Chris Nassetta of Hilton Worldwide, said there’s no doubt the company will go public and launch a lifestyle brand at some point. For now, there’s no rush.
Chris Nassetta must have the patience of Job. Regardless of the venue, he is compelled to address two issues that his role as president and CEO of Hilton Worldwide always generates:
1) when the company will go public; and
2) when it will launch a lifestyle/boutique brand.
The case was no different Thursday morning during the opening general session of the Hotel Investment Conference Asia Pacific. Nassetta, in his usual manner, put on a happy face and dutifully addressed the issues.
First, the question about going public, which was asked by one of the 800 attendees of the conference. A long-running rumor in the hotel industry has Hilton parent Blackstone Group spinning off the company that it bought for $26 billion and took private in November 2007. As Nassetta has said before, it’s not really a question of “if,” it’s more of “when?”
“Blackstone and I are both of the mind that everything is doing really, really well as a company,” Nassetta said. “There will be a time to consider an exit—they’re in the business of exiting at some point in time—but none of us, management or Blackstone, are in a particular rush because we’re growing, we’re deleveraging. Every day that goes by we’re creating more value for both Blackstone and all of our constituents … Someday we will, but we’re not in a particular rush is an honest answer.”
You gotta give the man credit for being open. The late-night gatherings of the minds during industry events often produce guesses as to when the inevitable will happen. I’ve heard from countless sources for the past 18 months that the deal is “imminent.” Clearly these sources were simply guessing.
It makes for good headlines to speculate on such things of urgency, but it sounds like we’re just going to have to wait for this to happen. It could be tomorrow, next month or next year. My guess is that it isn’t too far in the future, given that it’s been five years since Blackstone bought Hilton, and a five-year hold is a good rule of thumb for such investments.
In the meantime, I’m guessing Nassetta will have to address the issue at least once or twice more.
A dramatic lifestyle
The question about the lifestyle brand launch is more dramatic. You’ll recall that Hilton got into, uh, hot water, when it hired executives from Starwood Hotels & Resorts Worldwide and launched a brand called Denizen in 2009. Well, it tried to launch it. Shortly after the coming-out party, Hilton was accused of corporate espionage and stealing secrets from Starwood to launch the brand. Denizen suffered a quick, undignified death.
The lifestyle segment is hot. Heck, I’m moderating a general session at the Lifestyle/Boutique 2012 Hotel Development Conference next week in Miami. And Hilton’s absence in the segment is conspicuous.
So, Mr. Nassetta, when will Hilton join the fray?
“We will ultimately do something in the space,” he said during the general session. “We think it’s an opportunity … There’s a lot of growth in that space if you look at the numbers, percentage growth rate—the numbers are great. If you look at the absolute numbers, it’s still a relatively small segment, so given our scale in the growth rate in everything else it’s certainly not something that’s held us back. But it’ll be something we want to do.”
He added that lifestyle elements are permeating the industry throughout all of the segments, which is blurring the lines of lifestyle.
Other panelists during the session were firm believers in the segment as well. InterContinental Hotels Group CEO Richard Solomons said it’s all about what the consumer needs.
“If there’s a demand, if the consumers want a particular service, as an operator you have to think about how you give them that,” he said.
Gerald Lawless, president and CEO of Jumeirah Hotels & Resorts said his company scuttled its Venu lifestyle brand after realizing it needed to focus on its core brand—which on its own could be considered a lifestyle brand.
“At this stage in our life cycle, with the recession, we really were in a position if we wanted to grow with sustainability we needed to do it with one brand, and we made a decision to shutter the (Venu) brand,” Lawless said.
Nassetta said a lifestyle hotel brand is about satisfying customers’ needs.
“In this part of the world, if ‘lifestyle’ is a more progressive design, more innovative ways of delivering service, because there is a significant stock of new hotels, many elements are being addressed,” he said.
Solomons disagreed, saying that if brands tried to be all things to all people, it would lead to commoditization.
“Consumers are much clearer in what they what,” he said. “You have to be careful to not be everything to everyone in one particular hotel. Trying to drive revenue, (you) have to be careful not to commoditize the product. That’s not how we drive the business, and it’s certainly not how we drive returns to our owners.”
The discussion was a brief interaction during a one-hour panel. Nassetta has heard these things before. As he and the Hilton team push toward the launch of a lifestyle hotel brand, it’s going to be interesting to see what they come up with and when it will be unveiled.