Chris Nassetta, president and CEO of Hilton, spoke at the recent International Hotel Investment Forum on the risk of commoditization, the sensible addition and molding of brands and the need for industry cooperation on sustainability and environmentalism.
BERLIN—In the late spring of 1919, Conrad Hilton, the founder of the hotel company that still bears his last name, bought a small hotel in Cisco, Texas.
It had 40 rooms. Today, the building houses the Conrad N. Hilton Community Center & Memorial Park, the HQ of philanthropic trust set up by Hilton in 1944 and run separately from Hilton Hotels. Meanwhile, global hotel chain Hilton today has nearly 913,000 rooms worldwide.
Sitting at the top of the company now is Chris Nassetta, who has been in the president and CEO’s chair since 29 October 2007.
Speaking to British journalist and television presenter Nick Ross at the International Hotel Investment Forum, Nassetta said it was humbling to lead an entity celebrating its centenary. And though, in its first 100 years, Hilton has seen 3 billion customers, 10 million team members and a trillion dollars of financial impact, there is more to come, he said.
“Blue-chip companies may only last 10 or 20 so years, but (Hilton is) not limping over the line. Objectively our brands are stronger than they’ve ever been, and we’re opening more than a hotel every day,” Nassetta said.
New brands, too, despite Hilton having fewer than other industry stalwarts such as Marriott International and AccorHotels.
Last month, it announced its 17th hotel brand, Signia Hilton, a meetings and events-focused brand that has three assets in development, currently all in the U.S.
“We need as many (brands) as our customers tell us they need. Signia is a high-end meetings brands, one we’ve worked on for a number of years,” Nassetta said.
Nassetta said hotel chains don’t add brands just for the fun of it.
“Is it a space race? A lot of people might look on it that way, but all the brands are ideas from years of gestation. (Our brand) Motto was five or six years in planning. I don’t know how many … but you’ll see new things from us, but maybe the pace will not be as high as it has been in the last few years,” he said.
The key, he added, is differentiation.
“Generally, the world is moving to the bottom. It is just price, price, price, and if you compete only on this, you will lose. The winners will be premium players who bring differentiation. We are asking new customers, young customers, what it would take for them to be loyal to us. Pioneering is about bringing to customers what they want and taking more friction out of the equation so as to better drive premiums,” Nassetta said.
Hotels must not repeat the mistakes of the airline industry in regards to continually cutting costs and services, Nassetta said, although he added that airlines as a product are more able to be commoditized than hotels.
“In hotels, there are more touchpoints that mean more to you, but our industry could be commoditized if that is what the industry wants,” Nassetta said. For that to happen, the industry would have to regard itself as providing lodgings rather than hospitality, he added.
Nassetta says Hilton is not falling into this trap.
“For example, Hampton by Hilton … you would argue this is a commodity business, but I would argue that is the strongest brand we have, perhaps the strongest brand in the world, as it has an unbelievable service culture, even though there are fewer employees than at other brands,” he said.
“We are a people business serving people, and to do that right you have to build a culture. … The greatest defence against all the things we worry about—disruption, distribution—is culture.”
A main theme at IHIF 2019 was the need for the hotel industry to collectively do more for the environment.
“The hotel industry is the second-biggest industry, but one of the risks of that is the stewardship of that responsibility,” Nassetta said.
“We fight over customers and development, but sustainability is one thing we should not fight over. It is incumbent on our industry to lead. You can be a provider of fantastic experiences and be environmentally conscious.”
The growth of the middle classes and the desire for travel within that group makes this a very optimistic time for hotels, he said.
“There will be ups and downs, but the world is just fine. Across the next couple of years, well, it’s hard to predict further than that, but it looks to be healthy,” Nassetta said.