When Chris Nassetta joined hilton Worldwide as CEO in 2007, he encountered a chain hotel that was “broke”.
“We had lost our way for decades and decades”says the 62-year-old manager. But when he set out to revive the brand, which is often credited with inventing the Piña Colada cocktail, popularizing air conditioning and televisions in hotel rooms, the obstacles mounted.
Nassetta was named as part of private equity group Blackstone’s $26 billion subprime purchase of Hilton, with the debt package alone exceeding $20 billion. Months later, the financial crisis broke out and Nassetta remembers that media headlines described the hotel group as Blackstone’s “black eye”for the high price that was paid at what seemed like exactly the wrong time. The challenges continued when, in 2009, rival Starwood accused Hilton and its top management of corporate espionage while trying to create a hotel brand of lifestyle.
Nassetta, a restructuring expert with experience in repairing fractured companiesmoved Hilton’s headquarters from California to Virginia, where property and labor were cheaper. He pursued an aggressive asset-light strategy to franchise and manage hotels, increase room counts and expand internationally, while reforming the corporate culture to make the company more performance-oriented. Hilton returned to the New York Stock Exchange in 2013 and Blackstone was sold in 2018, generating a record profit of $14 billion.
“We build a plan around a purpose, developing a great culture, making people feel part of something bigger than themselves” says Nassetta, referring to himself and Jonathan Gray, the Blackstone chief operating officer who is Hilton’s president and who appointed his friend to the CEO position.
But Hilton was hit again when he arrived the covid pandemic, decimating the hotel sector. Although business and leisure travel is back, the global economy is once again showing signs of weakness, from the United States (US) to China.
“Nothing surprises me anymore” Nassetta tells the Financial Times at the Hilton hotel near its headquarters in McLean, Virginia. “I’ve been through a lot…the good, the bad and the ugly.”
The loquacious CEO of the 105 year old company He says his job has been to be a “steady hand on the wheel.” “It’s so easy to get distracted…there are shiny objects everywhere.”
the data…
Hilton has 8 thousand hotels
In 126 territories.
Steering wheel control
Hilton, founded by Conrad Hilton and run by his family founder until 1996, expanded from nine brands to 24 under Nassetta’s leadership. But it has largely done so organically, unlike more acquisitive rivals such as Marriott and Accor, in a bid to be consistent. hiltonwhich also owns the Waldorf Astoria, has tried to develop its brands in a way that they do not cannibalize each otherfor example, targeting specific groups such as young urban or business travelers.
It has been limited to hotels and accommodation rather than diversifying into other parts of the travel sector, such as cruises, like some of its peers. Too many companies today are purpose-washing (when purpose and activism make for a good campaign, but there’s no real strategy to sustain it) and you rely on the visions that come from marketers, Nassetta says, rather than sticking to what they’re good at. . “If you keep swerving, if you take all the exits, no one can follow you.”
As Airbnb and hosting-sharing services compete for the travel business, Nassetta says Hilton offers consistency of quality and service that encourages guests to stay with their brands. However, that goal faces a new threat, as thousands of hospitality employees, including those at Hilton hotels, declared strike in the US to demand better working conditions.
Hilton grew faster than its biggest rival, Marriottwith an average annual increase of 5.4 percent in the total number of rooms over the five years to the end of 2023, up from 3.9 percent from Marriott. At the end of June, Hilton had just over 1.2 million rooms, compared to Marriott’s 1.6 million rooms.
Hilton share price rises of more than 30 percent so far this year, surpassing the sector and raising its market valuation to almost 60 billion dollars. The company plans to present third-quarter results next week. For the whole year, Net income is projected to increase by $1.15 billion at a range of between 1,530 and 1,560 million dollars.
Nassetta recommends humility: “You can always do better,” he says. “Complacency is a disease that, if allowed to set in, can be very dangerous.” But he can’t help but brag about a success, last year, Hilton was voted the best place to work in the world and on the lapel of his blazer he wears a large pin in the shape of the number one.
Nassetta is competitive and likes to win. She says she wakes up every day as the tenacious “underdog” and attributes her drive and always-on work ethic to her Irish and Italian parents who constantly “pushed us to do more.” Before Hilton, he began his career in hospitality unclogging toilets and rose through the ranks to manage Host Hotels & Resorts.
Nassetta says he is aware that for make a change of course for a company like Hilton (which has about 8 thousand hotels in 126 territories and around 500 thousand employees) “It is everyone’s task” . “I’m not that special.” You have to manage your ambition by delegating appropriately and realizing that “if you don’t stop, take a deep breath, celebrate successes, and give credit where credit is due, people will simply burn out.”
“At the beginning of my career as a leaderI probably didn’t take enough time to slow down,” he admits.
He says other business leaders often ask him how to turn a company around. Radical changes, he points out, fail due to “bad strategy or bad culture.” Good leaders are able to get not only management on their side, but also staff further down the chain. “You have to make people believe in the place you are going and believe in you.” He says he tries to achieve the latter by being authentic, hard-working and a good listener, although he admits he can always improve.
The golden age of travel
Hilton builds on long-term trends that indicate, as Nassetta calls it, “the golden age of travel.” Key drivers include the growth of the middle classes, especially in emerging markets; the combination of business and leisure trips; greater mobility and people looking for pleasant experiences.
Nassetta has previously said that a strategy of andexpansion into affordable mid-range hotelswith basic services has performed better in a difficult financing environment with high borrowing costs. But analysts warn that the risk of reducing scale (in prices and services offered) is to dilute the brand. Patrick Scholes, an analyst at Truist Securities, notes that Marriott and Hyatt are more reluctant to move away from full-service hotels. “Hilton lags behind its competitors in luxury.”
Bernstein analyst Richard Clarke adds that the company recognizes that “its most important stakeholder is not really the guest… but the hotel owner.” Hilton focuses on maximizing its franchisees’ return on investment (for example, implementing technology to improve efficiency), which is why they choose it over its rivals, he says.
the data…
More than 1.2 million rooms
Hilton Worldwide has in the world, until the end of June of this year
Nassetta has a cheerful personality and a permanent Cheshire cat smile. He tries to channel that into the way he responds to challenges, like the pandemic, when he knew “the sun would rise again.” “Your job is not to be optimistic…or unrealistic,” he says. “But keep your people and the organization moving forward”.
As for “noisy and chaotic” US politics, he says, the country is resilient and the system “is built to last.” About the presidential elections next Tuesdayhe says, “we’re going to be perfectly fine no matter what the outcome is.”
In his 18th year as CEO, the issue of succession is something Hilton’s board is interested in addressing, although Nassetta says yesYour departure is expected to be “in a long time”.
When asked if some people who are poised to be his successors might leave because of their reluctance to leave office, Nassetta doesn’t flinch. The company “would survive,” he says. For now, you have the desire, energy and motivation to keep going. He doesn’t spend much time thinking about his legacy, but says his goal is make sure Hilton “is prepared for future success”.
“That is, singularly, the only thing I focus on”.
A day with Chris
Nassetta is an early riser by nature, who arrives at Starbucks at five in the morning for a cup of tea and a light breakfast.
The first hour of the day in the office is your “quiet moment” to read before the meetings begin. Most of the time, he travels abroad, visiting partners, dignitaries and directors, something that takes up two-thirds of his time.
After eating an early dinner, he goes to bed around 9pm, making sure his email inbox is empty and WhatsApp chats are read, replied to and deleted. At the end of the day, “I have no text messages or emails.”. His habit of deleting messages even extends to communicating with his family (he has six daughters between 21 and 30 years old).
He tries to return to his house Virginia, where he grew upevery weekend and often cooks dinner there for 30 members of his family.
ERR