Hilton's LivSmart Studios: A Strategic Play on Long-Stay Demand and Secondary Market Growth

Hilton's 2025 launch of LivSmart Studios, its new extended-stay brand, marks a bold entry into a sector that's quietly becoming one of the most compelling opportunities in real estate and hospitality. With its first properties opening in Tullahoma, Tennessee, and Kokomo, Indiana—both secondary markets—the brand is positioned to capitalize on a structural shift in travel and housing demand. Let's unpack why this matters for investors.

The Long-Stay Boom: More Than Just a Hotel Stay

The extended-stay market—defined by stays of 10+ nights—is booming. LivSmart Studios' design reflects this: full kitchens, flexible furniture, and communal spaces like fire-pit patios cater to travelers who need a “home-away-from-home.” But this isn't just about comfort. The long-stay demand drivers are secular and powerful:

1. Workforce Migration: Professionals in sectors like healthcare and energy (e.g., Kokomo's auto and energy industries) increasingly require temporary housing.
2. Student Housing Shortages: Secondary markets near universities, such as the Outer Banks or Gulf Shores, face acute PBSA (purpose-built student accommodation) gaps.
3. Remote Work Flexibility: Freelancers and digital nomads are expanding their search beyond urban hubs to lower-cost, secondary locations.

Why Secondary Markets Are the New Frontier

LivSmart's focus on secondary markets—areas like Kokomo, Indiana, or Gulf Shores, Alabama—is no accident. These regions offer three key advantages for investors:

1. Discounted Valuations, Underserved Demand

Secondary markets have lagged in hospitality development, creating a supply-demand imbalance. According to the research, valuation declines of 16–25% in core regions have made these areas attractive for investors seeking entry at lower prices. LivSmart's first properties, for example, target undersupplied workforce markets, filling gaps left by traditional hotels.

2. Resilient Sectors with Steady ROI

Sectors like grocery-anchored retail and PBSA—both prioritized in secondary markets—offer stable cash flows. LivSmart's amenities (e.g., retail markets, laundry facilities) mirror this strategy, creating hybrid spaces that serve both leisure and business travelers.

3. Operational Efficiency Meets Scalability

LivSmart's modular design and reliance on Hilton's commercial systems reduce costs for owners. The brand's pipeline of 90+ hotels and 225 deals in negotiation signals confidence in this model. Meanwhile, secondary markets often have lower development costs than primary cities, boosting margins.

The Data: What's Driving Secondary Market Growth?

The real estate secondary market itself is a $140 billion+ industry in 2024 and growing. Key trends include:
- GP-led transactions: These deals, now 50% of secondary volume, allow investors to access high-quality assets like logistics hubs or PBSA portfolios—sectors LivSmart is already targeting.
- Discounted LP deals: LP-led transactions offer up to 30% discounts on fund interests, enabling investors to pick up undervalued assets in resilient sectors.

Risks and Considerations

While the long-stay sector is robust, risks persist:
- Interest rate sensitivity: Higher-for-longer rates could strain borrowers, though LivSmart's focus on long-term contracts (e.g., healthcare workers) may mitigate this.
- Sustainability mandates: New energy codes (e.g., EU's BPS standards) require retrofits, adding costs. LivSmart's modern design—energy-efficient kitchens and communal layouts—positions it to comply.

Investment Takeaways

For investors, Hilton's LivSmart Studios represents a dual opportunity:
1. Equity Play: Hilton's stock (HLT) could benefit from LivSmart's expansion. The brand's pipeline and strategic focus on secondary markets align with broader trends favoring extended-stay brands.
2. Real Estate Direct Investment: Secondary markets like Kokomo or Gulf Shores offer entry into PBSA or logistics hubs at discounted prices. Investors might also consider REITs focused on multifamily or industrial sectors, which LivSmart's model complements.

Final Thought

LivSmart Studios isn't just a hotel brand—it's a bet on the future of living and working. As professionals, students, and travelers increasingly seek affordable, flexible housing in secondary markets, Hilton has positioned itself to dominate a space that's ripe for growth. For investors, this is a sector to watch closely.

Bottom Line: Secondary markets are where the long-stay demand meets undervalued real estate. LivSmart's launch is a sign that this trend isn't just cyclical—it's structural.