Hilton Group CEO: What makes a good hotel?

Hi everybody, super excited to be here with the CEO of Hilton Hotels, a hotel group with 1.

3 million rooms, Wow, that's a lot of rooms, Chris.

We have to be really proud of our ability to deliver incredible, authentic service delivered by what is one of the best cultures on earth. And recognized as such by a great place to work and the like. But it really is a combination of a great location, a great product with all the functionality that people need. With heartfelt service that delivers customers a bespoke experience and that meets their stay occasion, and there are a lot of stay occasions.

What is the vibe of the team? And I know that's hard for your typical customer to figure out. But this is what I do for a living. And there's a difference. You know, are people happy? Do they look me in the eye? Are they attentive not just to me, but do I see them being attentive to the needs of our guests?

And I say this, and it's a bit of an overstatement, but I really believe this to be true. I can tell within five minutes of walking into a hotel where it stacks in terms of customer satisfaction. And I'm very, very rarely wrong.

And you can tell very quickly. Do you have a team that's well-led? Do you have a team that is inspired by the work that they do, by how they act? Are they engaged, are they happy? Are they, you know, communicating with guests and satisfying various guests needs.

And so it's really easy to know a great hotel.

But the number one complaint, particularly in the United States, which is still the largest piece of our business, is the quality and quantity of towels. Which is obviously, something, you know, very, very simple to fix. So I'm very proud of the fact that we have a whole new Terry program that's just starting a rollout. The next couple of weeks and our entire system across the world will have upgraded quantity and quality of towels. And I take it seriously enough, where I've used them all. I took them home while we were testing things and I was using, I made my wife use the towels, you know. And so we get into the granularity of these issues.

What they want is a consistent, high quality experience. They want the product, the amenities, the functionality to meet their needs, whatever their stay occasion is. And they want it done consistently all the time, and they want friendly service. That doesn't treat them like an honors number or a room number, but treats them like a human being. And when you put those two things together, they will be very, very loyal.

And it accelerated that in the sense that people got locked up for a period of time, depending on where in the world you were. And they really decided that they wanted to live their lives, and they wanted these experiences more than ever. And so they're out traveling for leisure, they're out traveling for business. They realize they need to build relationships and network, and to collaborate and innovate.

They have to meet in groups. And so you really are seeing a golden age of travel, where for all segments of travel, people are out and about. And I think it's picking up momentum.

No offense to Airbnb, but they're the opposite, right? When people are people. You don't have the consistency of quality, you don't have the amenities, you don't have the service delivery. Because there is, you know, limited, if any, service.

Don't have the technology that bands it all together, and at the moment, don't have, don't have loyalty either. And so that's not to say it's not a good business for for a certain trip occasion, people use it, by the way. In those 12 hours of focus groups, that was a question I asked, you know, or indirectly asked and witnessed from every one of those focus groups. Which validated my view, which is that is a value play.

So, from a customer point of view, when they use home sharing, Airbnb is typically leisure related. Typically higher occupancy by number of people. You know, a little bit longer stay, and they need a different type of facility, kitchen and other type of facility, and a value proposition. Meaning, you know, they have a bunch of people, generally of different means, and so they're looking for a reasonable value. To get incrementally more space to satisfy that trip occasion.

It's, it's absolutely the opposite. Still, two thirds of people are driving and one third are flying, and so I think during Covid, people retrain themselves. They started to travel, but they traveled within driving radiuses and not quite as great a distance. And so the the fact that airfares have gone up has not really hurt us.

And the fact is, people, businesses, are making more. I mean, the reality is, why have airfares gone up? Inflation's gone up, fuel, all the input, labor costs, fuel costs. you know, broadly around the world, we have inflation. Well, I mean, that's helped businesses and individuals.

So people are making more money, their salaries went up, businesses are more profitable. And so the reality is everything is sort of moved up. Airfares haven't been the only thing moving up.

Everything's moved up, including profitability and people's pay, and so we have not. We have not seen any real impact. But again, part of it is a shift out to a more incremental drive to.

And so when they decided they were going to buy Hilton in 2007, they called me and said, you know, we should do this again. And so I had a great deal of familiarity with them and I had a lot of knowledge having competed against Hilton. On on the company. From the outside looking in, and, you know, I found that we were very aligned in our view of what the opportunity was.

And they were, you know, the perfect partner for me. To be able to enable the massive amount of change that needed to occur at the company. To get it, you know, get it going and in a proper direction. I mean, the truth is, Hilton's been around a long time. At that time, we'd been around 85 plus years, but we were a very middle of the road performer.

That, you know, is the hospitality business today, and we've become the number one growth of the majors. And at the same time, all of it on behalf of our owners. And we can talk about the model because we don't own the real estate, so driving returns is important.

You know, we drive the premium market share and the premium returns to owners.

But Blackstone's, and you could ask them, but Blackstone's entire mantra is buy it, fix it and sell it, right? And so they bought this at a time where everybody thought they were paying way too much. I mean, it was an asset that had never sold, right?

You can't buy brands like this, and they bought it. And I came in with the acquisition with a fundamental belief that it was the most undermanaged company we had ever seen. And so we went about fixing it. But it wasn't for the faint of heart.

Right, you know, even without the Great Recession, OK, it was a lot to do. It was a big global business that was really sort of limping. But Blackstone, as a partner, basically gave me carte blanche to do the things that we needed to do and supported it. It wasn't just Crisco. Do it, but we're going to give you the resources.

We're going to help you with people. Particularly. In the beginning, we didn't really have the talent base and so we went about it. Then the great recession hit, and everybody thought, by the way, that Blackstone had just lost five and a half or six billion dollars.

The headlines and all the period in the journal and everything were horrific, but to their credit, and this is an important part of the story. They doubled down, they invested over, you know, another billion plus in the business because they believed in what we were doing. Even though that was a huge, concentrated bet already that they doubled down on. And they stood with the team and I to sort of help us push through the great recession. And the end of the story is, it's still, I think, to this day, the largest private equity profit in the history of private equity.

So it was really across the board, it was help on the strategy side, help on the HR side, help on the branding side, help on the global growth side. In terms of relationships and knowledge and partners that they had around the world, I would say it would be fair to describe it as a full court press.

You know, if we're not responsible, then all of a sudden people can't fly around and drive around and visit all these amazing destinations and do business all over the world. It might crimp the business a bit. So I said, we need to not only have an ESG strategy, which we built many years ago, but we need to lead it. And we need to be collaborating. Because no one company, even as big as we are, can do it. And they were super supportive of those efforts, you know, and, as I say, we were way ahead of our time.

A lot of people want to say, PE, you know, they don't want to invest in anything that's not going to drive revenue, but that's just not true. I mean, with Blackstone, we had a very concerted effort on this on this front. Because our view, my view, and I think they shared it was. It got to the very sustainability over the long term of the business.

So I think that gives me, you know, a lot of experience and calmness. But it's also something I work really hard on is just to be steady, to have a steady hand on the wheel, it's really easy to jerk the wheel, it's real. There are a lot of things going on in the macro environment.

Your competitors are doing things. You got generative AI, you got this, you know, got so many shiny objects that are flashing by you all the time. And if you try and chase them all, you're likely to do very, you know, you're likely to do a lot of things and none of them very well. And so my leadership philosophy is steady hand focus.

Don't worry about the small things, don't let you know, don't let you know. So many things come at you, intimidate you because it can be intimidating. Both the macro things that are changing, but the micro things, all the shiny object. If I go back and tell my, you know, 30 year old self, you know, how do you advance your leadership skills? It would be, you know, recognize, like, pull the big levers, like, just keep focusing on building a great culture.

Make sure you have a spectacular strategy, make sure if it's a big business, you got a reasonable balance sheet. And, you know, and keep pushing and chunk it out and and grind. I mean, that's the thing, you know, like, we are. We are a lot of our success, and I think my success is, you know, being all of those things, but being very scrappy.

Entrepreneurial, scrappy, gritty, like, you know, just you got to plan, work the plan. And I would tell my younger self, Don't get caught up in all the all the extraneous stuff.

And I think that can be super disruptive, particularly in a very large global organization. Or they feel like they absolutely have to, and they may be right because they haven't. They haven't built the right teams for whatever reason, they haven't changed people, they need to change.

They're insecure about their own position in the company and they don't want, you know, people that are smarter, faster, you know, around them. Whatever the whatever the point, you know, the the the the results the same, which is dysfunction. And so in the end, if a CEO's primary job, for you know, is culture and strategy, and those are way up high to get them right. By definition, the more that you allow yourself to get sucked down in the business, the more risk you. You don't see the forest through the trees, and so I am constantly pushing myself to delegate and get out of the weeds.

I say this to our board all the time and it's sort of related to this a little bit like. We've gone through 16 years of evolution here, and I'd say we probably have gone through five or 10 different big iterations. And what got, you know? What I always say is like, what got you from A to B is is probably not what's going to get you from B to C, and it's definitely not what's going to get you from C to D. And so, as a CEO, like what? I'm preaching to myself, Nikolai, because I'm constantly reminding myself of this.

You have to be able to reinvent yourself so you can reinvent your organization because the world is changing around you. The competitive landscape is changing, and I think that one of the pitfalls all of us fall into is comfort. You get a team around you, you've had great success and you just keep repeating the rhythms. With the belief that if it worked for the last five years, it'll work for the next five years.

And the day that I don't think that you will, you will see me leave the business. Because the truth is, we have a great business. The model is one of the best business models on earth and we've run it well. But there's opportunity. There's a whole bunch of pockets of opportunity in different segments of customers and thus within the brands. Tons of opportunities in terms of different geographies, all of which we're pursuing. But I'd say just, I think there's some that we can do even more, better, faster.

Literally, and my kids, of course, were young, They're now 20 to 30. I have six daughters, but they were young. And my kids thought I worked for Paris Hilton, They used to say, Dad, what's it like to work for Paris Hilton?

And I gave up trying to explain that I didn't, and I just said, she's great. We didn't really have much of a relationship till about four or five years ago, and my belief was that it was a. It was silly that Paris has an unbelievably large following and a very, very positive brand, not just here in the U.S. but all over the world.

And her name's our name, like, there's no getting away from it. She's going to use the Hilton name and we're going to use the Hilton name. And we ought to be trying to find ways to get her more actively engaged, and we have.

So you can see, she's a partner with us in all of our campaigns, she does a lot of our TV ads, social media, she DJs all over the world for us.

She's doing some advisory work. I mentioned lifestyle was a category that I want us to push harder on, and she's doing some advisory work there to help us in that. And so we have an extraordinary relationship. I'll see her tomorrow.

I'll be you. We're opening, we're opening. The first tempo in Times Square at TSX, and Paris is going to DJ in Times Square on Wednesday. Excuse me.

Wednesday night, so I'll see her.

But find you know, something in your professional career that you have an interest in. But more importantly, find a company and or a group of people that you love, being part of, a group of people, that that is purposeful, a group of people or a company that will invest in you. A group of people where you feel like you are part of something bigger than yourself. I think if you can find that, you will find a lot more happiness and joy in your career than being in something you like. Without. Without the other parts, in fact, I'd argue you could be in a lot of different things in terms of industries. But if you were with a group of people. Doing something that you thought mattered to you and that inspired you and made you feel like you're part of something bigger, you're. You have a much higher probability of happiness and joy.

And that's what I say to my my six daughters. I want two things in your life I want you to be, I want you to have happiness, and I want you to be able to sustain yourself.

And finding a great career in a great company, with a great group of people, you can connect those two and accomplish both.