March 10 (Bloomberg) -- Hilton Hotels Corp., acquired by Blackstone Group LP in 2007, said it will start a luxury boutique international brand called Denizen Hotels.

Denizen will compete with independent hotels and boutique properties including Starwood Hotels & Resorts Worldwide Inc.’s W line, Morgans Hotel Group Co. and Thompson Hotels, Ross Klein, Hilton’s global head of luxury and lifestyle brands, said in an interview.

The global recession and near-frozen credit markets mean fewer hotels are being built, intensifying brand competition, while lower occupancy and room rates are prompting some independent properties to seek alliances with global names to tap their booking and marketing networks.

“While it’s a challenging time, it’s also a really great time to bring something fresh,” Klein said. “We’re cautious and careful, but we’re not cringing away from moving the industry and moving our brands forward.”

Touted as a lifestyle brand for cities and resort destinations, Denizen adds to a portfolio that includes Hilton Hotels, Conrad, Doubletree, Embassy Suites, Hampton Inn and Waldorf Astoria, said Klein, who joined Hilton in May.

The company sees Denizen as a return to the luxury of Hilton’s past without making customers look “guilty on an expense report,” Klein said. “We hope it’s going to disrupt the lifestyle and boutique arena.”

The company is in “active development negotiations” with owners in cities including Buenos Aires, London, New York, Montreal, Jerusalem, Istanbul and Mumbai, Hilton said in a statement.

Hilton, which is moving its headquarters to Fairfax County, Virginia, from Beverly Hills, California, to cut costs and taxes, operates 3,200 hotels in 77 countries.

To contact the reporter on this story: Beth Jinks in New York at bjinks1@bloomberg.net

Last Updated: March 10, 2009 04:00 EDT