Hilton CEO on the future of room service, Wi-Fi, and more
Hilton CEO Chris Nassetta in McLean, Va. on May 29, 2014. (AP / J. David Ake)
Scott Mayerowitz, The Associated Press
Published Wednesday, July 30, 2014 8:50AM EDT
MCLEAN, Va. -- Nearly every weekend, Chris Nassetta is cooking in his family's oversized kitchen, outfitted with two commercial-grade refrigerators, three sinks and a deep fryer.
These aren't small meals. Between his wife, six daughters, friends, neighbours and relatives, there are often 40 people dining.
"I'm not a gourmet chef," Nassetta says. "I tend to cook what the kids beg for: my grandmother's old recipes of spicy red sauces, some sausage and ziti."
Most of the time, Nassetta is on the road. In his day job as CEO of Hilton hotels, he has about 732,000 guests per night to make happy.
When Nassetta took over in 2007, Hilton lagged behind other hoteliers. He had to restructure not only the operations, but the culture. "People really didn't know where we were going," he says.
Nassetta focused on lucrative international markets -- at the time, only 19 per cent of Hilton's new hotels were planned for overseas. He also franchised more hotels -- a quick way to grow the company with minimal capital investment or risk.
Today, Hilton Worldwide is the largest hotelier in the world, by rooms, with 679,000. Of its planned hotels, 60 per cent are now outside the U.S. Its initial public offering last December raised $2.35 billion, surpassing Twitter's IPO the month prior. It was the second largest IPO of the year and the biggest ever for a hotel.
Nassetta, 51, is as likely to greet you with a high five as a handshake. He gets animated about the gifts he's received from world leaders who welcomed Hilton into their country, like a zebra skin rug, swords and watches.
"I know I've got a dagger here," Nassetta says, rummaging through an office cabinet.
And he loves to chat. An interview lasts three hours, long enough to require a bathroom break -- but not a pause in the conversation. Nassetta talks all the way through the washing of his hands.
"I am very long-winded," he acknowledges. "Everybody tells me that."
Hilton was once an innovator. The pina colada cocktail is said to have been invented in 1954 at the Caribe Hilton in Puerto Rico. Hilton pioneered the idea of an airport hotel in 1959 in San Francisco. And highlighting its cultural importance, in 1975 the Muppet characters Statler and Waldorf were introduced, named after two Hilton properties in New York.
But by 2007, many of Hilton's rooms were tired looking. Private equity firm Blackstone Group purchased the company; Nassetta was brought in to turn it around.
Nassetta moved the headquarters from Beverly Hills, California to the Virginia suburbs of Washington D.C. There was a massive bloodletting: of the 600 headquarters employees, only 130 moved east.
"If you want to change a culture, you change 80 per cent of the people," he says. "We had lost touch with the front line."
So Nassetta and his senior executives started spending one week each year working at hotels -- in housekeeping, engineering and the front desk.
"Their job is harder than your job," Nassetta says. "You get in there, and you pay them the respect."
Nassetta is the fourth of six kids. His grandfather arrived in America from Italy before the Great Depression with a few dollars in his pocket and just as many words of English in his vocabulary. He was a woodworker and started his own shop in Connecticut making church pews and cabinets.
Nassetta's father applied that same entrepreneurial drive to real estate. For his six kids -- three boys, three girls -- there was no allowance.
"My father wanted us to be independent, do it on our own, just like he did," Nassetta recalls.
Nassetta had a newspaper delivery route then expanded it, getting other kids to do deliveries under his supervision. He also had a lawn mowing and snow plowing business.
The summer before college, he got his first formal job -- an entry-level position in the Holiday Inn Capitol Hill's engineering department. Primarily, he unclogged toilets.
Nassetta grew up about 10 minutes from Hilton's current headquarters. His parents still live in the same house; he lives just a mile down the road. And the neighbours -- on both sides -- are his sisters and their families.
His six daughters go to the same elementary school, junior high and high school he attended. And if that weren't enough hometown connections, here's one more: Nassetta and his wife Paige met in high school and were prom dates, though it would take another 12 years until they wed. (They had dinner at Trader Vic's in the Capital Hilton before the prom.)
While some hotel companies, like Marriott International, are launching new brands targeting younger travellers Nassetta isn't convinced that is the best approach.
"I think all our hotels, in all brands, need to appeal to the millennial," he says. "Millennials grow up and their needs change. All of our brands need to be relevant to a broad array of customers."
Part of that is accepting what needs to go away.
Rolling suitcases have eliminated the need for bellmen and Nassetta questions if guests truly desire robes, slippers or nightly turndown service. Or at least are willing to pay the higher room rates they require.
"Do you get turndown service at home? If you do, let me know because I'd like to ask my family," Nassetta jokes.
He made headlines last year with a decision to eliminate traditional room service in big city hotels.
The labour costs involved with delivering food to rooms makes it a money-loser for the hotel. But guests aren't happy either with often overpriced, mediocre food. So Hilton and other hotels are testing a "grab-and-go" food outlets, particularly for breakfast.
"The customer gets a better price, better service and ultimately, in their minds, a better product," Nassetta says.
Then there is Wi-Fi. Most hotels -- especially at the higher end -- charge for it. Nassetta believes in three to five years a basic level of Internet access will be free across the industry, with hotels only charging for faster service.
But don't expect free bottled water soon, unless you're an elite member of the loyalty program.
"Bottled water has a cost, has an environmental impact," Nassetta says. "I don't really want to encourage it. People pay for bottled water at their house, so I'm not sure why they can't pay for it at our hotels."