Hilton Gaining Global Market Share Rapidly With Asset-Light Expansion Strategy

Hilton Worldwide Holdings' Headquarters In The Washington, D.c., Suburb Of Tysons, Va., As Of 2017

Hilton Worldwide Holdings is proving the benefits of an asset-light expansion strategy.

Shares of the publicly traded hotel giant have gained around $20 in value since the start of 2018 on the back of an aggressive expansion through multiple brands and without owning or developing any of its properties, The Motley Fool reports. Even while adding rooms at an accelerating pace, Hilton's average occupancy rate is above 75%, higher than the industry average overall.

Hilton hasn't used its own capital on new projects since 2016, instead entering into franchise agreements with local developers and property managers in a manner similar to one of its primary competitors, Marriott International. It spun off the properties it long held into a lodging REIT, Park Hotels & Resorts.

Beyond its raw occupancy rates, Hilton has seen encouraging signs from the loyalty program it has thrown its weight behind in recent years — from 2012 to this year, its member count has risen from 36 million to 94 million, TMF reports. In the second quarter, Hilton reported that loyalty program members made up about 60% of its bookings, signaling especially strong customer retention.

Hilton's success can be a positively reinforcing cycle, as its industry-beating numbers are an advertisement to potential partners. The company says it has a pipeline of 2,530 hotels worldwide, which totals to 379,000 rooms in progress, TMF reports. That accounts for 18% of the global hotel pipeline overall, compared to the 5% of the world's operating hotels under the Hilton umbrella.

By comparison, Marriott reported a pipeline of 155 properties totaling 46,693 rooms in the second quarter, while InterContinental Hotels Group reported 1,941 hotels totaling 289,135 rooms in its pipeline as of Sept. 30.

Hilton isn't just adding hotels; the group is also adding variety to its offerings. It has signed licensing agreements for seven pending projects under its new micro-hotel brand, Motto by Hilton.

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