UNITE HERE Urges Hilton Owners to Evaluate Whether the Brand Provides the Most Value for their Properties
UNITE HERE has sent letters to over 80 Hilton franchise owners in university towns, urging them to reevaluate their partnership with Hilton (NYSE: HLT) following the company's acquisition of Graduate Hotels. The union warns that the competitive advantage of participating in the Hilton Honors program may be diminished due to new competition from nearby Graduate hotels.
The letter also highlights a recent case where Marriott was forced to buy the Sheraton Grand Chicago for $500 million, significantly above its estimated value of $270.5 million, due to a settlement related to Marriott's acquisition of Starwood. UNITE HERE encourages Hilton franchise owners to carefully consider whether Hilton provides the most value for their properties in an era of industry consolidation and tightening brand standards.
UNITE HERE ha inviato lettere a oltre 80 proprietari di franchising Hilton in città universitarie, esortandoli a riesaminare la loro partnership con Hilton (NYSE: HLT) dopo l'acquisizione da parte dell'azienda degli Hotel Graduate. Il sindacato avverte che il vantaggio competitivo di partecipare al programma Hilton Honors potrebbe essere ridotto a causa della nuova concorrenza proveniente dagli hotel Graduate vicini.
La lettera sottolinea anche un caso recente in cui Marriott è stata costretta ad acquistare lo Sheraton Grand Chicago per 500 milioni di dollari, notevolmente sopra il suo valore stimato di 270,5 milioni di dollari, a causa di un accordo relativo all'acquisizione di Starwood da parte di Marriott. UNITE HERE incoraggia i proprietari di franchising Hilton a considerare attentamente se Hilton offra il miglior valore per le loro proprietà in un'epoca di consolidamento del settore e di standard di marca sempre più rigidi.
UNITE HERE ha enviado cartas a más de 80 propietarios de franquicias de Hilton en ciudades universitarias, instándoles a reevaluar su asociación con Hilton (NYSE: HLT) tras la adquisición de Graduate Hotels por parte de la compañía. El sindicato advierte que la ventaja competitiva de participar en el programa Hilton Honors puede verse disminuida debido a la nueva competencia de los hoteles Graduate cercanos.
La carta también destaca un caso reciente en el que Marriott se vio obligada a comprar el Sheraton Grand Chicago por 500 millones de dólares, significativamente por encima de su valor estimado de 270,5 millones de dólares, debido a un acuerdo relacionado con la adquisición de Starwood por parte de Marriott. UNITE HERE anima a los propietarios de franquicias Hilton a considerar cuidadosamente si Hilton ofrece el mayor valor para sus propiedades en una era de consolidación de la industria y de estándares de marca cada vez más estrictos.
UNITE HERE는 대학 도시의 80명 이상의 힐튼 프랜차이즈 소유자에게 편지를 보내 힐튼(뉴욕증권거래소: HLT)과의 파트너십을 재평가할 것을 촉구했습니다. 이는 회사가 Graduate Hotels를 인수한 후 발생한 일입니다. 노조는 가까운 Graduate 호텔의 새로운 경쟁으로 인해 힐튼 Honors 프로그램에 참여하는 경쟁 우위가 감소할 수 있다고 경고합니다.
편지에서는 또한 Marriott가 Starwood 인수와 관련된 합의로 인해 2억 7천 500만 달러의 추정 가치를 크게 초과하는 5억 달러에 Sheraton Grand Chicago를 매입해야 했던 최근 사례를 강조합니다. UNITE HERE는 힐튼 프랜차이즈 소유자들에게 힐튼이 산업 통합과 강화되는 브랜드 기준 시대 속에서 그들의 자산에 가장 큰 가치를 제공하는지 신중히 고려할 것을 권장합니다.
UNITE HERE a envoyé des lettres à plus de 80 propriétaires de franchises Hilton dans des villes universitaires, les pressant de réévaluer leur partenariat avec Hilton (NYSE: HLT) suite à l'acquisition des Graduate Hotels par la société. Le syndicat avertit que l'avantage concurrentiel de participer au programme Hilton Honors pourrait être diminué en raison d'une nouvelle concurrence provenant des hôtels Graduate voisins.
La lettre souligne également un cas récent où Marriott a été contraint d'acheter le Sheraton Grand Chicago pour 500 millions de dollars, bien au-dessus de sa valeur estimée à 270,5 millions de dollars, en raison d'un règlement lié à l'acquisition de Starwood par Marriott. UNITE HERE encourage les propriétaires de franchises Hilton à considérer attentivement si Hilton offre la meilleure valeur pour leurs propriétés à une époque de consolidation de l'industrie et de normes de marque de plus en plus strictes.
UNITE HERE hat über 80 Hilton-Franchisenehmer in Universitätsstädten angeschrieben und sie aufgefordert, ihre Partnerschaft mit Hilton (NYSE: HLT) nach der Übernahme der Graduate Hotels durch das Unternehmen zu überdenken. Die Gewerkschaft warnt, dass der Wettbewerbsvorteil der Teilnahme am Hilton Honors-Programm durch neue Konkurrenz von nahegelegenen Graduate Hotels verringert werden könnte.
In dem Schreiben wird auch auf einen aktuellen Fall hingewiesen, in dem Marriott gezwungen war, das Sheraton Grand Chicago für 500 Millionen Dollar zu kaufen – deutlich über dem geschätzten Wert von 270,5 Millionen Dollar – aufgrund eines Vergleichs im Zusammenhang mit der Übernahme von Starwood durch Marriott. UNITE HERE ermutigt die Hilton-Franchisenehmer dazu, gründlich zu prüfen, ob Hilton den größten Wert für ihre Immobilien in einer Zeit der Branchenkonsolidierung und strenger werdender Markenstandards bietet.
- Hilton's acquisition of Graduate Hotels brand expands its portfolio in university towns
- Hilton signed long-term franchise agreements with existing and pipeline Graduate hotels
- Potential increased competition for Hilton franchise owners from Graduate Hotels properties
- Possible diminished competitive advantage for existing Hilton franchises in university towns
- Tightening brand standards may put pressure on franchisee margins
Insights
Hilton's acquisition of Graduate Hotels presents a complex scenario for existing Hilton franchisees in university towns. This move could potentially dilute the value proposition for current franchisees by introducing direct competition for the same Hilton Honors customer base. The situation mirrors the Marriott-Starwood merger fallout, where brand consolidation led to legal challenges and financial implications for property owners.
The Sheraton Grand Chicago case is particularly noteworthy, as it resulted in Marriott purchasing the property for
For Hilton franchisees, this development warrants a careful reevaluation of their franchise agreements and the overall value provided by the Hilton brand. The increased competition within the Hilton ecosystem could potentially impact occupancy rates and revenue for existing properties, especially those in close proximity to Graduate Hotels.
The UNITE HERE letter raises important legal considerations for Hilton franchisees. The mention of "rights under your franchise agreement" is particularly significant. Franchise agreements often include clauses protecting franchisees from direct competition by the franchisor. The introduction of Graduate Hotels into the Hilton portfolio could potentially violate such clauses, depending on the specific terms of individual agreements.
The Tishman Realty case against Marriott sets a precedent for legal action based on area of protection violations resulting from brand acquisitions. Hilton franchisees might have grounds for similar claims if they can demonstrate that the Graduate Hotels acquisition materially affects their protected territories or violates other contractual protections.
Franchisees should carefully review their agreements, focusing on territorial exclusivity, performance clauses and termination rights. They may need to consider legal counsel to fully understand their options and potential recourse in light of this significant change in the competitive landscape.
Hilton (NYSE: HLT) acquired the Graduate Hotels brand from real estate investment firm AJ Capital Partners in March 2024, and signed long-term franchise agreements with all existing and signed pipeline Graduate hotels. UNITE HERE’s letter, sent to over 80 owners of Hilton-branded hotels in university towns or otherwise near Graduate Hotels properties, warns owners:
“You may have chosen Hilton as your franchise partner, and paid Hilton’s hefty franchise fee and adhered to strict brand standards, in order to access the pool of loyal customers that comes with the Hilton Honors program. Your participation in Hilton Honors has served as a competitive advantage. However, that advantage is diminished now that you have a new competitor for the same pool of Hilton-loyal customers with the nearby Graduate hotel.”
The letter also explains that earlier this year, Tishman Realty, the then-owners of the Sheraton Grand Chicago, exercised an option to force Marriott to buy that hotel. Marriott purchased the hotel and the land underneath for
Marriott was forced to buy the hotel at a price higher than the property’s valuation as part of the settlement of a 2017 lawsuit filed by affiliates of Tishman Realty regarding Marriott’s purchase of Starwood. The Tishman affiliates argued that the Marriott/Starwood merger violated the management agreement’s area of protection clause, and the right to force a sale to Marriott was part of the final settlement.
The letter concludes, “In this era of consolidation, brand proliferation, and tightening brand standards that put pressure on margins, we encourage you to carefully consider whether Hilton is the brand that provides the most value for your properties going forward. You can also consider your rights under your franchise agreement.”
View source version on businesswire.com: https://www.businesswire.com/news/home/20241007543865/en/
Benjy Cannon, bcannon@unitehere.org, 202-714-1567
Source: UNITE HERE
FAQ
What recent acquisition did Hilton (HLT) make in March 2024?
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What concern did UNITE HERE raise about Hilton's acquisition of Graduate Hotels?
What recent event involving Marriott and the Sheraton Grand Chicago was mentioned in the letter?
