Celebrating its centennial, Hilton looks to the future
 
Celebrating its centennial, Hilton looks to the future
19 APRIL 2019 8:14 AM

Conrad Hilton began his legacy a century ago, and today Hilton continues to evolve in the ever-changing hotel industry through innovative technology, strategic development and social responsibility initiatives.

NEW YORK—The Hilton legacy has weaved its way through the hotel industry for a century now, and the company continues to innovate and develop in ways that keeps it ahead of the curve for both guests and team members, sources said.

In 1919, Conrad Hilton purchased his first hotel in Cisco, Texas, called the Mobley Hotel. In 1925, Dallas became home to the first Hilton branded hotel.

From the start, Conrad Hilton began his foray into the industry with innovation in mind. For example, in the Dallas Hilton, he didn’t position guestrooms on the western side of the building because the heat of the setting sun was brutal without air conditioning, Mark Young, archivist, historian and professor at Conrad Hilton College of Hotel and Restaurant Management, said during the Hilton 100th Anniversary and Beyond event in New York on Thursday.

Fast forward a couple of decades: “In the 1950s, he (spent millions of dollars) to air condition the big hotels in Chicago, New York and elsewhere and a byproduct of that was … he proved innovation. Conrad was always pushing new things that were against the grain at the time but proved very successful,” Young said.

The company has now grown to a portfolio of 17 brands making up more than 5,600 rooms across 13 countries and territories and has welcomed more than three billion guests throughout the past 100 years.

Today, the company is doing things that Conrad Hilton couldn’t conceive without technology. One thing that remains is the core vision that he had built, which was trying new things and taking inspiration from everyday occurrences, said Mark Weinstein, SVP and global head of customer engagement, loyalty and partnerships at Hilton.

“Get to know your customers, treat them as if it’s a colleague, friend or community member, understand them so well that you (not) only know what they want and need, but things they haven’t even imagined … whether it’s for business or pleasure” he said.

Not only should innovation be applied to the guest experience, it needs to be applied to team member experience as well, which Hilton has put a focus on, said Gretchen Stroud, VP of talent, learning and engagement at Hilton.

“We’re constantly challenging ourselves. How do we leverage that new technology or new ways of doing things to also change how we interact with our team members? In the learning space, for example, we are currently piloting the use of artificial intelligence and augmented reality,” she said. “We’ve already launched virtual reality training across all of our corporate offices globally.”

There’s been so much success with that, she added, and Hilton is already working on a second project to put VR training in all hotels.

To continue planning ahead for the future, Noelle Eder, EVP, chief information and digital officer at Hilton, said there’s a couple levels to it.

First, it’s having modern and flexible architecture and infrastructure, she said. This allows flexibility and speed of making experiences more dynamic and sophisticated. Second, it’s about solving pain points that customers have and marrying it to a methodology that creates a passion to pursue new things for customers, she said.

Development, midscale focus
Ian Carter, president, global development, architecture, design and construction at Hilton, said there’s an enormous runway for growth outside of the U.S. with existing brands that have already become a staple in the country.

“Hilton actually split into two companies about 66 years ago—Hilton in the U.S., Hilton Hotels Corporation, and Hilton International, which was based in London—we only put the two companies back together 12 years ago,” he said. “During that period of separation, Hilton Hotels Corporation U.S. actually invested in grooving to multiple other brands, many of which have become extremely well-known here in the U.S.—Double Tree by Hilton, Hilton Garden Inn, Hampton by Hilton—but none of those 12 years ago existed outside of the U.S.”

Hilton has opened an average of one hotel a day around the world, including 400 in 2018, in the past two years, he said. The company’s current pipeline is about 2,400 hotels. More than half of those are outside of the U.S. and are under construction, he said.

“The opportunities are actually, in my mind, endless,” he said.

Specifically there are a handful of areas that grab Hilton’s attention right now, he added. Those regions include Africa, all-inclusive in the Caribbean and other areas in the northern part of South America and China.

Carter said China has moved beyond just upper-upscale and luxury and there’s now a focus on growing the focused-service segment.

Twelve years ago Hilton had five hotels in China.

“We have 150 (open) now, over 300 in the pipeline, but what’s commonly most interesting for us … the real future is in the midscale,” he added.

Hilton currently has 60 Hampton Inns and 250 in the pipeline in China, and the company is now “developing for the Chinese traveler—within China. That’s a massive opportunity,” he said.

The reason Africa is on the radar for Hilton is simple, Carter said. It’s the largest geographic continent, it’s highly populated all around the coast, there are huge mineral and oil resources and it has the potential to be very wealthy, he said.

“If you look at inward investment, the Chinese are the biggest investor into Africa, and they’re investing in infrastructure. They’re buying mineral resources et cetera and … if you step back and wonder why, it’s because they see a long-term future,” he added.

From a hospitality perspective, that means more and more people will be traveling to Africa. If you spin the clock forward, Carter said, and that may not be for 20 or 30 more years.

“It is going to be a very high growth area,” he said.

That reasoning makes it important to establish brands there now, Carter said, and not just in upper-upscale but also in the midscale.

“That’s why we launched our Africa fund for investment, where we’ll co-invest where it’s important for strategic assets to be built in key locations, whether it’s near an airport or whether it’s in South Africa where clearly (it’s) more developed in the tourism perspective,” he said.

As Hilton expands around the globe in so many new markets, Katie Fallon, EVP, global head of corporate affairs, stressed the importance of corporate responsibility.

She said for an owner to fly a Hilton flag anywhere in the world, it comes with a special obligation to carry on the legacy of monitoring the cause of impact.

It’s an easy conversation with owners, she said, because the company has done a very good job over the last decade measuring and tracking the carbon footprint that hotels across the portfolio make.

“Since we’ve started tracking the environmental footprint of our hotels, we’ve been able to determine that we’ve saved our hotel operators over $1 billion in energy and food and waste costs over the years we’ve been tracking,” she said. “We can show each individual hotel owner how much they will save year over year using the LightStay program.”

What’s on the horizon for brands
While Hilton has been expanding with newer brands like Signia Hilton and Motto by Hilton, Carter said there really is no prioritization of growing out any single brand over another, “because they’re all important for different reasons. So I look at it as more where are they in their cycle.”

He said Hilton set a milestone of one million rooms in operation by 2020, which he said the company is on track for and is keeping a steady pace.

“I think we’ll probably think about how to get to 10,000 hotels (by 2030) but we’re not there yet … if you look out three years, which is as far as we kind of look at this point, we want to continue to grow at a rate of adding rooms, opening rooms, about 66% a year, which is about roughly speaking 60,000 to 70,000 rooms a year,” he said.

Carter said it’s possible there could be new brands on the horizon. He said the current ones “all work well because the guest knows what they stand for … and an owner knows what they’re going to get when they build one.”

Hilton doesn’t want to have brand confusion and overlap. Carter said the company will only launch a brand when there is an apparent whitespace, which is why Hilton launched brands such as Tru.

“When we look at where there might be a gap, where we can bring … scale, that’s when we’ll launch a brand,” he added. “It won’t be just for the fun of it.”

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