Hilton’s CEO on new brands, legacy and the booming business of Hilton Honors loyalty
When Hilton CEO Christopher Nassetta took on the top job at the hotel giant in 2007, the company wasn’t exactly known for thinking outside the box or trendy brands.
“We were complacent. There was no culture of innovation. It was more a culture of do it at a relatively slow pace and do it the way we’ve always done it,” Nassetta once told the Washington Post. “It just wasn’t organized in the right way.”
But fast forward 17 years, and Hilton is a hotel force to be reckoned with. The brand increasingly has something to offer for all types of travelers with all types of budgets.
Luxury camping? Check. Lifestyle hotels? Check (and with major plans to grow). Classic ultra-luxury? You bet. Oh, and don’t forget how the company snatched away a Small Luxury Hotels of the World partnership from Hyatt earlier this year.
Ah, yes — and there’s also what some see as the company’s “category killer” debut in the economy space with Spark, a brand launched last year that will typically target the $100 per night hotel space.
So, what has changed at Hilton over the years from that era of complacency?
“I’d say our secret sauce in terms of performance is grit, determination, competitiveness and an entrepreneurial spirit to do it differently,” Nassetta said in an interview with TPG this month at the NYU International Hospitality Industry Investment Conference.
With a current roster of 24 hotel brands — from the affordably priced Spark to the high-end Waldorf Astoria — and a loyalty program that's nearly 190 million people strong, the company is making significant growth and many changes, achieved primarily via the organic growth of launching brands internally rather than acquiring them.
But even that changed slightly over the last year, as the company acquired the Graduate lifestyle hotel brand and also took a majority stake in the parent company of NoMad Hotels in a quest to beef up its presence in luxury lifestyle hotels.
“I was an M&A guy in my background, so it’s not like I don't like doing it,” Nassetta said of buying brands as opposed to building them organically. “But at my core, I'm a very disciplined person. So, the filter of what makes sense for our customer [and] what makes sense for our shareholders in terms of the economics have always been my North Star.”
The rise of Hilton Honors and partnerships
While Nassetta declined to weigh in on industry chatter that Hilton Honors is within striking distance of overtaking Marriott Bonvoy as the largest hotel loyalty program, he was more than happy to point out the strength and expansion of Hilton’s network.
Hilton Honors adds roughly 80,000 new members a day, and the overall loyalty program accounts for about 64% of total Hilton room night bookings. The goal is to get that to 65% by year’s end, and Nassetta indicated he thinks it could eventually hit 75%. Further, the company is moving into more experiential offerings within the program.
“I want it to grow, but I want engagement, and I want it to ultimately drive satisfaction and market share so that owners want to keep reinvesting,” he added. “That's how I think about our ecosystem.”
Further growth opportunities come from Hilton’s cobranded credit card partnership with American Express. Hilton became the first co-brand partner for American Express in the '90s, and the partnership — American Express is the exclusive cobranded credit card issuer for Hilton — was renewed last year with a 10-year extension.
“This extension builds on the strong foundation we've built over the years with Hilton and gives us a long runway to invest in products and services and attract new customers and deepen our relationships with existing ones,” American Express CEO Steve Squeri said on an earnings call last year.
“Even though it's grown considerably, we believe there's a lot of upside left,” Nassetta added when speaking to TPG this month.
Luxury vs. lifestyle vs. budget-friendly brands
It’s difficult to pinpoint a singular direction Hilton is taking these days, as brand growth encompasses so many points along the travel food chain.
Spark and LivSmart Studios both launched last year and cater to more affordable segments of the market, as well as extended-stay trips. Graduate and NoMad will boost Hilton’s presence in the trendy lifestyle hotel sector dominated by brands like Marriott’s Edition, Accor and Ennismore’s The Hoxton and Standard International. Hilton’s AutoCamp partnership even gives it a presence in the booming business of high-end camping.
The company’s legacy brands are also seeing major upside: Waldorf Astoria has a development pipeline that should expand the 35-hotel portfolio by 75%, including recent openings in the Seychelles and Doha and upcoming openings in London; Hanoi, Vietnam; Costa Rica; Kuala Lumpur, Malaysia; Jakarta, Indonesia; Sydney; Tokyo and Osaka, Japan; and Riyadh, Saudi Arabia. The long-awaited reopening of the Waldorf Astoria New York is also on the horizon.
So, are there any blank spaces left for Hilton to fill in its brand lineup?
“What I'm really trying to push our team on is how, now that we have the right lineup, let's make sure that, with our legacy brands, we continue to reinvent them to keep them strong,” Nassetta said. “Let's make sure our new brands that we've created get a proper birthing and launch and can ramp to scale, and let's make sure these new ‘children’ that we've ‘adopted’ are integrated fully and that the opportunities are maximized.”
But, he later added, “There will inevitably be a next thing.”
It seems if you have a travel desire, there will eventually be a Hilton brand for that.
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There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.