HB EXCLUSIVE: Happy Anniversary! From Conrad to Chris: Hilton continues to thrive 100 years after its founding

Hilton team members from around the world

There aren’t many companies still standing after 100 years, but maybe that’s because their founders didn’t dream big enough—unlike Hilton’s founder, Conrad Hilton, who attributed the fact that he dreamed big to his successes: “To accomplish big things, I am convinced you must first dream big dreams.”

“A company that turns 100 is a rare thing—let alone a company that turns 100 and is experiencing its most dynamic time in its history,” said Christopher J. Nassetta, president/CEO of Hilton. “As much as we’ve had a great history, the reality is we’re doing more now than we’ve ever done.”

Prior to going public for the second time, when Blackstone Group owned it, Hilton appointed Nassetta as president and CEO in 2007, in an effort to “build the premier global hospitality company,” but at the time, “Hilton had lost its way,” he said. “We were not what we had once been.”

To find the company’s North Star, he built a strategy around the research he conducted from the onset. In addition to examining annual reports and traveling the world to meet with Hilton team members, he read the words of Hilton’s founder.

Titled Be My Guest, Hilton’s autobiography told the story of the founder’s life in and outside of the hospitality industry, shared business lessons and outlined the way to live a successful life.

Also between the covers? The founder’s feelings on how Hilton’s properties can make the world a bit smaller by breaking down cultural barriers.

“Our company was founded on a very noble premise,” Nassetta said.

Speaking at the Istanbul Hilton’s opening ceremony in May 1955, Hilton’s founder made the following remark: “Each of our hotels is a ‘little America,’ not as a symbol of bristling power, but as a friendly center where men of many nations and of goodwill may speak the language of peace.”

He believed world peace could be achieved through international trade and travel.

To turn around one of the largest hospitality companies in the world, Hilton’s current president/CEO moved the organization forward by returning to the basics—its culture, which began with its founder’s philosophies.

Esprit de corps
The founding of Hilton’s culture can be traced back to when Conrad Hilton bought his first hotel, the 40-room Mobley Hotel in Cisco, TX, in 1919.

To improve the quality of the property, he borrowed a strategy he learned during his time in the U.S. Army, which invoked esprit de corps. (A phrase of French origin, esprit de corps, as defined by Webster’s New College Dictionary, means a sense of  pride or honor shared by those in the same group or undertaking.)

To get his employees on board with his approach, Hilton’s founder used a simple formula: pride plus incentive.

“I grant that our 20-odd employees were stunned when I assembled them for our first pep talk,” he wrote in his autobiography. “They liked the attention, however, and they were very pleased to hear that Mr. Drown and myself, while able to front for them at the bank and in the lobby, were completely at their mercy once a guest got beyond the front desk.”

He told his employees: “You’re the only ones who can give a smiling service. Clean rooms, spotless halls, plenty of fresh soap and linen. Ninety percent of the Mobley’s reputation is in your hands. You get steady jobs, good money, pay raises, if Cisco means the Mobley to travelers. It’s up to you.”

Nearly 100 years later, with culture being such a core component to Hilton’s foundation, one of the things Nassetta did to turn around Hilton in the mid-2000s was solidify its culture.

“Our culture had gotten off the rails, and our strategy was not really refined,” Nassetta said. “So as a leader, the one thing I’ve learned over these years—both by being a student of it and trial and error—is there are two things you’ve got to do to be successful: You’ve got to have a great strategy and you’ve got to have a great culture.”

One of the things he did was rebuild Hilton’s executive committee—keeping only a single member, Ian Carter, currently president of global development, architecture, design and construction.

“If you want to do things radically, differently and change the culture and strategy, most of the time that means you’ve got to change most of the people,” Nassetta said.

When he took the reins, the company’s values as a whole weren’t aligned. As a result of his leadership, today, Hilton’s values are hospitality, integrity, leadership, teamwork, ownership and now. (The first letter of each word united spells Hilton.)

Each member of Hilton’s senior leadership team is required to put in a week at a property every year. Matthew W. Schuyler, chief human resources officer, said, “It’s the best experience you have all year round, but it is the most draining. You think sitting here and thinking of big ideas is tiring? No way. Being on your feet all day long, seeing how these team members spend their lives servicing our guests, it is humbling. It is exhausting. It is exhilarating. It is an emotional rollercoaster, but you come away with such better context of the work we do in our corporate offices as it relates to what happens at the properties.”

Oftentimes, Hilton executives go back to headquarters with new ideas to help improve the lives of employees. For example, executives recognized the need for new uniforms after performing various roles at properties, so the company sealed a partnership with Under Armour to launch the Hilton Under Armour Wardrobe Program for employees.

“We’re rolling this program out,” he said. “We’ve already introduced millions of articles of wardrobes around the ecosystem, all Under Armour, so you see our logo on the front of the shirt and the Under Armour logo on the back or on the side; the team members are thrilled to wear this stuff because it’s super comfortable and lets them do their jobs without having the burden of nonbreathable wardrobe.”

Hilton isn’t immune to the labor shortage challenge many in the industry are facing; however, for the company, “attraction is a slightly harder challenge than retention,” Schuyler said. To retain employees, Hilton does its best to shape a culture where employees can easily find reasons to stay.

“Once you’re here, you generally fall in love with the environment and want to stay,” he said. “We have noticed our statistics on attrition are much better than the industry as a whole, but, to be clear, we still lose more than we’d like to. We do view attrition as a problem and retention as a goal.”

One of the company’s goals is to create programs all of its employees can benefit from—for instance, the Team Member Travel Program, which provides discounts to employees traveling. The one caveat is employees can only use the program for leisure travel.

“Hotels aren’t 100% occupied every single night of the year,” he said. “When you have available rooms, we’d like to book those up with our team members traveling around the world.”

To help train its employees globally—its youth in particular—Hilton established a partnership with the International Youth Foundation (IYF) nearly 10 years ago.

From the onset, IYF introduced Passport to Success (PTS), a life skills curriculum, to the company. Eventually, the two began collaborating on a hospitality version of the program—called “Passport to Success for Hospitality”—and since then, the platform has helped train more than 20,000 Hilton team members across the globe.

“We’ve been developing an electronic training module with IYF for these parts of the world where we have to change perceptions,” said Katie Fallon, EVP/global head of corporate affairs at Hilton. “It’s a fun, hotel-based online training that we’re now making mobile-friendly that educates you about careers in hospitality, but also teaches you the soft skills you need to succeed in an entry-level hotel position.”

After all, with regard to training, Hilton’s founder wrote the following: “Training good men—a common requirement in any industry if it is to keep its standards and progress.”

Global responsibility
Hilton’s founder believed in assuming responsibility for the world around him.

“The whole purpose of democracy is for the participation of the individual,” he wrote. “The will of the people. You cannot have ‘government of the people, by the people, for the people’ without the active participation of those people. Nor can your life be a personal success unless, as a citizen, tourist, voter, you share in shaping your own world.”

Hilton wrote these words more than 60 years ago, and today, the company is continuing its founder’s vision by investing in initiatives aimed at positively impacting the communities surrounding its properties.

In 2011, Hilton rolled out Travel With Purpose, a corporate responsibility platform designed to focus on creating opportunities, strengthening communities, celebrating cultures and living sustainably.

“It was really industry-leading in its ability to track, measure and advise hotels on their performance vis-à-vis the environment around them because we were one of the first hospitality companies to make it a brand standard for all of our hotels—managed and franchised—to use this proprietary software called LightStay to measure their water, energy and waste and give them annual goals to meet in service of a broader goal around environmental impact. So, we had a really, really good foundation,” Fallon said.

The UN rolled out its own Sustainable Development Goals (SDGs) in 2015 and, as a result, Hilton adjusted its own initiatives.

“We realized we still had some work to do to fine tune how we were running our corporate responsibility program and connect it—from a business integration standpoint—to as many of the SDG goals as possible, so that we were really operationalizing the spirit of those goals,” Fallon said.

To identify opportunities for improvement, Hilton did a risk assessment across its business. “We then revitalized our Travel With Purpose platform to align with those goals, and we built out a macro vision, which is the doubling of our social impact and cutting our environmental footprint in half by 2030; then underneath that macro vision, we have 23 subgoals, where we have a business plan around the implementation,” Fallon said.

Some of the company’s 2030 environmental goals include the following: reduce water consumption and produced waste by 50%; remove plastic straws from managed properties; and expand existing soap recycling program to all hotels, sending zero soap to landfills.

“Since we already had a very strong foundation on the environmental front, we’re feeling really good about the leadership role we’re playing and confident that we’ll meet the reduction of our environmental footprint in half, aided by the fact that we’ve adopted science-based targets,” Fallon said.

As for its social investments, Hilton has committed to doubling the amount spent with local, small and minority-owned suppliers; doubling investment in opportunity programs for women and youth; and doubling monetary support for natural disaster relief efforts.

Even though Hilton seems to be on track with many of the goals it set for itself, challenges lie ahead, especially with regard to building the ecosystem of local vendors and suppliers around new hotels in developing parts of the world.

“We will have to put in a lot of time and energy, and, I think, mindshare into identifying where our development pipeline is and working with NGOs on the ground to help inspire and promote the entrepreneurship that we need around the hotels to be able to procure locally,” she said.

Development: Think big
Looking back on his life, Conrad Hilton attributed three factors to his success: prayer, work and dream.

After opening hotels across the nation, he continued to dream big. For instance, when his mother asked him if he was satisfied with this achievement, he responded with, “Nope. I haven’t got the ‘greatest of them all.’ But I’ll get it. Wait and see.”

Of course, he was referencing the Waldorf Astoria, which he successfully purchased later on. He became known as “the Man Who Bought the Waldorf” on October 12, 1949.

But even with his grand imagination, he couldn’t have envisioned the company Hilton is today.

In terms of development, 2018 was a record-breaking year for the company. Hilton opened more than 450 hotels (opening more than one hotel per day) with nearly 57,000 rooms in 2018—making it the best year of openings in Hilton’s history.

Some notable openings during the year included Hilton’s first tri-branded property, located at Chicago’s McCormick Place; Homewood Suites by Hilton in Pleasant Hill, CA, the 1,000th All Suites Brands by Hilton property; and the dual-branded Hampton by Hilton Monterrey Apodaca and Homewood Suites by Hilton Monterrey Apodaca, the company’s second dual-brand hotel in Mexico.

“If you think about it, we’re heavily successful in the U.S.,” Carter said. “A number of our brands were just simply unknown outside of the U.S., so for about the last eight years, we’ve been very, very focused on taking three brands in particular—Hampton by Hilton, Hilton Garden Inn and DoubleTree by Hilton—outside of the U.S.”

Hilton ended the year with roughly 5,700 properties and 913,000 rooms across 113 countries and territories.

“We have this phased approach to growth, and as we start to penetrate markets with those brands, we then expand upon our footprint there to basically gain presence and leverage with our owner base, because, obviously, we’re asset light, so we’re growing with other people’s money,” he said.

During the same time frame, the hotel company began construction on more than 83,000 rooms—shattering another record.

“We signed 108,000 rooms, marking our fourth consecutive year of signings over 100,000 rooms and are on track for another year of record signings with increases expected across both U.S. and international markets,” Nassetta said during a Q4 2018 earnings call.

The company also launched two brands in 2018: Motto by Hilton and LXR Hotels & Resorts, followed by the reveal of Signia Hilton in 2019, which focuses primarily on meetings and events (the hospitality company now has 17 brands).

Each Signia Hilton will have a minimum of 500 guestrooms, at least 75 sq. ft. of event space per room, a destination bar, a signature restaurant and wellness offerings.

The brand will debut with the following openings: Signia Hilton Orlando Bonnet Creek, Signia Hilton Atlanta and Signia Hilton Indianapolis.

Out of the three properties, Bonnet is the only conversion. The remaining two are new-builds.

“I suspect there may be other potential conversions, but the bulk of this brand over time is going to be new-build, not conversion,” Nassetta said during a Q1 2019 earnings call.

During the first quarter, Hilton opened 85 hotels with 12,100 rooms.

“We’ve grown enormously in the U.S., as well,” Carter said. “If I look back just eight years and think about two of the brands that we’ve launched, Home2 and Tru: We’ve grown enormously, and only in the U.S.”

Alone, Tru by Hilton opened 50 properties in 2018. Between the two—Tru by Hilton and Home2 Suites by Hilton—there are nearly 800 properties in the pipeline and open.

“We haven’t decided to take those [brands]overseas yet,” Carter said. “We may do so in the future, but I think what you’re seeing is a huge amount of growth driven by the strategy we employed and a huge amount of potential as we go forward because we have only got half of our brands outside of the U.S. at this point.”

Hilton’s development pipeline has nearly 2,480 hotels with more than 371,000 rooms throughout 108 countries and territories, including 37 countries and territories where Hilton doesn’t currently have any open hotels.

Several recent notable opened properties include Conrad Washington, DC; Conrad Hangzhou in China; and Canopy by Hilton Minneapolis Mill District.

“We’re going to be adding another 20 countries to the countries and territories we’re already in,” Carter said. “We’ll be well north of 130 in the next couple of years.”

Based on the pipeline Hilton currently has, he’s actually a lot more bullish than that. “I think if we look out five years, we’ll be at 150,” he said.

His confidence stems from Hilton’s history. “We were the first in many of these international markets with the Hilton brand,” Carter said. “The brands have recognition pretty much everywhere in the world, particularly the Hilton brand.”

On loyalty
While Hilton didn’t launch its first loyalty program until 1987, nearly 10 years after Conrad Hilton’s death, the company’s founder would’ve seen the value in such a system (he was known for using and supporting technology to bring together the company’s guests).

For instance, he was a staunch proponent of inter-hotel reservations and believed they were the way of the future: “We can, we hope, one day book our guests around the world, always under a Hilton roof,” he said.

Over the past 30-plus years, Hilton’s loyalty program has changed, but its purpose—similar to its founder’s feelings on inter-hotel reservations—has remained the same.

“Loyalty programs used to be exclusive clubs that were only valuable for the most frequent of travelers,” said Jon Witter, chief customer officer. “At Hilton, we want to serve any guest, anywhere in the world, for any travel need they have—and we want to reward their loyalty and make them feel special regardless of how frequently they travel.”

The company’s approach to loyalty is paying off. To date, Hilton has nearly 90 million Honors members (more than half of them are active, according to the company).

“We have made a number of changes over the last several years that make Hilton Honors uniquely valuable to guests of all shapes and sizes, making it easier for them to earn and redeem points in the ways they value,” Witter said. “Whether that means pooling points with other Honors members for a big group trip, using our slider tool to select the points/cash combination that works best for them, redeeming their points through our Amazon Shop With Points platform or going all in on our Experiences platform, we are giving all of our loyal customers choice and control over how they spend their hard-earned points.”

Hilton is enrolling approximately 1.5 million Honors members per month on average.

“When we meet our customers where they are with personalized content and stories that resonate most with them, we’re building loyalty that will keep us outperforming the competition for the next 100 years,” Witter said.

Customers spark innovation
Innovation has always been part of Hilton’s backbone.

To generate more revenue from the Mobley, Conrad Hilton realized he needed to add more beds, so he renovated the entire first floor of the property.

“I decided there and then that the trick in packing a box is to pack a full box,” he wrote. “This had nothing to do with crushing or crowding, only the intelligent use of what is available. I have never had reason to change my mind. Truthfully, the manner in which wasted space is unearthed and utilized can mean the difference between a plus and a minus in operation.”

Throughout the course of its history, the company has introduced the multi-hotel reservations system, televisions in guestrooms, in-room direct dial, the airport hotel concept and even the Pina Colada to the lodging industry.

“Customers are more discerning than ever, and just as they inspire our innovation, they expect to be inspired when they stay with us,” Witter said. “Travelers will always look for an outstanding travel experience, and that includes design aesthetics that are not only functional, but also beautiful. Moreover, this experience now needs to include personalized experiences and technology that allow them to escape and to feel at home simultaneously.”

For example, a couple of years ago, Hilton introduced its Connected Room, which enables guests to control entertainment, room temperature and lighting from one central device.

Currently, there are more than 1,800 Connected Rooms across 10 hotels. Hilton has plans to roll out the technology to tens of thousands more rooms across hundreds of hotels—and to do something positive with that information.

“We’re committed to integrating digital and physical spaces in our hotels to give our guests the connectivity they’re looking for,” he said. “Carrying out such end-to-end personalization is only possible with a culture and workforce that is intensely forced on people serving people, which is our differentiator. Our team members are empowered to go above and beyond for customers and, coupled with our approach to data, we have a prime opportunity to truly understand who our customers are, what they like and why they’re traveling.”

Another innovation Hilton has been amping up is Digital Key, which allows guests to access hotel rooms using their smartphones. More than 4,100 Hilton properties currently offer Digital Key to guests.

In terms of innovation, where Hilton is today has almost certainly surpassed its founder’s expectations.

When speaking on tangible items for the hotels of the future, Hilton once wrote: “Any new hotel of the future should include the following: television, portable libraries, sun lamps, portable beauty parlors, smaller freezers for ice cubes in each room, automatic telephones that record all calls, improved air conditioning and ventilation equipment, and other innovations.”

The next 100 years
Looking back, Hilton has survived major events in its history and the country’s, including recessions, two world wars, IPOs and spin-offs.

Despite challenges, over the past 100 years, Hilton has hosted more than three billion guests, employed more than 10 million team members and contributed more than $1 trillion of economic impacts.

“What’s really exciting is not so much the last 100 years—though those are inspiring numbers and awesome in the sense of the impact we’ve had—but the next 100 years should be even better because we’re really in a great position and very dynamic as a company—led by our purpose,” Nassetta said.

While the average CEO’s tenure is getting shorter, Hilton’s current leader isn’t planning on going anywhere soon—despite having been with the company since 2007.

“At some point when I think that somebody would be better [at]doing it than me, that will be a time in my life [I] maybe retire because this job is not for the faint of heart, running around the world all the time,” he said. “I will gladly hand it over to another great leader, but, for the record, that isn’t going to be anytime soon—barring me getting run over by a truck.”

No matter what’s in store for Hilton or the hospitality industry at large, some things never change, and the hospitality company’s founder—no longer around to grace hoteliers with his overwhelmingly enthusiastic presence (he once said, “There is no such thing as being a little bit enthusiastic”)—left the next generation of hoteliers a timeless piece of advice for running a successful property: “There are still five basic ingredients that the hotel of the future [should]share with the inn of the past: need for a hotel, proper location, conservative financing, property design and good management.” HB

A century of firsts

1893: The brownie is invented at The Palmer House, a hotel that would become a Hilton.

1919: Conrad Hilton buys his first hotel, the Mobley Hotel in Cisco, TX (below).

1925: The first branded Hilton—Dallas Hilton—becomes a reality.

1927: Waco Hilton becomes the first Hilton with cold running water and air conditioning in common areas.

1930s: Hilton is the first to standardize the concept of room service in hotels, growing it from its origins in the Waldorf Astoria New York throughout the industry.

1943: Hilton becomes the first coast-to-coast hotel group in the U.S. with the purchase of the Roosevelt and Plaza hotels in New York.

1946: Hilton Hotels Corp. is formed, and becomes the first hotel company post-WWII to sell stock in New York. Hilton is listed on the New York Stock Exchange in 1947.

1947: Roosevelt Hilton in New York becomes the first hotel to install televisions in guestrooms. 

1948: Hilton installs a multi-hotel reservations system, another first.

1949: Conrad Hilton is the first hotelier featured on the cover of Time magazine. The Caribe Hilton, the first Hilton outside the continental U.S., opens in Puerto Rico.

1950: Hilton creates its first special amenity for female travelers: a sewing kit and booklet with helpful names and telephone numbers.

1954: Bartenders at the Caribe Hilton in Puerto Rico invent the Pina Colada.

1955: Hilton Istanbul becomes the first hotel built from the ground up in Europe after WWII.

1957: The first in-room direct dial occurs.

1959: San Francisco Airport Hilton opens as the first airport hotel.

1965: Hilton begins franchising hotels in the U.S. Lady Hilton, the first hotel concept designed for female travelers, is launched.

1967: Conrad Hilton becomes the first hotelier to be featured in a syndicated cartoon, Batman.

1973: Hilton develops the first computerized central reservations system, a breakthrough in customer service.

1974: Hilton globalizes the in-room minibar with Hong Kong Hilton.

1987: Hilton launches Hilton Honors loyalty program.

1989: Hilton becomes the first hospitality company to promise the 100% satisfaction guarantee with Hampton by Hilton.

2008: Hilton becomes the first to have a hotel with both LEED and Green Seal certifications (Vancouver, Washington).

2014: Hilton launches Digital Key, enabling guests to use smartphones as room keys, and becomes the first hospitality company to offer the technology at scale.

2018: Hilton becomes the first to offer a truly mobile-centric hotel room with Connected Room, and opens the world’s first underwater hotel suite at the Conrad Maldives Rangali Island.

Historian reflects on Hilton’s legacy

Mark Young, archivist and historian at the Conrad N. Hilton College of Hotel and Restaurant Management at the University of Houston, spoke with Hotel Business about the hospitality company and its history.

What does your day-to-day look like? I am Hilton’s historian, but I also serve as the director of the Hospitality Industry Archives, which includes Hilton, the American Hotel and Lodging Association Collection, and several smaller hotel and restaurant collections.

Day-to-day, I provide information to people asking questions about Hilton and the hospitality industry. We help scholars, the media and Hollywood when they have questions about hotels and the hospitality industry as a whole.

Additionally, I write articles on Hilton and hotel history. I’m also working on a book about Hilton’s advertising history and a biography of Conrad.

What does Hilton’s 100-year anniversary mean to you? It’s made for a very busy year! People are curious about the Hilton story and its pioneering role in shaping the modern hospitality industry. A nice by-product of that is we are receiving more material related to Hilton’s history, from swizzle sticks to old human resources policy manuals. We want it all!

If you had to point out the biggest challenges in Hilton’s history, what would they be? How did Hilton overcome them? Conrad’s survival during the Great Depression would be one example. More than once, he could have thrown up his hands, but had the tenacity to work through the problems and find solutions—often in ways that were ahead of their time. Another example would be the vision of both Conrad and his son and Hilton’s second CEO, Barron. They saw opportunity, but sometimes got too far ahead of the corporate board of directors. They both saw the potential for Hawaii and, later, Las Vegas.

Today it is a no-brainer to operate hotels in those markets, but back in the 1950s and 1960s it was a hard sell. Fortunately, they eventually won the argument, and the rest is history.

Looking back on Hilton’s history, what surprised you the most when doing research? The vision that Conrad, Barron and current CEO Chris Nassetta had/have. All three seemed to see the future of hospitality before most anyone else. A second surprise was how much Hilton, over and over, led the way in hospitality innovation, creating industry standards we all know and take for granted today. That was true from its earliest innovations, such as being the first to offer in-room televisions sets, standardized room service and the concept of airport hotels, to today’s newer standards, such as Digital Key and Connected Room. But no matter the time or technology, there was still that important yet simple formula at work: Treat guests nicely, provide comfortable, modern rooms and anticipate guest needs. Do those things, and you will always have loyal guests.

What did all of Hilton’s CEOs have in common? Again, it’s their incredible vision—their ability to see not only down the street, but around the corner and anticipate what was next.

The Caribe Hilton was the first Hilton outside the continental U.S.

What’s an interesting fact about Conrad Hilton many people don’t know about? He was from San Antonio, NM, back when it was a territory and not yet a state. He was bilingual in English and Spanish, which served him well in his bid to open the Caribe Hilton in Puerto Rico, which he wrote in Spanish. Finally, he started his career in the 19th century working in his dad’s mercantile store. This is where he began his mastery of the art of negotiation, as well as learning to always put the customer first.

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