Hilton CEO Chris Nassetta teased the coming launch of a new extended-stay brand during the company's Q1 earnings call on Wednesday.
According to Nassetta, the brand will play at the "lower end of midscale," below Home2 Suites. He described it as a hybrid brand, combining elements of an efficiency apartment and a hotel.
"There are so many workforce housing needs that are just unmet with this kind of product, for somebody who needs to be somewhere 30, 60, 90, 120 days," Nassetta told analysts. "So, you're talking about an average length of stay of probably 20 to 30 days, versus most of the core extended-stay brands that are like five to 10, maybe."
Nassetta said that Hilton expects to formally unveil the new extended-stay brand within the next 30 to 60 days. He sees potential for the concept to scale to "hundreds and hundreds of hotels" over time.
"While it will be a newbuild product, it will be a very efficient build cost," Nassetta added. "The lower-cost-to-build products that are very high margin, they're the lowest risk and they're the easiest to finance. We think that is a mega brand opportunity for us, even in an environment that's been more challenging from a financing point of view."
The extended-stay launch follows the recent introduction of Spark by Hilton, the company's first economy brand.
Hilton's efforts to innovate at the economy and lower-midscale end of the market come as Nassetta warned analysts of "macroeconomic uncertainty" and potential for a slowdown in the latter half of the year.
"The basic fundamentals in the business are good," said Nassetta. "Having said all of that, we do expect things will slow down. You're going to continue to have a slowing of the broader economic environment, that at some point has to have some impact on us."
For the quarter, Hilton reported systemwide growth in revenue per available room (RevPAR) of 30% on the same quarter last year, to $103.72.
First-quarter systemwide occupancy rose 9.8 percentage points, to 67.7%, and systemwide average daily rate (ADR) for the quarter was up 11.2%, to $153.20.
Hilton posted a Q1 net income of $209 million, compared with $211 million a year earlier. First-quarter revenue was up 33.2%, totaling nearly $2.3 billion.