Owned by AJ Capital, which retains ownership of the real estate assets, Graduate Hotels was created close to the major American campuses and is now aiming to expand internationally, while retaining its lifestyle connotation for nostalgic students.
The brand was born just ten years ago in Nashville, a pure product of the imagination of Ben Weprin, property developer and head of Adventurous Journeys Capital Partner, who wanted to immerse customers in the nostalgic atmosphere of their student days and campus festivities.
In the space of ten years, the concept has been developed in around thirty American destinations, close to university campuses whose interior design codes it has adopted. The pipeline is already full, with projects in Austin and Dallas (Texas), Auburn (Alabama) and Princeton (New Jersey).
A potential 500 hotels worldwide in time
The acquisition of the brand, which is now the 23rd for Hilton Hotels, will enable the company to enter a new phase in its expansion, particularly through franchising. Justifying the purchase, Chris Nassetta, CEO of Hilton Hotels, said: "Adding Graduate Hotels to our portfolio of award-winning brands accelerates our expansion in the lifestyle space by pairing an existing much-loved brand with the power of Hilton’s strong commercial engine to drive growth. With thousands of colleges and universities around the world, we believe the addressable market for the Graduate brand is 400-500 hotels globally."
For €200 million, Hilton Hotels owns the franchise agreements for the 35 hotels already in operation and under development, as well as the domestic and international development. Each new Graduate Hotel will sign a long-term franchise agreement with Hilton Hotels. AJ Capital will retain ownership and management of the hotels already in operation. Hilton expects to generate $16 million in franchise fees in the first year.
Hilton Hotels maintains 6% annual room growth target
The agreement between the two partners should be finalised in the second quarter of 2024 and the Graduate Hotels will be available for booking on the Hilton platform before the end of the year. Nearly 6,000 rooms will be added to the Hilton Hotels inventory, with a potential of 100,000 in the long term, enabling the American group to meet its ambitious development plan of 6 to 7% annual growth.
Chris Nassetta has no doubt not finished shopping around for brand owners. Rumour has it that he is already on the trail of NoMad, a top-of-the-range lifestyle brand created by Andrew Zobler, boss of the Sydell Group, and already present in London and Las Vegas.
