Chris Nassetta really wants people to download the Hilton Honors App. In the course of a 60-minute interview, the CEO of Hilton Worldwide Holdings urged me five times to do so, insisting it's the pathway to deals, better rooms, and services like remote check-in.
"You're sort of crazy not to buy it through us. You'd just be getting a better deal. You have a guaranteed discount. You get all the technology," Nassetta responded when I offered that I'd booked a room at a Netherlands Hilton hotel through an online travel site rather than the company itself. Adding to his agita, I admitted to occasionally staying at Super 8s, not part of Hilton's portfolio, when seeking cheaper road trip accommodations.
While booking that European hotel room through Hilton's app would be profitable for the hotel operator, cutting out the middleman, the actual gameplay is building customer loyalty to Hilton, whose 18 brands include Conrad, Hampton Inn, and DoubleTree. Hilton is doing well on that score, with 62% of bookings now made on its app or site, and Nassetta estimates that figure could hit 80% of reservations within a few years.
Like the rest of the travel industry, Hilton is recovering nicely from the pandemic, with many people enjoying so-called "revenge travel," pent-up demand for travel after time lost to the pandemic. Personal and business travel is back to pre-pandemic levels for Hilton, while meetings, events, and conference-related bookings will get back to 2019 volumes next year, Nassetta projects.
Still, the company is going all out to keep its momentum, notably through marketing. After years of keeping the controversial reality TV star Paris Hilton, the founder's granddaughter, at arm's length, the hotel operator embraced her in a tongue-in-cheek ad campaign. Hilton and her dog first appeared in ads this summer, with more commercials slated for this holiday season. "The reality is that her name is inexorably linked to us whether we choose it or not," Nassetta says. "She has an unbelievably strong following in the younger customers."
Hilton has recently made other moves, including bringing Peloton bikes to 5,000 hotels and adding more adventurous food to menus at its discount hotels, such as pumpkin spice waffles at its Hampton Inn chain.
Despite the uncertain economy, Nassetta says pent-up demand, work flexibility that allows for more travel, and the greater propensity to mix leisure and business travel (a trend given the cringeworthy portmanteau "bleisure"), is likely to buoy the global travel sector next year.
"People are spending more disposable income on experiences and travel," says Nassetta, Hilton's CEO since 2007. "That will accelerate."
This interview has been edited and condensed for clarity.
Fortune: Hilton has bounced back from the depths of the pandemic shutdown. Are you confident this can continue, given the specter of a recession?
We have been shifting back to the secular trend from before COVID, where people spent proportionally more of their disposable income on experiences and travel. Besides China, the world is open now, so a lot of pent-up demand has been released. The $64,000 question is how we are preparing for a potential recession. I believe the tailwinds from pent-up travel demand are stronger than the headwinds of a macroeconomic slowdown.
How is the rise of work-from-home affecting revenue?
It's been a boon for travel because anything that increases mobility is positive for our business. People have more flexible schedules, so workweeks look a bit different, and they have greater mobility to take more trips or combine them with business in what's been coined "bleisure" trips. More mobility means they need places to meet, sleep, eat, and do everything we do for them.
Is "bleisure" really a new thing? Haven't people been adding holiday time to work trips forever?
Yes. But with Tuesday, Wednesday, and Thursday becoming more of the regular workweek in the office and Monday and Friday more flexible, people are taking advantage of it and creating longer weekends.
I recently booked a room at a Hilton in Europe on a travel site. What are you doing to get more people to book directly on your site or app?
You're sort of crazy not to buy it through us and join our Hilton Honors loyalty program. You're just going to get a better deal and have a guaranteed discount. You should download the app. You can choose your room. About 62% of our overall occupancy comes from Hilton Honors. Certain types of business will never be direct, like groups or very infrequent travelers, but there's no reason it can't get to 75% or 80% of occupancy. Very avid travelers consolidate their spending with one or two hotel operators because of apps, and they do that because there is real value.
Lots of hotel gyms are less than impressive in size and services. In October, Hilton announced it would put Pelotons in all its Hilton-branded hotels. Is that to spruce up your offering?
No franchisee operator can have an undersized gym, or it doesn't get into the Hilton system. We do not receive complaints about our gyms. We learned from COVID that 98% of people say their health and wellness are a higher priority because everybody feared for their lives for a while. We also found that within Peloton's customer base, 90% will select a hotel based on whether there is a Peloton bike. By the end of this year, we are putting a Peloton bike in 5,000 hotels in the U.S.
What kind of menu changes are you making at your lower-price chains to entice customers and justify the price premium that a Hampton Inn has over other discount chains like a Super 8?
Post-COVID, we've been reinventing how we think about food and beverage, even at the simplest hotel like Hampton Inn. Hampton Inn is famous for its waffles, and if you would stop staying at Super 8s, you'd know we just rolled out a pumpkin spice waffle. We're doing these things because while we can't go crazy given the price point, people are much more focused on food and beverage and the experiential aspect of it at all price points.
An executive at one of your competitors, Marriott International, recently told Fortune that people are willing to pay a bit more for sustainability in their vacation. Have you found the same customer attitude regarding your sustainability efforts?
Data is a bit garbled on that. We're doing it because it's the right thing to do, and our customers care about it. But I honestly have not seen a lot of data that suggests they will pay a lot more for it or that they are desirous of changing their behavior to help us with it, but that's evolving. People say they care and want us to be environmentally sensitive, but when we give them the opportunity to hang towels, not change sheets, or use no plastic bottles, they're still evolving.
Paris Hilton, the granddaughter of company founder Conrad Hilton, and her dog are part of the company's current ad campaign, a striking contrast to the 2000's stance when the company kept her at bay. Why the change?
I've gotten to know Paris—we're not best friends—but I've gotten to know her because I knew her grandfather, who asked me to give a eulogy at his funeral. Paris went through some trials and tribulations, like a lot of young people. She is inexorably linked to us whether we choose it or not. She has really shifted in the last five to eight years and has an unbelievably strong following with younger customers. My six daughters think she's great.
Any travel hacks to share with our readers?
Download the Hilton Honors app. I am shocked that you haven't.
Get to know Nassetta:
- His favorite activity is cooking a gourmet meal for a large group of friends. He has no preferred cuisine but says he has expanded his culinary vocabulary.
- Nassetta is the current chair of the World Travel & Tourism Council.
- Before joining Hilton, he spent 10 years at Host Hotels and Resorts, first as operations chief, then as CEO for the last seven years. The company owns dozens of high ends resorts.
