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(Bloomberg) -- President Donald Trump built his hotel brand with luxury properties aimed at high-income travelers visiting pricey locales such as New York, Chicago, Miami and Washington. Now his company is moving downmarket.

Trump Hotels’ newest chain, to be called American Idea, will be found initially in smaller towns -- the first three are planned for the Mississippi cities of Clarksdale, Greenville and Cleveland -- and will compete in the mid-tier hotel category. That’s a segment already stuffed with brands, including Courtyard by Marriott, Hyatt Place and Hilton Garden Inn.

Therein lies an opportunity, said Eric Danziger, chief executive officer of Trump Hotels.

“I love that it’s crowded,” Danziger said in an interview. “They are all, in my mind, homogeneous -- same properties with different names. Look at things like Hampton Inns, Fairfield Inns, Holiday Inn Express, just keep going -- you know, Wingate, Baymont. All the mid-scale brands basically are the same, with a different brand name.”

American Idea properties will set themselves apart by being “specific to the local area, steeped in some American heritage,” Danziger said. A hotel might be decorated with a vintage firetruck once used in the area, or feature clothes hangers made by a local factory.

They’ll also be much less expensive than Trump Hotels’ existing properties, where rooms run from hundreds of dollars to well over $1,000 a night. At the new Mississippi hotels, prices may start at just $65 a night, said Dinesh Chawla, whose company will own the three properties, licensing the American Idea name.

New Strategy

The new strategy for Trump Hotels follows a presidential campaign in which Donald Trump focused on appealing to voters in small towns and cities hurt by the decline of local industries such as steel manufacturing and coal mining -- people who may not be able to shell out $1,499 for a deluxe one-bedroom suite at the Trump International Hotel Washington, D.C., but can afford a night or two at an American Idea.

For critics, it’s another example of Trump’s intermingling of his White House role with his business interests. Trump has refused to divest his real estate holdings despite the conflicts of interest that ethics experts say are posed by his ongoing ownership of hotels in the nation’s capital and other parts of the country.

“This is about a president cashing in” on his campaign and election, said Paul S. Ryan, a vice president at the liberal-leaning government ethics group Common Cause, adding that it appears Trump’s company wants to expand its business by appealing to his political supporters. “His campaign created and grew that base, lots of working-class folks, and now they’ll have the opportunity to give the president more of their money by staying at his new line of hotels.”

Trump’s daughter Ivanka also has moved her fashion label toward the lower end of the merchandise spectrum in the past several years.

Different Customers

Larry Noble, general counsel at the Campaign Legal Center, a Washington-based advocacy organization, noted how different the market for American Idea properties is from the luxury space Trump’s company usually operates in.

“There are similarities between the marketing of it and Trump’s message,” Noble said. “It’s not the market they normally go after.”

Chawla, whose Chawla Hotels Inc. is converting three existing Mississippi hotels into the American Idea properties, and Trump Organization executives say politics play no role in the new brand.

“We’re going into business with them as professional people,” Chawla said, referring to his partnership with Trump’s sons Donald Jr. and Eric, who now run the Trump Organization. “We might have made one or two jokes about politics. It never really entered our conversations,” he said, adding that former President Barack Obama was a guest at one of Chawla’s hotels in 2008.

Danziger, too, said the new brand “has nothing to do with politics,” but has more to do with Trump Hotels’ decision to focus on a domestic expansion and hold off on adding foreign properties.

“Once we declared we would not be growing internationally while Donald Trump was president, well, by default, doesn’t that make you an American company?” Danziger said. “Why don’t we say what we are? And, by the way, I’m sure you’ve heard of American Express. I’m sure you’ve heard of American Airlines. This is not like we’re trying to capitalize on something that doesn’t exist.”

To contact the reporters on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net, Ben Brody in Washington at btenerellabr@bloomberg.net, Caleb Melby in New York at cmelby@bloomberg.net.

To contact the editors responsible for this story: Daniel Taub at dtaub@bloomberg.net, Kara Wetzel

©2017 Bloomberg L.P.

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