BERLIN—Less than a month has passed since Hilton Hotels Corporation launched Denizen Hotels, the company’s new global lifestyle brand. But the question still remains: How will the product be met by developers in a time when capital is so difficult to come by?

Though there are already about 20 hotels in development—the seeds for which were planted before the brand’s official launch—it might still be too early to tell if the brand will take hold.

(To view the Denizen launch press release, click here.)

Despite this lack of visibility, Amar Lalvani remained positive. The company’s global head of luxury and lifestyle brand development said  the conversion-friendly project is well suited for the current environment, while the practical-yet-eclectic

Amar Lalvani

HotelNewsNow.com caught up with Lalvani during a break at the International Hotel Investment Forum in early March to discuss the launch of the brand and its outlook for development.

HotelNewsNow.com: Why did Hilton launch Denizen Hotels?

Lalvani: This was something missing from the portfolio and consumer standpoint. There are existing Hilton owners who wanted to build a product in this segment, but had to do it with someone else. As soon as they heard Hilton had something in the segment, it was a quick conversion. … We’re hearing what our customers, owners and developers, are saying to us. … We’re developing it based on a real need, as opposed to just developing it and hoping for the best.

HNN: Are you worried about launching a new brand in the current market?

Lalvani: We’re very confident about the growth and penetration we’re going to have. Look, will it probably develop slower than if we were developing it two years ago? It will probably develop slower. But frankly, I’d rather be doing it now than then because then we would be having to adapt our model and retracing and recalibrating what the brand is about.
 
HNN: Where are you targeting development?

Lalvani: The distribution will not be centered in North America. We’ll be throughout the world. That expectation is important for us.

HNN: Are you relying on new builds or conversions? 

Denizen public space interpretive sketch

Lalvani: Conversions are much more what we’re looking for because it’s the right thing for the market today. We’ve constructed the brand to be conversion-friendly, which means our job is more about putting together the tool kit: ‘Here’s the tool kit. Here’s how you can map this brand onto different types of space.’

HNN: In terms of space, what size does the prototype support?

Lalvani: It’s going to be across the board. We don’t mind going bigger. We believe in the power of the Hilton engine to fill the rooms, but it has to have the right sensibility about the public space. … You don’t overbuild it in terms of space. It’s a big mistake. If you build it too big, you won’t have enough money for what you want to put it in, and what you want to put in it is what touches the guest. So we’ve got the facilities program down to about 740 gross square feet per key, which is very tight to fit all of the elements of a lifestyle brand. And that’s not to say you don’t go bigger than that. … If there’s an ROI case for a restaurant, if there’s an ROI case for destination bar … great, but we know we can deliver it in this space, which is important for these economic times—being smart with owner capital.

HNN: How else does the design reflect these difficult economic times?

Lalvani: We talked about being FF&E heavy and millwork light, which is smart for a couple of reasons. Development costs have increased significantly, but FF&E costs have declined substantially. … From an upfront, development-cost standpoint, it’s smart to be FF&E heavy and millwork light. If it’s FF&E heavy, you can evolve over time and push out your renovation cycle. … It’s about building it intelligently at a low cost and getting a premium from the experience and the differentiation. … We want to design the product so the high revenue per available room is through higher return in invested capital rather than forcing you up into that higher RevPAR based on the cost you’re spending.