company to which he’s hitched his professional fortunes. Hilton’s soap-recycling program, which has helped distribute more than 7.6-million bars of recycled soap over the past decade, keeping two-million lbs. of soap and bottles out of landfills, “has saved lives,” says Lodhia. “We’re very proud to be associated with that.”
Thriving though it might be, Hilton’s not exempt from challenges. Prominent among them is labour, which is currently straining not just operations but, says Cury, the development side — especially in Quebec, where the cost of construction is also a trial. Hilton has responded by stepping up its interactions with universities and colleges, so recruitment can happen at source. It’s also focused on training and retraining through its “Hilton University,” on-line library and extensive offering of e-learning opportunities.
“We want to work with the talent we have in a property but also throughout the whole operation,” Loges says. This summer, the company unveiled the third iteration of its popular retention program, Thrive Sabbatical: Give a Dream, Live a Dream. Here, team members get four weeks of paid sabbatical time and $5,000 to pursue a passion. One recent recipient, an administrative assistant at Conrad Dubai, returned to her home country to learn American Sign Language at the Philippine School for the Deaf so she could communicate with her 15-year-old son for the first time.
Such inventive triumphs are par for the course at Hilton, says Loges, where “innovation is part of the company’s DNA.” He cites an impressive list of Hilton firsts as proof, including standardizing the concept of room service in hotels (in the 1930s); installing televisions in guestrooms (at the Roosevelt Hilton in New York, in 1947); opening airport hotels (San Francisco Airport Hilton, in 1959, was the first); and developing the first computerized central-reservation system (in 1973). Most recently, a partnership between the company’s 94-million-member loyalty program, Hilton Honors, and Lyft and Amazon lets guests redeem points for rides and purchases. Hilton’s Connected-Room technology transforms guests’ phones into room keys, temperature and light regulators and TV remote controls (including, soon, access to Netflix). While Hilton isn’t currently deploying Connected Room in Canada, about 100 Canadian hotels use Digital Key — technology that lets guests open any door they’d normally access with a key card, including rooms, elevators, side doors, the fitness centre and even the parking garage.
Guest-centred novelty is also at play in hotels’ public spaces, says Loges, with Hilton transforming “mute boardrooms” into colourful spaces with abundant opportunity for relaxation and superior IT. “We’re trying to create experiences where meeting spaces are,” he explains.
But alongside the flurry of innovation at Hilton, you’ll always find a commitment to the tried and true. A late-summer owners’ conference in Orlando lit up when Nassetta reminded owners that remaining laser-focused on objectives is key. “That simple message resonated with me,” says Cury. “The idea of keeping our heads down and doing what we do best.”
Written by Laura Pratt