When Chris Nassetta joined Hilton Worldwide as CEO in 2007, he found a hotel chain that was “broke.”
“We had lost our way for decades and decades,” says the 62-year-old executive. But as he set about trying to restore the brand often credited with inventing the Piña Colada cocktail and popularizing air conditioning and televisions in hotel rooms, the obstacles mounted.
Nassetta was named as part of private equity group Blackstone’s $26 billion purchase of Hilton, where the debt package alone exceeded $20 billion. Months later, the financial crisis hit, and Nassetta remembers headlines calling the Blackstone hotel group a “black eye” for the high price paid at what seemed like exactly the wrong time. The challenges continued when, in 2009, rival Starwood accused Hilton and its top executives of corporate espionage as it tried to create a lifestyle hotel brand.
Nassetta, a turnaround expert with a track record of turning around failing companies, moved Hilton’s headquarters from California to Virginia, where property and labor were cheaper. He pursued an aggressive asset reduction strategy to franchise and manage hotels, increase room counts and expand internationally, while reforming the corporate culture to make the company more ruthlessly performance-driven. hilton returned to the New York Stock Exchange in 2013 and Blackstone sold out in 2018, generating a record profits of 14 billion dollars.
“We built a plan around a purpose, building a great culture, making people feel part of something bigger than themselves,” says Nassetta, referring to himself and Jonathan Gray, Blackstone’s chief operating officer, who is the president of Hilton and who appointed his friend to the CEO position.
But Hilton was hit again when Covid hit, decimating the hotel sector. While business and vacation travel has returned, the global economy is once again showing signs of weakness, from the United States to China.
“Nothing surprises me anymore,” Nassetta tells the Financial Times at the Hilton hotel near his headquarters in McLean, Virginia. “I have experienced many things. . . the good, the bad and the ugly.”
The 105-year-old company’s talkative CEO says his job has been to be a “steady hand at the wheel.” “It’s very easy to get distracted. . . “There are shiny objects everywhere.”
Hilton, started by Conrad Hilton and led by its founding family until 1996, has expanded from nine brands to 24 under Nassetta’s leadership. But it has largely done so organically, unlike more acquisitive rivals such as Marriott and Accor, in an attempt to be consistent. Hilton, which also owns the Waldorf Astoria, has tried to develop its brands so that they do not cannibalize each other, targeting, for example, specific groups such as urban youth or business travelers.
It has limited itself to hotels and accommodation rather than expanding into other parts of the travel sector, such as cruise ships, like some of its peers. Today, too many companies are “washing purposes” and relying on visions derived from marketing professionals, Nassetta says, rather than sticking to what they’re good at. “If you’re turning the wheel, if you’re taking all the exits, no one will be able to follow you.”
As Airbnb and home-sharing compete for travel business, Nassetta says Hilton offers a consistency of quality and service that encourages guests to stick with its brands. However, that goal faces a new threat as thousands of hospitality employees, including those at Hilton hotels, go on strike across the United States to demand better working conditions.
Hilton has grown faster than its largest rival, Marriott, with total rooms increasing on average 5.4 percent annually over the five years to the end of 2023, compared with 3.9 percent for Marriott. At the end of June, Hilton had just over 1.2 million rooms, compared to Marriott’s 1.6 million.
Hilton’s share price has risen more than 30 percent so far this year, outperforming the sector and raising its market valuation to nearly $60 billion. The company is due to report third-quarter results next week. For the full year, net profit is expected to rise from $1.15 billion to $1.53 billion-$1.56 billion.
Nassetta prescribes humility: “You can always do better,” he says. “Complacency is a disease that, if let in, can be very dangerous.” But he can’t help but boast about a success: Last year, Hilton was voted the best place to work in the world, and on the lapel of his jacket is a large pin in the shape of the number one.
A day in the life of Chris Nassetta
Nassetta is a natural early riser, arriving at Starbucks at 5 a.m. for a cup of tea and a light breakfast.
The first hour of the day in the office is your “quiet time” to read before meetings begin. Most often he travels abroad, meeting with partners, dignitaries and managers, which takes up two-thirds of his time.
After having an early dinner, he goes to bed around 9 pm, making sure his email inbox is clear and WhatsApp chats are read, responded to and deleted. At the end of the day, “I don’t have any text messages or emails.” His habit of deleting messages even extends to communicating with his family (he has six daughters between 21 and 30 years old).
He tries to return home to Virginia, where he grew up, every weekend and often cooks dinner there for 30 members of his family.
Nassetta is competitive and likes to win. He says he wakes up every day as the “underdog” fighter. He attributes his drive and constant work ethic to his Irish and Italian parents who constantly “pushed us to do more.” Prior to Hilton, he began his career in immersion toilets in the hospitality industry and rose to the top of Host Hotels & Resorts.
Nassetta says he is aware that to transform a company like Hilton, which has about 8,000 hotels in 126 territories and about 500,000 employees, “it takes a village.” “I’m not that special.” You have to manage your ambition by delegating appropriately and realizing that “if you don’t stop, take a deep breath, celebrate successes, and give credit where credit is due, people will simply burn out.”
“Early on in my leadership journey, I probably didn’t take enough time to slow down,” he admits.
He says other business leaders often ask him how a company can transform itself. Changes, he points out, fail because of “a bad strategy or a bad culture.” Good leaders are able to get not only managers involved but also staff lower down the chain. “You need to make people believe in your destiny and in you.” He says he tries the latter by being authentic, hard-working and a good listener, although he admits he can always improve.
Hilton is confident in long-term trends that indicate, as Nassetta calls it, “the golden age of travel.” Key factors include the growth of the middle classes, particularly in emerging markets; the combination of travel for work and pleasure; greater mobility and people looking for pleasant experiences.
Nassetta previously said that a strategy to expand into affordable mid-level hotels with basic amenities has worked best in a difficult financial environment with high borrowing costs. But observers warn that the risk of downscaling is brand dilution. Patrick Scholes, an analyst at Truist Securities, notes that Marriott and Hyatt have been more reluctant to abandon full-service hotels. “Hilton lags behind its competitors in luxury.”
Richard Clarke, an analyst at Bernstein, adds that the company recognizes that “its largest shareholder is not really the guest. . . But he is the owner of the hotel.” Hilton focuses on maximizing its franchise owners’ return on investment (for example, implementing technology to improve efficiency), which is why they choose it over its rivals, he says.
Nassetta has a cheerful personality and a permanent Cheshire cat smile. He tries to channel that into the way he responds to challenges, like the pandemic, when he knew “the sun would rise again.” “Your job is not to be Pollyanna. . . “I don’t want to be unrealistic,” he says. “But so that your people and your organization continue to move forward.”
As for “noisy and messy” American politics, he says, the country is resilient and the system “is built to last.” In next month’s US election, he says, “we’ll be perfectly fine no matter what the result is.”
Now in his 18th year as CEO, succession is an issue Hilton’s board has wanted to address, even as Nassetta says his departure is expected to be “a long time from now.”
Asked if some people poised to replace him might leave because of their reluctance to resign, Nassetta doesn’t flinch. The company “would survive,” he says. For now, he has desire, energy and desire to move forward. He doesn’t spend much time thinking about his legacy, but says his goal is to make sure Hilton “is set up for future success.”
“That’s singularly the only focus I have.”