Hilton CEO on balancing the luxury push in the Middle East

Skift grip

The Hilton brand development formula is working. Never say never about acquisitions, but Nassetta doesn’t want to be distracted by the disadvantages inherited from its rivals.

Denis Schaal

CEO Christopher Nassetta said Hilton plans to organically grow its own new brands rather than pursue costly acquisitions, in part because “we don’t want to have to solve other people’s problems.”

He said Hilton’s portfolio of brands had more than doubled to 19 in Nassetta’s 15 years at Hilton and they’ve all been successful, although some are “a bit in the early stages of gestation.”

“We designed them in a modern context around exactly what customers want and built them from the dust,” Nassetta said. “We built it with our own blood, sweat and tears rather than paying a big price. It’s been great for our shareholders, infinite returns effectively building them and creating brands that really resonate with our customer base.

Hilton, with 1.2 million rooms and 7,000 properties worldwide, did indeed complete several major transactions, including splitting the business into ‘three pieces’, during his tenure, ‘but we didn’t buy anything’ because Hilton is already good at organic. brand development.

Skift founder Rafat Ali interviewed Nassetta via hologram on Wednesday at the Skift Global Forum East in Dubai. Besides the M&A issue, Ali questioned the Hilton boss on public-private partnerships, the luxury segment, business travel, short-term rentals and the macro environment, among other topics.

Nassetta said some emerging economies in the Middle East and elsewhere will continue to need public-private partnerships, especially for infrastructure development and financing, over the next 10 to 15 years to build momentum.

Every market is different, however, Nassetta said, adding that Dubai is likely a decade ahead of others in the region when it comes to infrastructure development, while Saudi Arabia – with Hilton’s participation – is leading the way. significant investments in travel and tourism through public-private partnerships.

Asked if Hilton leaned too heavily on the luxury segment in the area, Nassetta replied, “I don’t think we’re overdoing it on the upscale.”

“We love luxury. We love to do Conrads, we love to do Waldorfs, we love to do LXRs (LXR Hotels) all over the world, and especially in this region,” Nassetta said, but added that all hotel segments are underrepresented in the Middle East.

He said Hilton needed to offer different products, including mid-size properties, at a variety of price points to meet demand for disparate travel types to create a “network effect.”

Nassetta took issue with the idea that Hilton isn’t involved in alternative housing, noting that it has Conrad and Waldorf residences, Hilton apartments and extended-stay properties, which are “a bridge.”

Referring to the extended stay, Nassetta said Hilton could grow in the area and is “still looking at those options.”

In other news, Nassetta said that before Covid, 80% of Hilton’s business travel business was small-to-medium sized, and that figure jumped to 95% during the pandemic when big business went on hiatus. their business trips.

He said Hilton would likely continue to look at the small-to-medium sized business segment over the long term and he wouldn’t be surprised if that ended up settling in around 85% of the company’s business travel segment. hotel.

Nassetta said the macroeconomic environment around the world is in strong recovery with borders reopening and people becoming more mobile through remote working. He said it should be clear within 60 to 90 days if Chinese travel will return in a robust fashion.

“It looks like it’s going in that direction,” Nassetta said.

He said there is huge pent-up demand for leisure and business travel, adding that “meetings and events are out of this world.”

Although the macroeconomic environment is cooling, the travel trends he highlighted will see the travel industry weather the headwinds.

Nassetta said he will become the president of the US Travel Association in 2023 and will actively engage in helping resolve excessive visa delays. Ali said the waiting time for a US visa in Mumbai, India is now over 1,000 days.

Hilton’s CEO said Covid got in the way and borders were closing around the world, so “I think those muscles have atrophied a bit”, referring to visa wait times. He called them “crazy”.

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