Hilton Worldwide intends to launch a midscale hotel brand in the first quarter of 2016, a move that will enable the company to pursue a market that it currently doesn’t serve, CEO Christopher Nassetta said during the company’s second-quarter earnings call on Wednesday.

Nassetta said a huge swath of customers cannot afford to pay room rates at its lowest-price chain, Hampton Inn, an upper-midscale brand that was initially targeted at the midscale segment “but has grown up out of it.” Hampton’s average daily rate across the chain will be about $115 this year, Nassetta said.

Furthermore, Nassetta said that “there is no good midscale product, and that’s why we are doing it.”

“We're doing it in a way that's going to be unlike anything anybody has done. It's going to be all new build [as opposed to] product that's out there that is almost no newbuild. That's going to be very appealing to the customer,” Nassetta said.

Hotels will be constructed and operated “in a very simplistic way to be able to drive returns like we've done with Hampton,” he said. Nassetta envisions a “megabrand” that could amass more than 1,000 hotels “just as we’ve done with Hampton.”

According to STR’s chain scale, prominent brands in the midscale segment are Best Western, Ramada and La Quinta.


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