Hilton intends to establish “many more partnerships” with independent travel and hospitality businesses, said the company’s president and CEO Chris Nassetta from the stage at IHIF on Tuesday.
“You will see many more partnerships on the experiential side. Why? Because our Hilton Honors members, particularly, want more experiences, and the more we can offer them those adjacencies, the more we think they will remain loyal and we’ll get an incremental share of wallet,” he said, in conversation with consultant Nick van Marken.
Nassetta added that membership of Hilton’s loyalty programme would surpass a total of 200 million by the end of the year.
Hilton recently announced exclusive distribution partnerships with Small Luxury Hotel of the World (SLH) and AutoCamp, a US-based provider of camping experiences.
Of the SLH deal, Nassetta said: “SLH was the best thing out there at scale … and it was a really effective and efficient way for us to take our own 160 luxury hotels up to 700 hotels with a very heavy resort orientation and to do it quickly and efficiently from the standpoint of us being a very capital light business.”
The deal means Hilton Honors members can book, earn, and redeem points for stays at the 560 SLH properties, 60% of which are in Europe.
A similar deal with AutoCamp, which provides custom Airstreams, cabins, and luxury tents at US national parks, was described as a: “fabulous concept born in the US that will ultimately go global.”
Giving Hilton customers an ever-increasing choice has been a key theme of Nassetta’s 17 years as CEO of the company, during which time the number of Hilton brands has risen from 9 to 22.
All these brands have been created in-house. Nassetta commented: “Doing it ourselves is an infinite yield. It’s a very high return way of doing it.”
However, Hilton recently broke with its DIY tradition and acquired two hotel brands: NoMad and Graduate. Why?
“We think they’re great brands. We want to get into the luxury lifestyle space starting with NoMad. We’ve been saying we’re gonna do it. We’ve probably been late in doing it. And, as we looked at how we’d imagine it, NoMad was pretty much the bullseye,” he said.
“As we buy it, it’s really only one hotel in London,” he said, adding that the price was right compared to the cost and time of developing a similar brand in-house.
“While we’re not getting a portfolio, we’re getting a pipeline of a dozen deals at various stages and we probably save ourselves two years of gestation time if we had been building out our own brand.”
On Graduate, Nassetta said: “Ben Weprin [founder of Graduate Hotels and AJ Capital Partners] is a friend of mine. Ben created something special and pretty small – 34 hotels going on 36 – and they own them all. Obviously, we think about the opportunity in a very different way and Ben got to a point where he and his team wanted to focus on the real estate and so this [Hilton to pay $210m to acquire all rights to the Graduate brand worldwide] is part of a recapitalisation of all the real estate. We end up with the brand, and our view is that every university town in the world can have and should have a Graduate Hotel. So, it’s an addressable market of four or five hundred hotels.”
On the subject of further M&A, Nassetta said: “My guess is there’s not a lot more brand acquisitions, okay. We’ll probably go back to our normal knitting, so to speak.”
He added that the success of Hilton was founded on having a “bullet proof balance sheet” in addition to a positive work culture.
Elsewhere during the conversation, Nassetta, who spends 80% of his time on the road, highlighted Saudi Arabia as an “extraordinary visit” and “the biggest opportunity for growth.”
In the face of geopolitical tensions and unknowns, Nassetta was keen to point to several positive fundamentals for the future of travel and hospitality.
As in Saudi Arabia, countries like India, China and the US are spending huge sums on infrastructure improvements – roads, rail and ports – leading to increased mobility and “more mobility is the lifeblood of travel.”
Increasing middle classes across the world; new generations who want to spend their money on experiences rather than things; and the increased flexibility of working lives were highlighted as key reasons for travel and hospitality to keep growing.