Hilton's Branson Brand Extension
Mark Hartman calls Branson Las Vegas without the gambling. That's not criticism, says Hartman, general manager of the Hiltons of Branson, the first branded full-service hotels in a southwestern Missouri destination best known for its inexpensive entertainment offerings. It's opportunity.
Hilton's arrival is expected to recast Branson as a place the well-heeled and well-traveled should visit, now that it's home to the 243-unit Hilton Promenade at Branson Landing. In August, that will be joined by the 294-room Hilton Branson Convention Center across the street.
“The Landing project, convention center and shopping area represent a $420-million investment in the downtown Branson area,” Hartman explains one bitter February afternoon over lunch in the Hilton Promenade's Liberty Tavern. Not only is the Landing home to Missouri's first Belk department store, a Bass Pro Shop and various upscale restaurant franchises, it will soon boast a Sight and Sound theater offering live animal acts with a Christian theme. That alone is expected to bring another million visitors to Branson, which already draws seven million a year — to a town of only 7,000.
Branson has more than 57,000 theater seats in 49 theaters and more than 100 live shows. These feature the likes of various Osmond brothers and standbys such as Japanese violinist Shoji Tabuchi, comedian Yakov Smirnoff, legacy crooner Andy Williams and country singers Moe Bandy and the Haygoods. It's also home to a new and very fine Titanic Museum, along with the Shepherd of the Hills, an ongoing religious dramatic presentation billed as the foundation of Ozark Mountains tourism. It's largely hokey and wildly successful.
Up the hill from the Landing and Lake Taneycomo is what one might call Old Branson, a hilly community known for old-fashioned entertainment offerings. It draws families from Missouri, Arkansas and states bordering on those.
Now that Hilton has announced its presence with a stylish bang, Branson is likely to draw a younger, more affluent demographic. Hilton HHonors members should be eager to visit a place where the accommodations are elegant and the attractions singular. At least that's what Hartman, a recent transplant from Chicago, hopes.
When a Hilton in Branson was first proposed some six years ago, there was snickering, Hartman acknowledges. “I think the main reason nobody looked at this market and the demographics are that the average visitor to Branson is probably 57 years old,” he says. “Probably 40 percent of those are over 65, and with a median income for visitors of $47,000, what chain would go after that?”
Fortunately, city fathers were interested and, allying with local developer HCW Development, decided to pursue the project. Early on, the vision was for a complex with hotels, retail and the convention center. Signs are it's paying off.
PUTTING IT TOGETHER
Even though Hilton has never managed convention centers before, it has experience with them in hotels such as the Hilton in Houston and the Hilton Anatole in Dallas. In addition, various Embassy Suites are linked to convention centers, like the Embassy Suites Hotel Northwest Arkansas in Rogers, AK, down the road from the John Q. Hammons Convention Center.
“We manage hotels like the Anatole and the Hilton Chicago, which have three times the meeting space as this, so we have the expertise,” Hartman says. Hilton manages the 220,000-square-foot Branson convention center in a flat-fee arrangement with the city.
“We liked the Hilton name and Hilton's ability to manage the hotels and the convention center,” says Rick Huffman, CEO of HCW Development. “We sent out a request for proposal to five or six hotel companies, and received back four.” Also competing: InterContinental, Starwood and Marriott, Huffman says. The finalists were InterContinental and Hilton, and “we selected Hilton,” Huffman says. The rapport was best; also favoring Hilton was its “fantastic reservations system and having one of the top frequent guest programs.” In addition, Hilton paid HCW a consideration of $1 million in cash, Huffman says.
The city council put the Landing area together by paying $23 million for about 90 acres, using eminent domain only to acquire two of 35 parcels involved, Huffman says. The state of Missouri facilitated the project by creating a tax-increment financing district. The $56 million in TIF money will be repaid over 23 years. It calls for Missouri to return to Branson half of all the state sales tax it collects at Branson Landing over that period. HCW began construction in 2004 and the first Promenade retail opened in 2006, Huffman says. “That's pretty fast,” he adds.
Cost control was a major challenge. Copper and fuel were becoming especially expensive, largely because of the devastation caused by Hurricane Katrina, according to the HCW leader. “That caused us to have some construction overruns,” Huffman says, “but we managed those well, and I believe that at the end of the day, out of a total project costs of $420 million, we were able to keep within $15 million of budget.”
The Hiltons will succeed because they will attract a new kind of customer, Hartman and Huffman assert. Bus tour participants and World War II veterans Branson has marketed to for so long are traveling less so Branson has to reach a younger, more diverse clientele, Hartman says.
Until now, Branson was known for its mom-and-pop hotels and the Chateau on the Lake, a 301-unit luxury hotel built by hospitality legend John Q. Hammons; that has about 35,000 square feet of meeting space. In Branson, three percent of business is meetings and conventions; in Chicago, it's 40 percent. “If Branson can develop that market, there's huge potential for growth,” he says. “That's why you have a convention center.”
Bill Tirone, director of sales and marketing, says the Hilton Promenade is generating more business travelers than expected, particularly from pharmaceutical sales. Also, because it is only a 35-minute drive from Springfield, MO, it is attracting Hilton HHonors members eager to amass points. Locals say it doesn't “look like Branson,” says Tirone, while younger guests appreciate its “hip” look and residential ambience.
The average Branson spend for a family of four is $776, the average stay 4.4 nights, Tirone says. (Hartman says he can spend that over a Chicago weekend.)
“Branson Landing is where Branson is starting to go,” Tirone says. “Other new attractions, like the Titanic Museum and Dick Clark's American Bandstand, draw a new audience and give those that have been coming to Branson more reasons to come back.”
“We're seeing a tremendous amount of group bookings of new business,” says HCW chief Huffman, noting the convention center will be the only one in southwestern Missouri with a ballroom and hotel linked to it. In addition, special colored lights make the Taneycomo lakefront dazzling at night. “We bought those from Denmark,” Huffman says. You can almost hear him beaming.
For more information and related articles, go to www.LHonline.com.
THE BIG IDEAS
Dazzle ‘em. These Vegas-style fountains light up the night at Branson Landing, the new complex transforming an old Missouri destination.
Go national. Want to draw on a wide market? Get a brand like Hilton to locate in your community.
Develop new business. A convention center like the one at Branson Landing is expected to generate meetings and convention business Branson has never been able to accommodate.
John Q.: Always Thinking Ahead
Drive southwest from Branson, MO through several quaint, old vacation communities until you hit Rogers, AK. Look around. The area feels like vibrant, suburban Dallas, with large highways, new business buildings and shopping centers and, for the weary traveler, the 248-room Embassy Suites Northwest Arkansas. The imposing 248-room John Q. Hammons hotel is smack-dab in the middle of Pinnacle Hills, a rapidly expanding complex banking on the region's singular synergy.
Business is good and getting better largely thanks to Wal-Mart, the giant discount retailer Sam Walton launched in adjacent Bentonville about the time Hammons, on cue from Holiday Inn guru Kemmons Wilson, entered hospitality. One of the last original architects of modern lodging, Hammons, 88, is focusing on his Rogers hotel and his Chateau on the Lake in Branson. He's also eager to begin building his Chateau on Lake of the Ozarks in Osage Beach, MO, north of Springfield. He wasn't interested in developing another hotel in Branson, he says.
“I am in 40 states now and didn't have the time and wasn't interested in down there,” Hammons says from his Springfield headquarters. “I was interested in creating the Chateau, because I knew the site was outstanding and I could take a remote area like that where the masses would demand lots of types of lodging. And that became true.”
He's also enthusiastic about his Rogers Embassy Suites, and, like the principals of Pinnacle Group, the development firm behind office-retail park Pinnacle Hills, cites the unique convergence of commercial forces in northwest Arkansas as a guidepost. He also suggests that like Sam Walton, his intuitive method — Walton used to, and Hammons still does, fly his private plane over the country to scout locations for potential development — strikes gold.
“I went down there one day and I just knew there would be growth there,” Hammons says of Pinnacle Hills, site of his Embassy Suites and the 125,000-square-foot John Q. Hammons Center a few minutes walk from the hotel. Besides those developments, the $200-million Pinnacle Hills complex boasts more than 300,000 square feet of Class A office space, The Shoppes at Pinnacle Mall and the Pinnacle Hills Promenade Lifestyle Mall.
It's the commercial heart of a rapidly evolving metro consisting of Rogers (home to J.B. Hunt Transport); Fayetteville (home to the University of Arkansas); Bentonville (birthplace and headquarters of Wal-Mart; Benton County is dry and the only Republican county in Arkansas); and Springdale (home to Tyson Foods). The region's overall population exceeds 350,000, and Wal-Mart outlets rule. According to 2000 census data, Benton County's population rose 57 percent between 1990 to 2000 to 153,406; household income during that period rose to $40,281 from $26,021.
By the time it's built out — with a new hospital, more retail and additional interstate development — Pinnacle Hills will represent more than $2 billion in development, says Pinnacle Group principal Bill Schwyhart. “This is the biggest project in mid-America,” he claims.
In Roberts and Bentonville, he says, 14 percent of the population has per-capita income of $100,000-plus. “We're breaking the Arkansas stereotype of the backwater hillbilly.”
Ironically, the prosperity of a region with a strikingly low unemployment rate of two percent is due to Wal-Mart lifting the tide, largely because it requires its key suppliers to have a presence in the area. That's why Procter & Gamble, Nestle, Sherwin Williams, Gillette and other key manufacturers have offices there and why transplanted executives used to better housing and retail are gentrifying the region. One could say Wal-Mart's success is subverting the values — frugality, discounting, maybe even utilitarianism — at its core.
“Mr. Hammons, early on, saw the explosive growth potential and approached Hilton to build an Embassy Suites here,” says David Lang, general manager of the Embassy Suites Northwest Arkansas, where the rack rate is $189. “Hilton laughed at him. This is the smallest market in the United States with an Embassy Suites. The Hilton brand didn't know where Rogers-Bentonville was. He explained to them the future here. Mr. Hammons is a legend. When Mr. Hammons talks, people listen.”
— Carlo Wolff
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