Hilton might become a leading hotel player in college towns and cities across the U.S.
The hotel giant is considering an acquisition of Graduate Hotels, a brand that’s heavily concentrated in the U.S. but also has properties in the U.K., Bloomberg first reported Monday afternoon. Graduate began as a boutique hotel brand focusing on U.S. college towns like Oxford, Mississippi (home of the University of Mississippi), Athens, Georgia (home of the University of Georgia), and Ann Arbor, Michigan (home of the University of Michigan).
The Bloomberg report noted a potential deal isn’t finalized. A Hilton spokesperson declined to comment on market rumors or speculation when contacted by TPG.
A potential brand takeover would be a strategic departure for Hilton, which has largely followed a path of organically launching and growing brands while its competitors like Marriott, Hyatt and IHG acquired brands to get into spaces they hadn’t previously occupied or geographic areas where they had a limited presence.
“The name of the game in the hotel business these days is definitely consolidation of brands,” said LW Hospitality Advisors CEO Daniel Lesser.
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The Graduate Hotels deal isn’t even the first rumored brand takeover for Hilton in recent months.
Investor and analyst chatter at last week’s Americas Lodging Investment Summit pointed to Hilton’s potential takeover of the trendy NoMad Hotels brand, which operates hotels in Las Vegas and London. That would add fuel to Hilton leadership’s hint that some sort of luxury lifestyle brand expansion was in the works at the company, but most assumed the company would launch its own brand in this space.
“There are pluses and minuses to everything,” Lesser said. “If you [develop and launch a brand] organically, it takes a lot of time. Time is money, as opposed to acquiring where it’s sort of instant gratification.”
Not to overly speculate, but Hilton pulling a one-two-punch acquisition of both brands would also give the company immediate exposure to the lifestyle hotel sector across a variety of markets and price points.
Graduate Hotels could deliver a lifestyle hotel offering in smaller markets that still want a cool hotel with local bars and restaurants. NoMad can be the head-to-head competitor of Marriott’s Edition in some of the world’s largest — and priciest — cities.
If Paris Hilton’s bedazzled, Hilton-branded clutch for the Grammy Awards last night is any clue, it’s clear Hilton is all about shiny things these days that garner maximum exposure.