Hilton sees a new golden age of travel. Can it last?

The company’s hotels are busy around the world as consumers return to personal experiences, travel restrictions ease and many fulfill a pent-up desire to see new places, says Chris Nassetta, the company’s longtime chief executive officer. People have emerged from the pandemic with a new perspective on how to seize opportunities to exit, he says.

“People think, well, I never thought I could get locked up for two years or the best part of two years, but it happened,” says the 60-year-old CEO. “So I’ll live if I can live.”

Covid-19 has likely prompted people to re-prioritize personal connections, a trend that should benefit Hilton over the long term, Mr Nassetta says. The company’s 18 brands include luxury outfits like Waldorf Astoria and Conrad, mid-sized chains like Hampton by Hilton, and new brands launched in recent years, including Home2 Suites by Hilton.

Hilton’s plans for Hampton Inn hotels include drop zones for deliveries.


Photo:

ANDREW KELLY/REUTERS

Mr. Nassetta joined Hilton in 2007 in Blackstone inc

$26 billion leveraged buyout of the company, a deal that would go on to become one of the most profitable private equity real estate investments. Hilton went public in 2013. Over time, Mr. Nassetta has more than doubled the company’s footprint to approximately 1.1 million rooms.

He recently spoke to The Wall Street Journal in his glass-enclosed corner office at Hilton’s McLean, Virginia, headquarters near Washington, DC. Here are edited excerpts:

WSJ: As the economy slows, will it be easier to staff your properties?

Mr. Nassetta: I would say on a scale of 1 to 10 the problem was a 9 or 10 a year ago. Now I would say it’s like a 5 or 6. We still can’t get everything we need in every market. But it’s getting easier and we’ve gotten smarter.

We’re getting a lot more creative when it comes to recruiting. We have always had temp workers, especially in seasonal markets. But now we’re upping our level of sophistication and expanding the availability of gig workers across all of our hotels. It’s a kind of overworking of the staff: they want to work, but they work two shifts a week. It was’nt easy; now let’s try to make it easier.

WSJ: How long will the current travel boom last?

Mr. Nassetta: In the long run it will be spectacular. All the trends that existed before Covid are now at an even higher level – that is, people’s desire to invest for experiences and for things to be done.

A Hilton hotel in Qatar, host of the World Cup.


Photo:

Christopher Pike/Bloomberg News

The other thing that is very beneficial in the long term to what I am calling our new golden age of travel is mobility. You have greater flexibility. People will be more flexible on Mondays, Fridays and weekends. People will allow more remote work. The more mobile the world, the better our business. As simple as that.

WSJ: What are you hearing from big corporate clients – are they starting to freeze travel budgets or cut spending?

Mr. Nassetta: We just conducted a survey: 85% or the vast majority of our business travel customers said they will be traveling at least as much next year as they have this year. At the start of Covid I was on every TV show; [some said] People will never travel for business meetings and the events business will be dead. I said, “I think by the time we get out two or three years, it’s going to look a lot more like it is.” I don’t think it’s going to look exactly the same; There will be some nuanced differences. The truth is I’ll be right.

WSJ: So which markets currently look the healthiest for Hilton?

Mr. Nassetta: It’s not what you would think. The market that has recovered the best this year – which will significantly outperform 2019 – is our business in Europe, the Middle East and Africa. Most of this business is Europe. You would think what’s going on with Ukraine, energy issues; Many people would argue [Europe’s] already in a recession, and they could be. In our business, mostly for the reasons I’ve described — pent-up demand, secular shifts in spending, everyone in the US looking to go to London this summer — all this tailwind, it’s crushing it. Then the USA would be second.

WSJ: Are there changes in the way people travel now that require hotel design changes?

Mr. Nassetta: In this space, you’ll see the biggest changes just in getting the basics and technology right. You’d laugh at the things we’re talking about because you’d be like, of course Chris, everyone’s interested in this stuff. But getting it right every time makes a difference. What are the things that people care about? A great bed. Great bedding. Great lighting. plug next to my bed. A great TV with great content. Great bathrooms, counter space, a great lighted mirror. water pressure and hot water. And great towels. Don’t give me sandpaper – I’ve stayed at some of our competitors.

WSJ: What does the future of hotel room service hold – will more hotels perform in the age of delivery apps?

Mr. Nassetta: It has a great future; I just think it will be different. In a luxury context, it will have a future forever because that is an expectation. In full-service hotels, I think it will largely evolve into some form of delivery from the hotel’s food and beverage operation. Then I think in a limited service context, where we’ve never had room service, it’s about making it easier to connect with the outside world.

WSJ: Let’s say you’re at a Hampton Inn and you want to order food. How does it look?

Mr. Nassetta: For example, if you look at the new Hampton Inn lobby prototype, there will be a drop zone for deliveries. In extended stay hotels, so take Homewood Suites, it could be the drop zone for Amazon packages, or Grubhub, or Uber Eats, or whatever. It will be near reception so there will be staff so people can drop off food and it’s safe and we have someone watching and customers will come down.

WSJ: You have been CEO for 15 years. What advice do you have for other managers who are aiming for a long tenure?

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Mr. Nassetta: I have a philosophy of life and that is to keep a steady hand behind the wheel. Have a plan and work the plan and adjust the plan.

The plan must be changed. Let me use the slang. I don’t take every exit, but I change lanes and take exits that make sense. My longevity has been the ability to easily filter out noise and know when to occasionally take an exit, when to change lanes, but not so often that everyone around me is confused and can’t see what may have happened tomorrow.

Write to Chip Cutter at [email protected]

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