When Chris Nassetta joined Hilton Worldwide as chief executive in 2007, he found a hotel chain that was “broken”.
“We had lost our way for decades and decades,” says the 62-year-old executive. But as he set about trying to restore the brand often credited with inventing the pina colada cocktail and popularising air conditioning and TVs in hotel rooms, the obstacles mounted.
Nassetta was appointed as part of the high-stakes US$26 billion ($42.8b) purchase of Hilton by private equity group Blackstone, where the debt package alone exceeded US$20b.
Months later, the financial crisis hit and Nassetta remembers media headlines calling the hotel group Blackstone’s “black eye” for the high price paid at what seemed to be exactly the wrong time. The challenges continued when, in 2009, rival Starwood accused Hilton and its top executives of corporate espionage as it tried to create a lifestyle hotel brand.
Nassetta, a restructuring expert with a history of fixing broken companies, relocated Hilton’s headquarters from California to Virginia, where property and labour were cheaper. He pursued an aggressive asset-light strategy to franchise and manage hotels, increase room count and expand internationally, while overhauling corporate culture to make the company more ruthlessly performance-driven.
Hilton returned to the New York Stock Exchange in 2013 and Blackstone sold out in 2018, generating a record US$14b profit.
“We built a plan around purpose, building a great culture, making people feel like they were part of something bigger than themselves,” says Nassetta, referring to himself and Jonathan Gray, chief operating officer of Blackstone, who is Hilton’s chairman and who appointed his friend to the CEO role.
But Hilton was knocked again when Covid hit, decimating the hospitality sector. While business and holiday travel has returned, the global economy is again showing signs of weakness – from the US to China.
“Nothing surprises me any more,” Nassetta tells the Financial Times at the Hilton hotel near its McLean, Virginia headquarters. “I’ve lived through a lot of things... the good, the bad and the ugly.”
The loquacious chief executive of the 105-year-old company says his job has been to be a “steady hand at the wheel”. “It’s so easy to get distracted... There are shiny objects everywhere.”
Hilton, started by Conrad Hilton and led by its founding family until 1996, has expanded from nine brands to 24 under Nassetta’s leadership. But it has done so largely organically, unlike more acquisitive rivals, such as Marriott and Accor, in an attempt to be consistent. Hilton, which also owns the Waldorf Astoria, has tried to develop its brands so they do not cannibalise each other by, for example, targeting specific groups such as young urban or business travellers.
It has stuck to hotels and lodging rather than branching out into other parts of the travel sector, such as cruises, like some peers. Too many companies today are “purpose-washing” and relying on visions derived by marketing professionals, Nassetta says, rather than sticking to what they are good at. “If you’re jerking the wheel around, if you’re taking every exit, nobody can follow you.”
As Airbnb and homesharing compete for travel business, Nassetta says Hilton offers a consistency of quality and service that encourages guests to stick with its brands. However, that aim is facing a new threat as thousands of hospitality staff, including those at Hilton hotels, strike in the US, calling for better working conditions.
Hilton has grown faster than its bigger rival, Marriott, with total rooms increasing on average by 5.4% a year during the five years to the end of 2023, compared with Marriott’s 3.9%. At the end of June, Hilton had just over 1.2 million rooms, compared with Marriott’s 1.6 million.
Hilton’s share price has increased by more than 30% in the year to date, outperforming the sector and pushing its market valuation to almost US$60b. The company is due to report third quarter results next week. For the full year, net profit is forecast to rise from US$1.15b to US$1.53-1.56b.
Nassetta prescribes humility: “You can always do better,” he says. “Complacency is a disease that, if you let it set in, can be very dangerous.” But he can’t help but brag about one success – last year Hilton was voted the best place to work in the world, and on his blazer lapel is a large pin in the shape of the number one.
Nassetta is a naturally early riser who makes it to Starbucks by 5am for a cup of tea and a light breakfast.
The first hour of the day at the office is his “quiet time” for reading before meetings start. More often than not, he is travelling overseas, seeing partners, dignitaries and managers, which takes up two-thirds of his time.
Following an early dinner, he heads to bed around 9pm, making sure his email inbox is clear and WhatsApp chats are read, responded to and deleted. At the end of the day, “I have zero texts and emails.” His habit of deleting messages even extends to communication with his family (he has six daughters between the ages of 21 and 30).
He tries to make it home to Virginia, where he grew up, every weekend and often cooks dinner there for 30 members of his family.
Nassetta is competitive and likes to win. He says he wakes up each day as the scrappy “underdog”. He attributes his drive and always-on work ethic to his Irish and Italian parents, who were constantly “pushing us to do more”. Before Hilton, he started his career in hospitality plunging toilets and worked his way up to the helm of Host Hotels & Resorts.
Nassetta says he is aware turning round a company such as Hilton – which has about 8000 hotels in 126 territories and about 500,000 employees – “takes a village”.
“I’m not that special.” He has to manage his ambition with delegating appropriately and realising “if you don’t stop, take a deep breath, celebrate successes, and give credit where credit is due, people just burn out”.
“Earlier in my leadership journey, I probably didn’t take enough time to slow down,” he admits.
He says other business leaders often ask him how a company can transform itself. Turnarounds, he notes, fail because of “bad strategy or bad culture”.
Good leaders are able to get not just managers onside but also staff lower down the chain. “You need to get people to believe in where you’re going and in you.” He says he attempts the latter by being authentic, hard-working and a good listener, although admits he could always improve.
Hilton is relying on longer-term trends that indicate, as Nassetta calls it, “the golden age of travel”. Key drivers include growing middle classes, especially in emerging markets; the blending of travel for work and pleasure; increased mobility and people searching for enjoyable experiences.
Nassetta previously said a strategy to expand into affordable, mid-market hotels with basic amenities has worked better in a tough financing environment with high borrowing costs. But observers warn the risk with downscaling is brand dilution.
Patrick Scholes, an analyst for Truist Securities, notes Marriott and Hyatt have been more reluctant to move away from full-service hotels. “Hilton lags competitors on luxury.”
Richard Clarke, an analyst at Bernstein, adds the company acknowledges “their most important stakeholder is not really the guest ... but it’s the hotel owner”. Hilton focuses on maximising its franchise owners’ return on investment – by, for example, rolling out technology to improve efficiency – so they choose it over rivals, he says.
Nassetta has a cheerful personality and a permanent Cheshire cat grin. He tries to channel that in how he responds to challenges, such as the pandemic, when he knew “the sun would come up again”. “Your job is not to be a Pollyanna... not to be unrealistic,” he says. “But to keep your people and the organisation moving forward.”
As for “noisy and messy” US politics, he says, the country is resilient and the system “is built to last”. On next month’s US election, he says, “We’ll be perfectly fine no matter what the outcome is.”
Now into his 18th year as chief executive, succession is a topic Hilton’s board has been keen to address, even if Nassetta says his exit is hopefully “a long time from now”.
Asked whether some individuals primed to take over from him might leave due to his reluctance to step down, Nassetta is unfazed. The company “would survive”, he says.
For now, he has the desire, energy and drive to carry on. He does not spend much time thinking about his legacy but says his aim is to make sure Hilton “is set up for future success”.
“That singularly is the only focus I have.”
Written by: Anjli Raval in McLean, Virginia and Eri Sugiura in London.
© Financial Times