Chris Nassetta

industry has been the most heavily impacted by COVID. Uh, you think that's a fair statement. You and the airline industry probably, Yeah, I think so. Maybe the cruise industry would it would probably top the list, but I think

we'd be near the top of the list. Yeah, it's it's been a difficult couple of years, but things things are have improved by by by significant margin from where we were we we started out, you know, in the first quarter of at you know, eight or ten percent occupancy, which we've never you know, I've never never experienced that

kind of down draft. Um certainly in the foremost forty years I've been doing this, but at this point we are while we're not through COVID, we're not back to where we were at the peaks of two thousand nineteen. We're sort of like still fifteen down and generally trending in a positive direction. My guess is when we get to the second third quarter of next year, we will be back to peak levels of of demand similar to nineteen.

What's been really interesting and been well documented I guess at this at this point is the leisure business has been off the charts. Um. If you look at demand for leisure broadly, the rates on leisure, they're already significantly higher than the peaks of two thousand nineteen, the business segment and the group and the meetings and events segment.

You know, it was on a you know, on a slower recovery, which you'd expect, but but but you know, building building up some momentum, So you think the worst is behind us for the time being. I think the worst is definitely behind us. So it's not a straight line up, but I think the worst is definitely As COVID was hitting the industry, you had to close hotels and lay people off. I assume that was extremely difficult.

It was. You know, it's interesting that, you know, having done this for almost forty years, that we open hotels all the time. In fact, at this point we're opening more than a hotel a day in the world. Still, even during COVID, we've been opening more than a hotel a day around the world. But we very rarely close hotels. So it's something people don't focus on. You know, when a hotel opens, it's open most of them forever. Like you open them up, they hope, but they're open their doors.

They're open twenty four hours a day, seven days a week. There. You know, it's sort of an epicenter of activity, and you rarely close them. You close them pretty much when you're gonna tear them down for another use or build another hotel. So we are not very experienced at closing hotels, but we gained the experience. But the hard part, uh, did you did close hotels? Actually we closed a significant

percentage of the system at some point in time. You know, we had probably fifteen hundred of circus seven thousand hotels that were closed. But the difficult part sort of you asked it. The question was the people um hotels were closing there. You know, it had a huge impact on our frontline team members in the sense of, you know, necessitating furloughs, reductions and force you know, both both in

the field and corporately. And so as hard as it is to close the hotels, it was really the people's side of it in the early stages of COVID where was heart wrenching. So now that you're coming back, you have the opposite challenge. You have to open hotels and hire employees back. And it's been reported that it's hard to get employees to come back for the previous jobs were to hire new people you have to pay much more. So is that a big challenge for you in reopening hotels?

It is. At this point almost all our hotels are open um, but they're not fully staffed. The the the single biggest issue that we have is getting labor back into the hotels broadly, but particularly in certain roles like housekeeping in the culinary areas. And while um we've seen some easing of that, you know over the last few months, we still have a ways to go, and so it's something we're working very hard on. It's it's a complicated issue,

you know, it's it's part. You know, throughout throughout this has been health concerns. People don't want to go to places where other people are congregating. It's been significant issues on child care, particularly when schools weren't open, people had nobody to take care of their children. Um, there have been government policies that have obviously, you know, compensated people, you know that we're unemployed in ways that provided some

some distancentives and you you put and then there. To be honest, there's some people that just have been reevaluating you know, life and what they want to do, and some of the you know, some of some of those folks have said, you know, I'd rather go work and where else rather than you know, clean rooms and other things. So it's a complex equation that's going to take a

significant amount of time to sort of work through. We're a lot better off than we were even three months ago, and I think when we wake up over the next year, we'll be able to get I'm hopeful labor back, you know, to to be able to do what we did. So one of the biggest concerns I assume the industry has is that people like me have gotten used to using zoom and Therefore, instead of traveling across the country around

the world, I can zoom. Is that a big concern that people will say, Look, the Zoom experience is actually pretty good, and I don't need to travel. It's not a big concern for me. I think, you know, and I think the world's figuring this out. I mean a year ago, Um, you know, I think people were saying, gosh, this works, it's so efficient. Maybe I don't need to do the things that I was doing. I think a year later, as at least everybody I'm talking to is

realize there are real limits to it. I mean, don't even wrong. It's great technology. We use it and it has facilitated our ability to continue to communicate during this crisis. But there is a a unstoppable force that exists with humans, which is humans want to interact with humans, and that isn't just for a vacation. Humans need and want to interact on business, to build partnerships, to innovate, to build culture, and they want to congregate the meetings and events business.

They want a network. They want to you know, to grow their business, to build relationships, and so I have no real worries. I mean, every time you know, we've sort of as we've been recovering. If you look at you know, the minute people start to feel like we're through the crisis, the demand for meetings and events, which is the longest lead, skyrockets. People are people are dying to get out. Okay, let's talk about your own background. How you came to be the president CEO. UM. Where

did you grow up? I grew up right nearby here, Arlington, Virginia. And you went to school and high school, to high public high school in Arlington, Yorktown high school, went to u v A. I ended up at the McIntyre School of Commerce, undergraduate business school. Uh. Got out and decided I wanted to follow my father and uncle's footsteps and

being the real estate development business. And ended up working for one of the biggest developers and and still a good friend UH today in the d C. E. R. Oliver Carr, and my first job was actually ended up being a hotel, which was the Willard Hotel and Office complex, So Oliver Carr was it was an individual who built a very big real estate company in Washington. See the company still around. UM. And then you were recruited, I

guess to go to Mariott, is that right. No, in between there, I created a private equity business, I know, a little teeny one compared to that big behemoth that you're part of. At the time, you know, this would have been in this was the early days a private

equity generally, certainly real estate private equity. And our view was that it's there's gonna be massive opportunity as a result of the displacement going on in the SNL crisis, just so much inadvertent ownership of real estate on the wrong people's balance sheets, and we wanted to get out and UH and take advantage of that. So we did so. For five years, my partner and I went out and

uh I had a fabulous private equity business. We did, you know, a lot of deals probably you know, it seems like small numbers today, but probably a half a billion dollars of deals across the spectrum of hotels and office did a lot of tax exempt multi family UH in in in our fund, and had a lot of great partners UM, one of whom was Blackstone, and then got recruited my partner and I to go to what

was then Host Marriott UM. After after doing that for five years, Host Marriott was the real estate arm Marriott Hotel. Mary had split the company into two parts. One was the brand Marriott that operates the hotels and managers HUM. The other part was owned the real estate right and that was Host Mary. I came in as a CEO, and I became the CEO within four years. My partner in our private equity did business, Terry Golden was the CEO. I was CEO. He retired in four years and I

and UH and I took over. So you're running Host Marriott. You did very good job, as I remember it, Um, I think, So how did you come to Hilton? I mentioned in my private equity days, I had gotten to know the Blackstone guys, you know really well, John Schreiber then who since retired, but John Gray you know particularly really well, UM, Steve Schorzman a bit and UM. When I got to Host. As a result of that relationship and given their interest in the hotel space, we did

a bunch of UM transactions to them. So while I had known them, I got to know them really really well. And as a result of that relationship, I guess when they decided, you know, in July, early late June, early July of two thousand and seven that they were gonna buy Hilton. John Gray Calton said, I've got I've got the perfect job for you. We know you, we like you, we trust you. We think you've sort of trained your whole career to be able to run a company like this.

I think there's a huge amount of upside and potential this. This company has been grossly undermanaged and you should come do it. Um, And I said, what are you crazy? Um, I'm gonna pick up my wife and my six little daughters at this time, and we're gonna move to Beverly Hills, California. And you know, I famously said like, well, we're gonna be like the Beverly Hillbillies out You know, I don't see that the set is on on Rodeo Drive, but those who know John Gray know that he's very persuasive.

And the truth is, as I stepped back from it, and as I talked to my wife, who was an equal partner in the decision, we realized how many chances in your life are you going to have where it's a counterparty like Blackstone, who you know really well, who you trust. It's a business that you know but has massive opportunity, and it meeting and it suits your skill set, um, and those things just don't come together that often. And so eventually I decided we would be pick up and

be the Beverly Hill bill As and we moved. So Hilton was a publicly traded company. Blackstone bought her for roughly billion dollars. Some people thought it was a pretty high price at the time. You come in to manage the large amount of debt and so forth, and you moved your six young daughters all the way out to California, and then, um, the Great Recession comes and all of a sudden, the debt from the leverage buyout seems to be burdensome. Were you worried that the deal wasn't gonna

work at all and it might go bankrupt? David, I I slept like a baby. I slept for two hours. I woke up, cried, slept for another two hours, woke up and cried. Kidding, no, you know, the truth is there were some tense moments at the you know, at the beginning of the Great Recession, but we never lost faith. Like John and I particularly is the two that sort of put our heart and soul into making this thing work. John Gray and I we we knew we had a

really good strategy. We were building a world class team. And you know, I'm a big believer in a steady hand on the wheel. What goes down will come up. You know, don't panic. If you've got a strategy, work the strategy, adapted to the times, and and you know you'll get to the other side. And we did. So we don't have as much gray hair as I do. But you get any hairs, I might question that you Did you get any gray hairs from this experience? Definitely? I definitely did, but I found it. You know, I

definitely got more gray hairs. And I'm not gonna say, like, you know, it didn't stress me out on occasion, but I love a challenge. I mean, the truth is, I had a really great job running HOST, and I love the company and the people and the board was incredible to me. And so why did I leave. I wanted a bigger challenge and you know, something that was more global and needed fixing. And so the reality is the

Great Recession. While it was hard and it was stressful, it was also an opportunity to sort of stretch myself and and to you know, fix it and to really push myself to get to the other side. So black Stunt ultimately injected some more money into the deal and they bought some debt back at a discounted The bottom line was they ultimately took a public or you took a public and it turned out to be one of the most successful, if not the most successful buyouts in history.

I think Blackstone made about a fourteen or fifteen billion dollar profit when what I'm told and when you took the company public, um you did at a certain price. But today I think the price is up about SI stock is up about so you must be pretty happy, right think. So we we, you know, did our job for Blackstone and their investors, and they, you know, they made a great profit, you know, out of what looked

like a difficult set up during the Great Recession. And yeah, anybody that is that bought the stock and we when we went public and held it has done exceptionally well. So c e o s today are under a lot of pressure to speak out on publicly controversial issues, civil rights issues, voting rights issues, other things. Do you feel as a CEO that you should be speaking out? Is that good for your shareholders or stakeholders. It's a really

complicated issue and it always has been. But as the representatives, the most senior representative of the company, for for the company effectively through me, to have a you, it has to be directly connected to our purpose. So I'm constantly looking at the convergence of what is good for society but is also good for our business, and and looking at that point of overlap and making sure that we're

focused in those areas. So here's the thing again, in my humble opinion, today's world, everybody wants to have an opinion on everything and do everything. Last I checked focus and discipline matter, and so we've picked sort of three areas that are most in important to us. Diversity and inclusion, which is clearly a huge part of our business. We serve a mentally diverse customer base, immensely diverse team member pop relation. So you know, that's a really important area

of work and that I do speak out on. On the social side, youth. You know, one of the biggest issues in the world today is that was a problem before COVID. It's only gotten worse as youth unemployment. We need young people desperately to want to get into our business. So it's it's uh, definitely in that convergence. And then the environmental side of it. You know, if we don't have destined, if we don't take care of our destinations

around the world, there is no travel business. And so that is directly you know, taking care of the environment and and attending to climate issues. Not only can we have a big impact on it, but it's it's immensely important to the to the future opportunities and traveling towards him. Now, your company was started more than a hundred years ago, a little bit more than a hundred years ago, by Conrad Hilton. He's famous for many things. He built this company.

But I was told at one time he made a famous statement about the most important thing in the hotel business. Can you tell us what that was? He did? I I wasn't alive to see it, but he was. He was famous in the time, and he ended up on the Johnny Carson Show on more than one occasion at one point. And as it goes, I've seen the clips, so it's not legend. Johnny Carson said, all right, Connie, he went by Connie, Um, you're the biggest hotel man on earth. Could you just give everybody in the audience

one piece of advice. He said, if I could give you one piece of advice, I would say, please keep your your shower curtain inside the shower because otherwise it was going to leak out and the water was going to damage the hotel. So do you ever commune with Conrad Hilton? You ever getting messages from heaven from him? You're doing a good job protecting my name. I haven't, but I do have his bust right next to my office.

When we moved out of Beverly Hills, UM, we had all sorts of paraphernalia that you know that was related to the history of the company, most of which I sent to the Conrad Hilton Museum at the at the University of Houston because I thought it would be great for them. The catalog didn't have it. The one thing I did keep was his bust, which I keep very close by my office. I did so I didn't know

Conrad personally. I did meet his son, Baron Um, who ran the company for for over forty years UM and was very close to his father Um, and they, you know, at least talking to Baron, he was quite proud of what we had done. With the company and suggested to me Conrad would have been as well. Well. Conrad Hilton was very famous, and Barren Hilton was very famous, But honestly, the most famous person with the last name Hilton is Paris Hilton. Harris is she involved in the company she had.

More recently, we've been working with Paris on the marketing side of it. We're working with her. She just got married and she's on her honeymoon and we're helping sponsor the honeymoon, and so we we have been doing, um some work more more recently. When I was growing up a blue collar family, we couldn't afford to go to Hilton. Hilton was the ultimate brand in those days, and we were lucky if we go to, say a holiday inn

or something like that. Um Over the years, Hilton name hasn't yet been seen as maybe as ultimately elite as Ritz, Carlton or four Seasons. Is that a fair statement in some respects? Yeah, it is, and my choice if you go back fifty years ago, Hilton was probably the leading pioneering luxury brand on Earth. But as time went on and as we learned that segmentation mattered in the business,

and that the customers had these different needs. We really tried purposefully to make Hilton a four star brand to allow for other things above it. So your ultimate luxury brand is that Waldorf Historia, that's Waldaver Sto. Luxury brands are Water water for Historia, Conrad and alex Are. You're in a Conrad as it turns out today, but the very highest end of luxury for us is his Waldor. Then Conrad and alex Are is a collection of luxury,

historic luxury hotels. Now in New York City, there's the famous initial waldorfer Historia which has been under construction and rehabilitation for a few years. Um, you don't own it, but you're going to manage it. I presume isn't going to open in my lifetime. Well, let me correct one thing.

That is not the original Waldorf story. The original water for story was was put together as a consequence of the Astor two members of the Astor family feuding that had two hotels that were on the site of what is today the Empire State Building. And the way they settled the feud was they one hotel was the Walter if the other was the Astoria, and they settled the feud by connecting them with what they called Peacock Alley, and it became famously the Waldorf Storia, New York. That

was in the late eighteen hundreds. They ultimately sold it to what got redeveloped as the Empire State Building and where the current water story is was built during the Great Depression and opened the nineteen and is under massive redevelopment um and should open reopen as what I think will be the best luxury hotel in New York in with four hundred rooms and you know, about the same amount of high end luxury apartments. So there's another rumor

going around about another Walldorf story. It's rumored in Washington, see where we are now at the Trump Hotel um which had its challenges, which has been reported and sold to somebody, and that you Hilton will manage it as a wal Dover Storia. Can you comment on that. I've read that same rumor, but no, I can't comment. I have a very strict rule. I'll comment when something is And so the rumors are justified in the sense that there's there's a lot of work and discussion going on,

but nothing is done. Now there's a new phenomenon that's now not that new called airbnb. What what is that? And when it came along, the hotel industry kind of shrugged it off a bit. But is it a real competitor to you? And are you going to be in that business? UM? I do not think it's a real competitor to us. So if you think about what we do, it's something different than what they do, and I think

we coexist with them quite well. We deliver a high quality, consistent product with the amenities wrapped in service, with all the technology loyalty, and people pay us generally a big premium for that because they, you know, they want that level of consistent, high quality experience. What they do is something different that what they're doing is by definition, you know, doesn't can't have the consistency and the quality and the products and the amenities that are tailor fit because it's

just something different. But it doesn't mean it's bad. It just means something. It's it's satisfying a different kind of tripication. So if you look at the numbers, even you know pre COVID we were coexisting quite what we were. We were at the peak levels of performance UM at a time you know where they were growing leaps and bounds, and we weren't really seeing UM significant competitive threat as a result of it. As an investor, UM, should I be looking at the hotel lodging industry is a good

area to invest in? I mean, your stocked rely has gone to near all time highs from very low point in time during the COVID period of time. UM, you think there's a lot of growth left in lodging in hotel stocks? Uh that you know, You're one of the smartest investors on us, so I'm not going to give you. And I'm a lowly hotel guy, I like you decide that. I think why the stocks have performed well is UM

really quite simple. I think it's an underlying belief that the business broadly will demand in the business in all segments will come back and will ultimately over time grow to be greater than it was before, which I believe, and I think in our case, why we performed well as I think they believe. Investors believe that the decisions we made that we had a very good capital light business that was that was growing faster than anybody in

the industry before. The decisions that we made during COVID put us in an even better position where when we get to the other side of it, where a higher market share, higher growth, higher margin business, and um, the market as you and I both know, as a result of a whole bunch of things in terms of discal

policy and like, is just looking further forward. And I think when people look forward two and three years, they like what they see in the industry, and I'd like to believe they really like what they see in terms of what we can deliver. You've now been doing this about fourteen years. Count the numbers, right, and you're fifty nine years old. I am so have you thought maybe I should go do something else. I can't do anything better than I'm already doing. I already turned this company around.

I've made a lot of money for the investors, the shareholders, and yourself. Are you happy doing this? You're gonna do this for the resieable future. I'm gonna do it for the foreseeable future. I love what I do, And the reality is we've accomplished a lot. As you've described, We've made blacks and a lot of money. We made our shareholders a lot of money. More importantly, we've grown the

business and we've been a huge engine of opportunity. If you think about all the jobs we've created around the world, all the communities we've made better places, all the ownership groups who we've helped grow their business and and having built a world class culture, the opportunities we've created for upward mobility for people, and this business I would still say is like a coiled spring coming out of COVID particularly, so I feel like we just have more to do.

You know, my job, My job is far from dune. Thanks for listening to hear more of my interviews. You can subscribe and download my podcast on Spotify, Apple, or wherever you listen.