CEO Interview: Hilton president and CEO Christopher Nassetta
Ten years ago, Christopher Nassetta joined Hilton as president and chief executive officer for Hilton and in that time has steered the operator through many changes. From overseeing the move back into the New York Stock Exchange, and completing the spin-offs of Park Hotels & Resorts Inc and Hilton Grand Vacations Inc, resulting in three independent, publicly traded companies, Nassetta has been 100% hands-on towards creating a lean, mean, efficient hotel operating machine.
Hotelier Middle East last spoke to him three years ago soon after the historic IPO; this time, we meet him soon after the spin-off was completed. Speaking at the Arabian Hotel Investment Conference (AHIC) 2017, Nassetta is confident that this separation is a “stepping off point” for the company.
He says: “We took the bulk of our real estate business and spun it out into a real estate investment trust that’s totally independent, and we did the same thing with our timeshare business. So we took what was a big conglomerate, if you will, that had three related but nonetheless three separate businesses and we spun those out. What remains is a pure consumer branded business. We are at a unique moment in time where the last decade has been foundational to the next decade.”
And certainly, the last decade has been transformational. When he joined Hilton in 2007, his four priorities at the time included aligning the culture and organisation, improving basic performance, enhancing and strengthening and expanding the brands, and then expediting growth. He has done it all, and says that company culture is the most important element towards making it all happen.
When I ask what the highlight has been for him over the last decade, he says: “We have been able to take a company that is a good company that had been a great company, and make it a great company again. And the way that we did that was transforming the culture of the company to get 350,000 people in 103 countries rallied around a common purpose.”
Adding that the experience has been “awe-inspiring”, Nassetta reveals that as a consequence of the changes, the company has grown — and how. “We have grown the company by nearly 50%, we have launched five new brands in as many years, we have the biggest pipeline that we have ever had in our history. We are opening a hotel a day on average a year. We are growing faster, on average, than anybody on earth,” he says enthusiastically.
He continues: “As good as the last decade was, the next decade is going to be even better for Hilton.
“You’re going to continue to see our growth accelerate, you’re going to continue to see us add lots of new hotels around the world, add lots of new brands around the world, with the core focus being better serving customers.”
With the talk of new brands and new hotels, it’s inevitable that the conversation turns to the industry’s mergers & acquisitions, as well as development of new brands. Tru by Hilton, for example, was a mid-scale brand that Hilton launched in January 2016. At the time, Hilton already had 102 hotels signed — now there are more than 400. With four hotels already open in the US, Nassetta expects Tru to have “thousands of hotels” in the future. While the brand has not yet moved beyond American shores, he’s confident that once it’s right in the US, it will be taken out on the road eventually.
Hilton has launched several brands in the past decade including Home2 Suites by Hilton in 2009, Curio — A Collection by Hilton in 2014, Canopy by Hilton in 2014 and Tru by Hilton in 2016. Another brand launch Hilton dropped earlier in 2017 was that of Tapestry Collection by Hilton, the operator’s 14th, and its second ‘collection’ brand. Located in the upscale segment just below Curio — A Collection by Hilton, it’s a sign of organic growth for the company. While Nassetta comments about how Hilton as it exists today exists as a consequence of mergers and acquisitions — with Hilton Hotels Corporation (HHC) acquiring brands including Hampton, Doubletree, Embassy Suites and Homeward Suites [Hilton International (HI) and HHC merged in 2006 to form Hilton] — he’s keen to drive an organic growth path for the operator.
With that line of thought, Nassetta is constantly thinking of untapped niches and unserved markets for new brands. He mentions, a few times, the ‘urban micro’ brand the operator is developing. All he reveals is: “We’re looking at a few others that we’re not going to quite get into but I’d say in my little incubator in my head, I have at least — including the urban micro — three brands, maybe four. Some of those are bigger, smaller, some are almost sub-brands as opposed to a mega brand.”
There are, at this stage, no acquisitions on the horizon for Hilton, although Nassetta says he can “never say never”. He adds during his conversation at AHIC: “We haven’t done it in 10 years; we have been very vocal, publicly saying we’re not out bounty hunting because I just don’t think we need to. We are incubating our own brands, and we’re doing it in a way that’s very customer-centric. From an organic growth point of view, we’re growing faster than anyone out there. We are growing 6-7% on an organic basis, that’s giving customers products that are tailored to their needs. It’s giving our shareholders a much better return because we’re not buying brands.” Having said that, he adds that he believes there will be further consolidation in the wider market to capitalise on the advantages of having a larger scale with broad geographic diversity.
It’s something he believes Hilton already possesses, and with 14 brands and nearly 5,000 properties across 103 countries, he’s right. In the EMEA portfolio alone, the operator passed the milestone of 100,000 rooms trading earlier this year. In EMEA specifically, there has been a net unit growth of more than 20,000 rooms in the past three years, a trend which is set to continue with close to 40,000 rooms currently under construction and expected to open by the end of 2020. Additionally, approximately 50% of Hilton’s pipeline is located in Middle East & Africa.
Nassetta is excited about the opportunities in every region across the world. He comments: “We are at the peak levels of growth in pipeline in every major region in the world, and every segment within our brand segment is at the peak level of pipeline we’ve ever seen. I think I semi-famously said this around our IPO: ‘Where do you want to win?’ and I want to win everywhere. We want to be everywhere.”
In terms of percentage growth, Hilton is growing at a very rapid pace in the Middle East, reports Nassetta, comparable to how it is growing in Asia-Pacific. This is, in part, because the operator is starting from a smaller base compared to the Americas, for example, but Nassetta re-asserts: “The Middle East region as a percentage growth is one of the higher growth regions that we have today and will continue to be so for a long time to come.”
And this growth is being showcased across a number of brands. Once Hampton by Hilton opens its doors, Hilton will have seven brands in the region, including Waldorf Astoria, Conrad, Hilton, Doubletree by Hilton, Hilton Garden Inn, and Curio – A Collection by Hilton. He cheekily teases: “I suspect that over the next three or four years, we’ll bring at least three more brands to the region, maybe four.” One of these will be Embassy Suites, which has already been signed for Saudi Arabia. Nassetta says he hopes Tapestry and Canopy would also be potential brands for the region, and adds that Hilton could have 10 out of its 14 brands in the region fairly easily.
All this growth cannot happen without people, asserts Nassetta. He comments: “We are a very big global company; we are 350,000 people trying to deliver great hospitality. We are a big company, and we very much act like a small entrepreneurial company.” Every decision around digital key, F&B, brand launches and more, is being driven by what Hilton’s current and potential customers want — with the front line team sharing this vital information.
He concludes: “We run a lean, mean operation. If people aren’t inspired, they’re not going to do inspiring things.” And it looks like he’s been inspiring them to do just that.