Hilton CEO Chris Nassetta describes personal, professional journey since joining hotel giant
Hilton CEO Chris Nassetta describes personal, professional journey since joining hotel giant
The 18 years since Chris Nassetta took over as chief executive of hotel brand giant Hilton has been an eventful stretch both for the company and him personally.
Speaking on the Walker & Dunlop's Walker Webcast, Nassetta described the journey from real estate investment with Host Hotels & Resorts to transforming Blackstone's 2007 $26 billion purchase of a then-struggling Hilton Worldwide into the most profitable private equity investment in history.
At one point, Blackstone "had written off 70% of the investment, so it was going to then turn in to the biggest private equity loss in history," he said. And yet, they had the confidence [in 2010] to say, 'Even with all that backdrop, we believe in the plan. We believe in you guys, and we're going to put another billion dollars in.' ... It's a testament to a lot of people. Blackstone, our management team, our teams on the front line — everybody put their heart and soul into it, and it ended up being the largest private equity profit in history."
Nassetta established his footing in the hotel industry before joining Hilton on the real estate investment side of the business, most notably climbing to the position of CEO of the largest hotel-focused real estate investment trust, Host Hotels & Resorts. Blackstone officials put him in place as Hilton's president and CEO just months after completing its buyout and just in time to oversee the company through the Great Recession that arose in 2008.
One of Nassetta's first major moves at the helm of the company was uprooting it from its Beverly Hills headquarters to relocate to the Washington, D.C., area, which despite being his hometown he insisted was purely a business-driven decision.
"A lot of people think, 'Oh, Chris just went out [to California, but] he always had the plan to move it and go back to Washington,'" he said. "That really wasn't what the plan was. My deal with Blackstone was if you run the company, you've got to be where everybody is."
He said the heavy concentration of hotel business in the Washington, D.C., area, which includes ownership groups such as his former employer, Host, along with brand competitors such as Marriott International, made the business case for relocating too compelling to ignore. Hilton is now based in McLean, Virginia.
Nassetta compared the move to "injecting a billion volts of life and energy" into Hilton's business.
"My view was the things that we needed to do to redirect and rebuild our culture could not be done in the time frames that we wanted to do them without doing something radical," he said, noting the cost of the move numbers in the "hundreds of millions."
In fact, he said the move back inspired a considerable amount of strife with his wife and six daughters after they had a couple of years to settle into life on the West Coast.
"I thought I was going to be the hero when we made this decision," he said. "I remember going home that night telling my wife and she's ashen and goes, 'Oh, no.' Then she's like, 'It was so hard [moving to Los Angeles], and everybody's doing so well. It was much harder than I expected, and not an easy one. I was not the hero. Let's put it that way."
Hilton went public in late 2013, then spun off both its timeshare business as Hilton Grand Vacations and its owned hotels as the REIT Park Hotels & Resorts in early 2017. Blackstone sold off its last stakes in the companies in 2018.
And the company has continued to grow considerable scale since then.
"At this point, we are 9,400 hotels in 146 countries," Nassetta said. "Five hundred thousand-plus employees this year alone. So far this year, we have opened three hotels a day [around] the world. So we're moving. We've got a lot going on in a lot of really far-flung places."
In terms of future plans, Nassetta was asked if he plans to stick around until he's 80, a la former Marriott CEO Bill Marriott.
"I don't think anybody needs me to be here when I'm 80 years old," he said. "I'm 63, and I still have a lot of energy. I think I'm young, but I don't know. I guess I'm not technically as young as I used to be. ... I love what I do. I have a lot of energy, a lot of passion. I'm not slowing down, so I want to do this for a lot longer. I would say I better find somebody younger, faster, smarter before I turn 80."
Nassetta believes artificial intelligence is poised to be one of the biggest game changers for the industry.
It's "the ability to really take data and have artificial intelligence help us figure out what the data means and to feed into our systems so that you can do things digitally at scale," he said. "And you can give team members in the palm of their hands information and enable them with a tool that can tell them exactly what to do to make you happy and to customize your experience when you're on property."
What isn't likely to be a game changer for his company would be investment in the cruise business. When asked if the outperformance of that segment is tempting, he said demand for cruises is loyal but relatively small and demands a lot of capital to be successful.
"The last number I saw, and I may be a couple of years out of date, is the entire cruise industry is like 30 million people a year," he said. "We're 250 million to 300 million at our company alone."
He also noted that earlier pronouncements that Airbnb and similar shared accommodation platforms would severely disrupt the hotel business have not proven out to be true.
"I said it from the very beginning days of Airbnb. Airbnb is not a threat to our business," Nassetta said. "It is something different. It is about travel, and it is about accommodations. But there are lots of forms of accommodation. It is different than what we do. What we do is we take products at different price points and with different amenity packages, and we deliver those very consistently with service from people that are really trained. We connected together with technology, with loyalty, and we give people, hopefully all the time, a very consistent, high-quality, friendly experience."
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