Hilton: Disrupting the Midscale Segment in 'Tru' Fashion

By Talene Staab Vice President & Global Head, Tru By Hilton, Hilton | March 15, 2020

This article was co-authored by Mitch Patel, President & CEO, Vision Hospitality Group

The midscale hospitality space is an enticing one for hotel brands and developers. At the inception of the Tru brand, Hilton's internal research showed that approximately 40 percent of total U.S. hotel stays were in the midscale and economy segments. What's more, the midscale category was poised for disruption. The existing supply was 26 years old on average, resulting in an inconsistent guest experience that needed to be updated.

The opportunity was there to develop a brand to reach this wide audience. But in order to launch a new brand with all new build hotels in a competitive category where value is king, a different approach by the Hilton team was required.

The launch of Tru by Hilton is an example of how innovative ways of thinking driven by insights and collaboration can disrupt a category and drive unprecedented growth. The brand has established itself as the premier midscale brand with over 100 hotels open in less than two and a half years since the first property opened. Tru has a $109 ADR and a REVPAR index of 130 (over $77), the highest brand premium in the industry.

The Opportunity

Despite a number of brands in the midscale category, Hilton identified an unmet need in the marketplace for both consumers and owners. With consumers, Hilton uncovered a group of underserved travelers who didn't want to compromise quality or design for a value-oriented hotel experience. From an owner perspective, Hilton recognized the need for a brand that was compelling for everyone – those new to the industry, new to Hilton, or existing owners seeking further diversification in their portfolio.

Tru by Hilton McDonough in McDonough, Georgia

Built (On Insights) From the Ground Up

Hilton has pioneered the travel industry for more than 100 years. It has a track record of building and launching strong brands, and a history of innovation that continues with Tru. An overriding factor in Tru's dramatic success has been the company's laser-focus on gathering insights from Hilton owners and consumers to inform all aspects of the brand. Every brand decision was grounded in research and was part of a thoughtful strategy to provide a unique offering unlike anything in the segment that both owners and guests would find valuable.

The brand embarked on a completely distinctive approach to the planning phase by creating a Midscale Advisory group, an innovative focus group of long-time Hilton owners that offered valuable input and feedback into what the development community and travelers were looking for at the midscale price point. This group was imperative during the conception of Tru, offering actionable input and feedback on the building design and footprint, construction costs, public spaces, guest room sizes, amenities and more.

Vision Hospitality Group's president and CEO Mitch Patel was a key member, collaborator and subsequently an early adopter of Tru, opening the brand's second hotel, Tru by Hilton McDonough, as well as more recent properties in Atlanta and the brand's 100th property, Tru by Hilton Chattanooga Hamilton Place.

Tru also commissioned consumer research to capture an array of insights, including what the midscale traveler found most important, what they felt was missing in the marketplace and, conversely, what they felt was unnecessary. The brand found that guests didn't want to compromise between a consistent, fun experience and an affordable price, so all decisions needed to delicately balance those elements. Research showed that guests spend approximately 70 percent of their time outside their guest room, and Tru's target consumer valued extra public space rather than a larger room. So, the brand re-evaluated both areas.

The lobby lounge at Tru by Hilton Chattanooga Hamilton Place, in Chattanooga, Tennessee

The brand also learned that the midscale traveler, regardless of age or type of travel (business or leisure), placed a higher value on travel experiences than they did on any specific amenities, meaning cost savings could be realized by sticking to the basics and delivering them in a fresh, consistent way rather than investing in more extravagant amenities.

Simplicity, value and consistency without compromise became the marching orders for the brand. These insights helped inform and inspire the layout, look, feel, offerings and, in some ways, even the spirit of the Tru brand.

Turning Insights into a Brand

The insights that inspired Tru redefine what a midscale hotel offers. The 2,880 square-foot, brightly-colored public space is unlike any in the category. Inspired by the retail trend of offering a "third space" experience, Tru offers four distinct public areas for guests to work, play, eat or lounge where they can connect with others or spend time by themselves while still being near other people. There's a game area with pool tables, board games and a large-screen television, as well as an open lounge area with movable furniture and sound-insulated workspaces. Every lobby also features a locally inspired mural as well as a Tru-ly Local Wall that offers insider tips, local restaurants and other suggested activities. Walk into any Tru hotel and you are likely to see a hub of activity.

Smaller, more efficiently designed guest rooms feature mobile desks, comfortable beds, bright, spacious bathrooms with premium bath amenities, as well as top-rate in-room entertainment. The innovative design and efficient flow maximize every available space, resulting in a room that seems larger than its actual size.

Tru's food offerings are also a unique part of the brand's value proposition for guests. The 24/7 "Eat. & Sip." market features local gourmet snacks, drinks and free coffee. The complimentary build-your-own "Top It" hot breakfast bar includes both healthful and indulgent breakfast staples with more than 35 customizable toppings.

Tru's fitness centers are an upgrade from the standard midscale offering, incorporating emerging fitness trends including tablet-guided workouts, barre, TRX bands and flexibility gear to accompany the traditional free weight and cardio offerings. And knowing that the Tru guest doesn't want to compromise on technology, mobile check-in, Digital Key, remote printing and super-fast free Wi-Fi are all part of the guest experience.

To complement the brand's innovative features and amenities, Tru's hotel Team Members are integral to the brand's success. The brand's empowering approach leads to authentic, personal guest interactions and brings a heightened level of excitement and energy to their service. Tru team members' infectious positive attitude rubs off on guests and results in a better guest experience.

And as an added bonus, Tru guests can utilize the award-winning Hilton Honors program. The program's combination of features, upgrades and other perks is a valuable difference maker for Tru compared to its competitors.

The game area at Tru by Hilton Atlanta Kennesaw in Cobb County, Georgia

Owner-Driven Innovation

Tru's distinctive offerings, including a low cost of entry, flexible scalability, turnkey design and ease of operations are unapparelled in the midscale segment, resulting in several advantages for owners.

The brand requires only 1 ¼ to 1 ½ acres of land, compared to the 2 to 2 ½ acres needed for other midscale or upper midscale hotels. This economical use of space provides more flexibility for developers to efficiently enter virtually any market – urban, suburban, college towns, airport or interstate locations as well as near amusement parks and other attraction-based areas. Likewise, developers have the option to scale the prototype up to 130 rooms or down to 82 rooms without any significant adjustments needed to the front or back of house spaces.

To help make the brand turnkey for new and experienced developers alike, Tru has taken care of a lot of the design legwork in advance, using "plug and play" design packages that make it simple and straightforward for owners to implement.

The reduced footprint, scalability and smaller, more efficiently designed rooms help streamline construction costs. And, amidst the growing cost of labor across the hospitality industry, Tru was specifically designed to be easy to operate, lending itself to a lean, efficient staffing model. Every step of the process has been optimized to provide more convenience and less cost for owners while delivering quality and value for guests.

Sticking to What's Working – Focus, Feedback, and Collaboration

A crucial aspect of the brand's success has been remaining true to its principles – delivering on simplicity and value without compromising quality and design and leveraging feedback from its key stakeholders.

After launch, Tru heard from owners and guests that it had gotten nearly all aspects of the brand right. But, as with any new product, a few adjustments were needed to perfect the offering. Continuing to be guided by input from owners, guests and property Team Members, Tru quickly learned from its first hotels and introduced a prototype enhancement in May 2018. This update included elements like a mobile desk and new hot items for breakfast to enhance operational and development efficiency-all of which received positive feedback from guests, owners and operators alike.

The insight-driven approach has paid dividends for the brand. In addition to game-changing success in terms of initial growth, ADR and REVPAR, Tru's guest satisfaction scores are strong - and when guests return, they rate the hotel a full seven points higher on average than first-time visitors. These return metrics prove that guests know what to expect when they stay at Tru and believe the brand is hitting the mark.

Looking toward the future, the brand remains well positioned for growth, with 320 additional properties and nearly 31,500 rooms in the pipeline -- the largest midscale pipeline in the Americas, with over a third of the overall share. The success of the Tru brand as well as its continued dedication to owner and consumer insights makes it one of the most attractive business opportunities for owners and continues to raise the bar for the midscale segment.

Mr. Patel This article was co-authored by Mitch Patel. Mitch Patel founded Vision Hospitality Group, Inc. in 1997 with a mere $3,000 in his savings account and a big dream of creating a company dedicated to excellence with a focus on community and family. Under his leadership as President and CEO, Vision holds a growing portfolio of 37 open hotels across the country, the majority of which are Hilton brands, along with a pipeline of nine additional properties.An early adopter of Tru by Hilton and a collaborator in the brand's development, Mr. Patel is part of a focus group of long-time owners that have offered valuable input and been a critical part of Tru by Hilton's success from conception to today.  He opened Tru by Hilton McDonough, the brand's second hotel, and more recently, Tru by Hilton Atlanta NW Kennesaw, as well as the brand's 100th property, Tru by Hilton Chattanooga Hamilton Place.Mr. Patel has led Vision to be the recipient of many awards, as well as industry media recognition in the fields of development, community service, design, and achievement. Most recently, Vision received honors such as the Developer of the Year Award for the Hampton Brand by Hilton Worldwide, and the Multi-Brand Developer of the Year Award by Hilton Worldwide.Mr. Patel serves on several advisory councils, including the Hilton Worldwide Owner's Advisory Council. He also maintains his presence on boards of local organizations that support education and economic development in Vision's hometown of Chattanooga.Mr. Patel holds a Bachelor's degree and Master's degree in Civil Engineering from the University of Tennessee.  

Ms. Staab As Vice President & Global Head, Tru by Hilton, Talene Lanuza Staab serves as the chief strategist and champion for Tru by Hilton - the fastest hotel brand to launch in industry history. In her role, she is responsible for driving Tru by Hilton's product and service positioning, distribution strategies, and owner relations. Across her more than 25 years of experience with Hilton, Ms. Staab has developed a unique blend of hospitality experience spanning owner relations, sales, brand performance support and brand development. Ms. Staab holds a bachelor's degree in Hotel & Business Administration from the University of New Hampshire. Talene Staab can be contacted at +1 703-883-1000 or talene.staab@hilton.com Please visit http://www.hilton.com/en/tru/ for more information. Extended Biography

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Payment for the services provided to you in, at, through or in association with HotelExecutive may be made by automatic credit card, debit card, direct debit, bankwire or Paypal and other approved payment means offered in, at, through or in association with HotelExecutive, and you hereby authorize HotelExecutive and its agents to transact such payments on your behalf.

You hereby authorize HotelExecutive's Internet Payment Service Provider to charge your credit card to pay for your membership to HotelExecutive. You further authorize HotelExecutive's Internet Payment Service Provider to charge your credit card for any and all purchases of products, services in association with HotelExecutive. You agree to be personally liable for all charges incurred by you in association with your access or other use of any content provided by HotelExecutive or any third party in association with HotelExecutive. You acknowledge and agree that your liability for all such charges shall continue after termination of your access or any type of membership arrangement with HotelExecutive.

In the event that you have chosen to have your membership automatically rebilled, unless and until you notify HotelExecutive that you wish to cancel or terminate your membership to HotelExecutive, you hereby agree and authorize HotelExecutive's Internet Payment Service Provider to automatically renew your membership to HotelExecutive on a continuing basis and to charge your credit card (or other payment means you have selected) to pay for the ongoing cost of your membership. You hereby further authorize HotelExecutive's Internet Payment Service Provider to charge your credit card (or other approved payment means you have selected) for any and all purchases of products, services and entertainment provided to in, at, through or in association with HotelExecutive.

13. PRIVACY POLICY

The following is the Privacy Policy for HotelExecutive

We can be reached via telephone, email, or online at our contact page. When you visit our site we do not log any information regarding your domain or email address. Information Sharing: We do not share user information with any third parties other than via press release distribution as described below.

Hotel Newswire is a newswire service that distributes press releases on behalf of our users. If you decide to submit a press release for distribution through our system we will transmit your entire press release including any personal information therein contained to our media contacts and online distribution points including search engines. This is the only redistribution of your information that we engage in. Your submission of press releases through our system indicates consent with this policy. The information we collect during your registration process is used to notify users about updates to our service and inform users of any special events hosted by Hotel Newswire. This information is not shared with other organizations for commercial or non-commercial purposes.

Cookies: Our system requires the use of cookies to enable the user to log back into our website to access information from the newswire, without having to log in each time using the required username and password.

If you do not want to receive email from us in the future, please let us know by following instructions included in our communication with you. Users who supply us with telephone numbers online may receive telephone contact from us regarding their account, or informing them of new products and services available on the HotelExecutive website. If you do not wish to receive such telephone calls, please edit your account and remove your phone number from your account profile. This can be done from your user account menu.

Ad Servers: We do not partner with or have any relationship with any ad server companies. From time to time, we may use customer information for new uses not previously disclosed in our privacy notice. If our information practices change at any time, we will post the policy changes to our website to notify you of these changes and provide you with the ability to opt out of these new uses. If you are concerned about how your information is used, you should check back at our website periodically.

Upon request we provide site visitors with access to all information (including proprietary information) that we maintain about them. Users can access this information by logging in to their account.

Security: We always use industry-standard encryption technologies while transferring and receiving user data exchanged with our site. We have appropriate security measures in place in our physical facilities to protect against the loss, misuse, or alteration of information that we have collected from you on our site. We do not store credit card information in our systems.

If you feel that this site is not following its stated information policy, you may contact us.

Hotel Newswire Headlines Feed  

Zoe Connolly

The U.S. hotel industry has been blindsided by the COVID-19 Global Pandemic Black Swan Event. Instantly, hotel owners have found themselves with empty hotels, depleted cash reserves, and wondering how they will be able to make their monthly mortgage and utility payments along with payroll which were hardly ever considered to be a problem in the expansionary period leading up to COVID-19. Struggling hotel owners today have many financing strategic options available to them, but many do not even know that these options exist. Hotel industry financier Harry G. Spirides outlines some of these options for them in this article. READ MORE

Simon Hudson
Paolo Boni
Juan Carlos Flores
Marilyn Healey
Bonnie Knutson
Gary Cardono
Richard D. Hanks
Coming up in May 2020...

Eco-Friendly Practices: Creative Innovation

Being eco-friendly is no longer a fad. It is an urgent planetary need and hotels are actively doing their part to reduce their carbon footprint by implementing sustainable, green practices. In addition to the goodwill derived from doing the right thing, hotels are also realizing the benefits to their business. A large percentage of Millennials expect hotels to be eco-friendly and will only patronize those properties that are proudly conforming. Consequently, more hotels are realizing that sustainability is a key element in a successful branding strategy. In addition, going green can lead to a more profitable bottom line, as savings on electricity, water and cleaning materials can add up. Also, there are other advantages that come with being an eco-friendly business, such as government subsidies and tax and loan incentives. As a result, many hotels are finding innovative ways to integrate eco-friendly practices into their business. Geo-thermal energy systems, along with energy-from-waste systems, are being used to heat and cool the property. Passive solar panels, green roofs, natural lighting and natural ventilation strategies also assist in energy conservation. Low-flow water systems and plumbing fixtures make a contribution, as does eco-friendly hardwood flooring, and energy efficient televisions and appliances throughout the property. In addition, some hotels have implemented in-room recycling programs, and only provide all-natural, personal care items. One hotel has actually constructed a bee-keeping operation on their grounds. Not only is this good for the bees but the hotel also produces products from the operation which they sell. This kind of creative innovation also holds enormous appeal to guests. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.