Hilton’s CEO on new brands and the surging success of the Hilton Honors loyalty program – The Points Guy

When Christopher Nassetta became the CEO of Hilton in 2007, the hotel company wasn’t particularly recognized for its innovation or fashionable brands.

“We were too comfortable. Innovation wasn’t part of the culture. Instead, the approach was to work slowly and stick to traditional methods,” Nassetta once told the Washington Post. “The organization just wasn’t set up correctly.”

However, 17 years later, Hilton has become a formidable presence in the hotel industry. The brand now provides options catering to every kind of traveler and budget.

Upscale camping? Confirmed. Boutique hotels with a lifestyle focus? Absolutely (and with significant expansion plans). Timeless, ultra-luxury experiences? Definitely. And remember, earlier this year, the company also took over a Small Luxury Hotels of the World partnership from Hyatt.

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Indeed, there’s also what some perceive as the company’s “category killer” introduction in the budget sector with Spark, a brand launched last year that generally aims at the $100 per night hotel market.

What transformations have taken place at Hilton from those years of complacency?

“Our key to performance success lies in our grit, determination, competitiveness, and an entrepreneurial spirit to do things differently,” Nassetta stated in an interview with TPG this month at the NYU International Hospitality Industry Investment Conference.

Boasting a diverse portfolio of 24 hotel brands, ranging from the budget-friendly Spark to the luxurious Waldorf Astoria, the company is experiencing considerable growth and various transformations. This growth is predominantly driven by the internal development of new brands rather than through acquisitions, and its loyalty program now encompasses almost 190 million members.

However, this shifted somewhat in the past year when the company purchased the Graduate lifestyle hotel brand and obtained a majority interest in the parent company of NoMad Hotels, aiming to strengthen its position in luxury lifestyle accommodations.

“I have a background in Mergers & Acquisitions, so I do enjoy the process,” Nassetta remarked about acquiring brands instead of creating them naturally. “However, I am fundamentally a very disciplined individual. Therefore, the criteria of what benefits our customers and what is economically advantageous for our shareholders have always guided my decisions.”

The growth of Hilton Honors and its collaborations

Although Nassetta chose not to comment on industry speculation that Hilton Honors might soon surpass Marriott Bonvoy as the biggest hotel loyalty program, he eagerly highlighted the robustness and growth of Hilton’s network.

Hilton Honors gains approximately 80,000 new members daily, with its loyalty program contributing to around 64% of all Hilton room night bookings. The aim is to increase this figure to 65% by the end of the year, and Nassetta suggested it could potentially reach 75% in the future. Additionally, the company is expanding its program to include more experiential offerings.

“I want growth, but I also seek engagement, aiming for it to ultimately enhance satisfaction and increase market share, encouraging owners to reinvest,” he further explained. “This is my perspective on our ecosystem.”

Additional growth prospects arise from Hilton’s co-branded credit card alliance with American Express. Hilton became American Express’s initial co-brand partner in the 1990s, and their partnership — with American Express serving as the exclusive co-branded credit card provider for Hilton — was recently extended for another decade.

“This extension enhances the robust foundation we’ve developed over the years with Hilton, providing us with ample opportunities to invest in products and services, which will help attract new customers and strengthen our relationships with current ones,” stated American Express CEO Steve Squeri during an earnings call last year.

“Although it has expanded significantly, we think there is still a great deal of potential,” Nassetta remarked while speaking to TPG this month.

High-end vs. everyday vs. affordable brands

It’s challenging to identify a single direction Hilton is pursuing these days, as brand expansion covers numerous aspects across the travel industry.

Spark and LivSmart Studios, both established last year, focus on more economical segments of the market and cater to extended-stay travelers. Graduate and NoMad will enhance Hilton’s footprint in the fashionable lifestyle hotel market, which is currently led by brands such as Marriott’s Edition, Accor, and Ennismore’s The Hoxton and Standard International. Hilton’s collaboration with AutoCamp also allows it to tap into the rapidly growing luxury camping industry.

The company’s established brands are also experiencing significant growth: Waldorf Astoria has a development pipeline set to increase the current 35-hotel portfolio by 75%. This includes recent openings in the Seychelles and Doha, as well as future openings in London; Hanoi, Vietnam; Costa Rica; Kuala Lumpur, Malaysia; Jakarta, Indonesia; Sydney; Tokyo and Osaka, Japan; and Riyadh, Saudi Arabia. Additionally, the much-anticipated reopening of the Waldorf Astoria New York is imminent.

So, are there any remaining gaps in Hilton’s brand lineup that need to be filled?

Nassetta emphasized the importance of leveraging our current lineup, ensuring that we continuously innovate our legacy brands to maintain their strength. He also stressed the need to give our new brands a successful launch and scale-up, and to fully integrate and maximize the potential of the newly acquired ones.

However, he later mentioned, “There will inevitably be another occurrence.”

If you have the urge to travel, there will likely be a Hilton brand to suit your needs.

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