Nassetta talks Hilton spinoffs, what drives innovation
 
Nassetta talks Hilton spinoffs, what drives innovation
07 OCTOBER 2016 8:09 AM

Hilton Worldwide Holdings’ President and CEO Chris Nassetta shares his thoughts on how and where the company will grow and what’s next for technology innovations.

GUAYAQUIL, Ecuador—For Chris Nassetta, president and CEO of Hilton Worldwide Holdings, culture is everything—something he calls “a pretty simple concept that is quite complex and difficult to execute against.”

In a keynote address to attendees of the South American Hotel Investment Conference and in a subsequent interview with Hotel News Now, Nassetta shared some of the ways he nurtures culture at Hilton, and how it all fits into the company’s expansion and innovation plans.

“Our rallying cry is that we want to be the most hospitable company on earth,” he said. “Of course that means delivering exceptional experience for guests and great value for owners. It’s starting with a purpose everyone can buy into, then connecting it to the values of an organization.”

That purpose and goal—to be the best—is what has driven Nassetta’s decisions over his nine years at the organization.

Splitting one company into three
Plans to divide the current Hilton structure into three parts—the core hotel business, timeshare business Hilton Grand Vacations and real estate investment trust Park Hotels & Resorts—are on track for completion by the end of the year, Nassetta said, adding that the company has been through several rounds of SEC filings and is “on target.”

“This move is all about the long term,” he said.

Nassetta compared the process to “Humpty Dumpty falling off the wall and not getting put back together.”

“It’s done forever so it needs to make sense long-term,” he said. “Each will have dedicated management teams. We’ll have a full activation of the businesses, the capital markets and tax efficiencies. … We can activate our core business fully.”

He said he’s excited for what this move means for the three businesses, since it will allow them to focus even more on what’s right for each.

And when it comes to unit growth, Nassetta said Hilton’s “strategy is unchanged,” even in the light of other industry megamergers, like Marriott International’s acquisition of Starwood Hotels & Resorts Worldwide.

“Our strategy is powerful—we’ll remain committed and continue to execute it in an incredibly disciplined way,” he said. “Having the best pure-play brands in each segment, and driving growth through organic growth is the way to deliver the highest returns on capital over time,” he said.

Still, Nassetta said it’s entirely possible to have too many hotel brands, especially if they’re not clearly defined. But he believes merger activity in the industry is likely to continue.

“In five years, I think there will be more individual hotel brands and fewer hotel brand companies,” he said. “There will be fewer hotel brand companies because the power of having scale, broad geographic diversity and broad chain scale diversity is compelling enough that others will be trying to achieve it if they don’t have it.”

Taking advantage of innovation
Nassetta hinted at the next wave of technology-driven innovation Hilton is investigating, which has everything to do with connectivity.

“When customers aren’t with us, we have to find ways to relate to them in new, interesting and relevant ways to their lives,” he said. “The next decade is going to be an opportunity to own the customer in a very different way. Of course, we have to own them from check-in to check-out, but if we can get our customers’ hearts throughout the whole journey, from dreaming about a trip to sharing stories from it when it’s over, we’re going to be a whole lot more relevant to them.”

When pressed about what the execution of that ideal might look like, he said the company’s app will be “the portal to travel,” and while he said it’s a leading app in the travel space, it’s still in its infancy as far as the capabilities he and the rest of Hilton envision for it.

“How do we connect this app to the whole world of travel?” he asked. “That’s the future. You want to be able to dream about the trip. To arrange digitally for all elements of your stay. Do anything on property, including use (loyalty) points for various things like room service. Connect with the outside world for entertainment. The app will be the portal to make everything more fun, easy and functional.”

He said the key to this kind of innovation is not necessarily creating new products from scratch, but rather linking products and services people already use. That, in turn, will lead to loyalty.

“You can bring your Spotify and Netflix; you can use Uber,” he said. “We don’t need to necessarily invent anything; instead, it’s how we connect the things you use into our ecosystem.”

Nassetta said succeeding in this regard is key in reaching more consumers.

“Those companies that do this well will end up with a (bigger) share of wallet and customer, because it’s not a traditional element of loyalty,” he said. “You become part of people’s travel lives in ways you haven’t been before, in fun and interesting and easy ways.”

Focus on Latin America
With the conference held in Ecuador, Nassetta spoke about Hilton’s growth in the South America region, particularly as momentum for branded hotels picks up in Latin America.

“In the last five years we’ve tripled our presence in Latin America, and we’re setting new records for our company in opening hotels,” he said. “We opened 20 in the last 123 months and signed 30 more deals, and we have more than 50 deals in the pipeline here, and growing.”

Nassetta said the select-service segment continues to grow in the region.

“The megatrend here—as it is in many parts of the world—is limited service,” he said. “The bulk of demand growth in this region is in the midmarket price point, and for us that’s Hilton Garden Inn and Hampton Inn. To drive adequate returns, the bulk of our distribution (in Latin America) will be in the midmarket—that’s where the economic model works the best.”

Nassetta identified Mexico, Colombia and Peru as countries that are high-growth regions for Hilton.

He said brand development in Latin America requires “patience and discipline, but it’s happening. … This is a big region with a huge amount of diversity, lots of regulatory issues to navigate and so on.”

He said he hopes to see Hilton grow a presence in Cuba.

“We’ve been very focused on getting back into Cuba,” Nassetta said. “We were the first international hotel company there many years ago … and it’s something we’re really focused on. We’re working through the process with the government to be licensed and able to do it.”

2 Comments

  • James October 7, 2016 10:40 AM Reply

    Hilton and Marriott seems to be lapping the hospitality field. Accor is close behind and Wyndham is trying really really hard. The rest are in maintenance mode don't you think?

  • Frank Norton October 8, 2016 4:09 AM Reply

    Is it time to ban the word "innovation"?
    The word "innovation" is a fluffy, substance-free cliché that's abused by many companies to mask a lack of real growth, some experts say. Company securities filings mentioned "innovation" 33,528 times last year, up almost two-thirds from five years before, without evidence of a corresponding increase in creativity. "It is a chameleon-like word to hide the lack of substance," writes The Wall Street Journal. There is a difference between having having a patent and true innovation. Innovation means inventing a creation that has never existed and not to be confused with a product replacement or improvement.

Comments that include blatant advertisements or links to products or company websites will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff.