Hilton Reborn

Above all, Chris Nassetta respects and revels in the 91-year history of Hilton Worldwide and its place as a global hotel brand icon. That said, the nearly three years he’s been president & CEO of Hilton have been marked by a missionary zeal to lift the company and its 10 brands to heights (and places) they’ve never been before.

“We’ve been very busy in the past three years restructuring, reorganizing and transforming the company,” says Nassetta, who joined Hilton at the end of 2007, a few months following The Blackstone Group’s acquisition of the company. “In the decade before the Blackstone purchase, Hilton was in a phase of merger and acquisition. They put together the right pieces so there was full segmentation from top to bottom and a full geographic segmentation.”

But what Nassetta found was a company of many parts not unified through a single culture, mission or vision. Hilton’s previous corporate headquarters in California was different from its Memphis office (the former home of Promus Corp., the brand company it bought in 1999) and different from Hilton International headquarters in England.

“I likened it to getting into a boat with the oarsmen rowing out of sequence,” says Nassetta. “The boat moves but it isn’t moving as fast and doesn’t look as good as if it is in the proper cadence. We had incredible people, incredible talent, an incredible legacy and incredible brands. It just wasn’t integrated and aligned with an enterprise-wide culture and view.”

He spent the first six to 12 months on the job traveling to many of the company’s locations asking employees, owners and even customers to define Hilton’s strengths and weaknesses. He found among employee groups more than 20 different value statements. And, as this process was evolving, the economy and hotel industry were taking a nosedive from which it is just now recovering. Instead of retreating, Nassetta stepped-up the transformation project.

“My attitude was instead of losing the focus on the work we had to do to restructure the company, we should accelerate the changes in the company,” he says. “Actually, the external environment was a catalyst to help us move along change even faster. We wanted to be in a position when we emerged from very difficult times to be a company very focused on our growth and on our customers and not focused on a lot of internal transformation or restructuring. That would be a distraction at the wrong time.”

Now that the company is in what Nassetta calls “a nice rhythm,” it’s primed to focus on a handful of key initiatives to fulfill his five-year projection to be the “preeminent global hospitality company, which to us means the first choice to guests, our team members and our owners.”

Beyond aligning corporate cultures and missions, the top job for Nassetta and his executive team was to address several brand issues, particularly with the core Hilton brand. An intensive global review of the brand, dubbed H360, aims, as Nassetta says, “to make sure Hilton is as relevant tomorrow as it once was 20 or 30 years ago. While it has been performing very well with meaningful market share gains over the last three or four years, we have a lot further to go. It’s the number-one brand in customer awareness is every region of the world, but by far it’s not the largest in terms of footprint in many parts of the world.”

The company is also refining its marketing and product offerings to reflect changing customer expectations. As the meetings business remains soft, particularly among big groups, Hilton is adjusting its offerings to attract and accommodate smaller groups.

“We listen to meeting planners to see what can make their lives easier,” says Paul Brown, president of global brands and commercial services. “Making meetings more sustainable is one example. We’re also changing some operational practices at our large properties. In the past, they were geared to have one group in the house at a time, so we’ve made adjustments to be able to handle multiple smaller groups at the same time.”

Brown also oversees Hilton’s product innovation group that processes feedback from customers and owners to improve and create new products, services and brands. Home2, Hilton’s midscale extended-stay brand announced two years ago, is a good example.

“Customers told us they love the Homewood product but wished it was also available at different price points,” says Brown. “And our owners said there are development opportunities in this segment if we could create a product at a lower cost to build and with less required acreage. We developed a prototype, announced it in January 2009 and today we have nearly 70 signed contracts.”

Another key initiative has been to nurture Hilton’s luxury segment business, a task that falls to John Vanderslice. He oversees the Conrad and Waldorf-Astoria brands and will possibly shepherd development of a new lifestyle brand, although that’s on hold for now.

While both the Conrad and Waldorf brands rely on service as cornerstones of their brand identities, Vanderslice can point out brand pillars in each that separate the flags and their customer promises.

For Conrad, which has 15 open properties and 14 on the drawing board, the emphasis is on what Vanderslice calls “smart luxury. It’s a different experience than what you find in other luxury hotels,” he says. “It’s a timeless, worldly style that’s not too traditional or native to one place.”

The Waldorf-Astoria brand, which includes 22 properties and eight in the pipeline, is built on “anticipatory service” and “inspirational environments,” product qualities honed at the flagship Waldorf-Astoria in New York City.

“The world’s most iconic hotel is now the world’s most iconic portfolio of brands,” says Vanderslice. “These are properties that retain their individuality but are joined together through the Waldorf service model.”

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