Not-So-Grand Hotel:
Lodging on the Cheap
SUNDAY, OCTOBER 22, 2023 -- My lousy metaphor is that airlines drive the bus on travel. In other words, we lavish a disproportionate amount of attention to how the airlines affect our lives on the road and not enough attention to where we put our heads on beds.

So consider this my good-faith effort to catch up with developments in the lodging sphere. Fun game: Count how many times "cheap" pops up among these 1,100 words.

Hilton already had 18 brands--You ever stay at a Motto, a Signia or a Tempo? Yeah, me neither!--but too much is never, ever enough in the modern hotel landscape. So along comes Spark by Hilton and it's not hyperbole to say Hilton's 19th brand is literally scraping the bottom of the lodging barrel.

Spark is what the hotel industry calls a "conversion brand." In other words, the idea is to convince hotel owners to convert to Hilton by offering something better than the owner has with their existing chain.

What's Hilton offering to lure owners to the new Spark brand? The Hilton name. Cheap.

Hilton's Spark pitch is aimed directly at owners of rundown roadside hotels: Throw a couple hundred grand at low-end new furniture, make minimal property upgrades, slap on a purplish exterior paint job and you can call yourself a Hilton, get the global reservations network and appeal to rubes seduced by Hilton Honors points. Case in point: The first Spark, which opened this month, is a converted Days Inn just off Interstate 95 in Connecticut.

Hilton calls Spark a "premium economy hotel brand at the intersection of value and consistency." Whatever that means. To be honest, the Spark promo reel looks like it's at the intersection of cheap IKEA knockoff and generic office cafeteria.

But don't take my word for it. When it operated as a Days Inn, the 120-room property got a less-than respectable 3.4 rating from Google reviewers. The first 11 Google reviews of the new Spark by Hilton? They average 3.3. "I killed 20 stink bugs climbing into my room through the window which would not close completely," one review said. "This place is terrible. Spark makes Hampton Inn [another Hilton brand] look like a 5-star resort. I DO NOT recommend."

Out of those dark and depressing pandemic days came one lodging winner: extended-stay properties. These apartment-like hotels racked up great occupancy numbers and better-than-average nightly rates because guests--business travelers and families alike--appreciated the spacious accommodations, the kitchens and amenities like free breakfasts and on-premises laundries.

So acting as if they shared a single brain cell among them, major hotel chains had an idea: Let's open a lot more extended-stay hotels, but let's make them less costly to build on a smaller real estate footprint, with less elaborate furnishings, smaller guest accommodations and fewer perks. In other words, let's create new extended-stay brands that are cheaper than the ones we have now and will appeal to penny-pinching hotel developers looking to cash in on a lodging boomlet.

Hence we await at least three new extended-stay brands: Hyatt Studios, which will be cheaper to run than the chain's existing Hyatt House operation; StudioRes, Marriott extended-stay lodgings cheaper than its existing Residence Inn and TownePlace Suites brands; and a brand from Hilton so embryonic that it doesn't have a name. Hilton announced it as Project H3 and all we know is that it will be cheaper for hotel owners than the chain's Embassy Suites and Homewood Suites.

These new brands "focus on owner economics," according to the sales babble of one chain's pitch to hotel developers. That's industry code for doing everything cheap: smaller buildings, smaller lobbies, fewer services, tighter guestrooms, less-expensive furnishings. But they imitate the existing extended-stay properties by offering full kitchens and other things that make travelers feel like they are in home-like surroundings.

The mock-ups of the new chains all look remarkably similar: closets without doors; miniscule kitchens just large enough to brew a pot of coffee or nuke a burrito; generic bathrooms with stall showers; and chintzy lobby areas that reject the existing lodging mantra that lobbies should feel like convivial coffee shops.

Several hundred of these cheap clones are already in the development pipeline. The first ones should open their doors next year. Heaven help us all.

Quick now, what does a Four Point by Sheraton hotel offer? Other than cheaper rooms, I can't think of an answer, either. But that never stops a big hotel chain from doubling down. Marriott, which seems to invent a new brand every month, is now developing a Four Points by Sheraton brand extension called Four Points Express. When chains put "express" in the name, that usually means less of something. And considering that Four Points itself is a Sheraton knockoff, what can the express version of Four Points knock off? Four Points Express hotels are being aimed at Europe, the Middle East and Africa, or EMEA in lodging parlance. The first FPE (hey, if hotel wags can do it ...) is due next year near Euston Station in London. I know I can't wait.

If you're getting the idea that the lodging industry is all about cheap these days, consider: One cheap hotel giant, Choice, wants to buy Wyndham, another cheap hotel titan. Together, the two chains fly their 46 lodging flags on 16,000+ hotels. Choice and Wyndham are what the industry calls "asset light." In other words, they own almost none of the properties that franchise their brands such as Econolodge, Comfort and Clarion (Choice) or Super 8, LaQuinta and Ramada (Wyndham). Choice thinks Wyndham is worth the $7.8 billion offer price. Wyndham is a reluctant prospect. The two sides have been talking since May. Stay tuned.

If you think the focus on cheap is overstated, consider: A growing number of hotel owners are simply walking away from their properties, turning the building back to lenders or allowing them to be sold at auction. A huge hotel owner, Ashford Trust, this summer handed back the keys to 19 hotels, all of them Marriott-affiliated properties. In a separate deal, Ashford also abandoned the Embassy Suites in Times Square. Meanwhile, an investment fund called Pimco walked away from 20 hotels with $240 million of outstanding mortgages. In a very public decision, Park Hotels bailed on two huge San Francisco hotels, The Hilton Union Square and Parc 55. That default was north of $700 million. And an investment fund last week won a foreclosure auction for the two-year-old, $370 million Margaritaville Resort in Midtown Manhattan. The winning bid? A thousand bucks. The winner, who also holds the paper on the 32-story building, didn't even have a competing bidder.