Barron Hilton (born 1927), son of the founder of Hilton Hotels, became head of the company in 1966.Disparaged by some as the lucky son of Conrad Hilton, he led the company into the gaming industryand was one of the first in the hotel industry to usemanagement leaseback deals.
Conrad N. Hilton bought a small Texas inn in 1919. From that purchase grew the Hilton Hotels Corporation. Hilton's philosophy about the hotel business was that no hotel should be built unless there was a need for it. Once need was determined, the right location had to be chosen and construction had to be financed in a conservative manner. Conrad Hilton's sons, William Barron (known as Barron), born on October 23, 1927 in Dallas, Texas, and Eric, born in 1930, followed their father into business.
In 1959, Conrad Hilton started the Carte Blanche credit card business, with Barron Hilton in charge. The company lost $2 million in six years, before it was sold to Citibank. Barron Hilton was very interested in making gambling a part of the Hilton empire. This led him to move the company's focus away from hotels. In 1964, the company spun off its international hotels to shareholders because Barron argued that the parts were worth more than the whole, a move that some questioned. In 1967, Barron convinced his father, the biggest stockholder of Hilton International, to sell his shares to Trans World Airlines (TWA) in exchange for that company's stock. Barron, an aviation enthusiast, thought the TWA stock would go up in value, but instead it plummeted. Barron Hilton took over as president and chief executive officer of the Hilton Hotels Corporation in February 1966.When Conrad died in 1979, at the age of 91, Barron became the new chairman of the board.
Hilton was one of the first businesspeople to use management leaseback deals. In 1975, the company sold half its equity in six major hotels, but continued to manage the properties in return for a percentage of room revenues and gross profits. This was one of the first management lease-back deals in the hotel industry. He received $83 million in the deal, which was used to buy back 20 percent of the company's stock. This turned out to be a smart purchase because the stock increased in value sevenfold.
In 1972, Hilton bought control of two Las Vegas casinos, paying $112 million for them. Growth in the hotel part of his empire came from expanding the number of hotels it franchised. His strategy of owning very few properties outright was later imitated by other hotel companies in the 1980s.
Seemingly a contrarian in the 1980s, Hilton sold many of his assets when others in the industry were building. Other hotel chains developed new formats such as suite hotels and vacation ownership resorts. He watched and waited. Some critics viewed him as being overly conservative, but his waiting paid off. When he saw which of the new formats were successful, he came up with similar products of his own. This watch and wait strategy caused the company's stock to increase in value.
When his father died in 1979, he left Hilton several hundred thousand dollars in cash. The bulk of his fortune, almost 13.5 million shares of Hilton Hotels stock, went to the Conrad Hilton Foundation to help Roman Catholic nuns worldwide. Hilton controlled another 3.4 percent of the 25 million shares. He claimed his father's will gave him the option to buy the stake from the foundation at the 1979 price of $24 a share, a total of $330 million less than the 1988 market price. A California superior court ruled against Hilton in 1986. The settlement, reached in November of 1989, gave four million shares to Hilton outright, 3.5 million shares to the foundation, and six million shares to a trust, with Hilton serving as executor. He was allowed to keep 60 percent of any dividends paid on the trust's shares for the next 20 years. After the year 2008, those payments and ownership of the shares revert to the foundation. The settlement meant that Hilton could vote the foundation's shares, giving him control of over 25 percent of the outstanding stock in the company. In April 1998, the Securities and Exchange Commission approved the sale of as many as 24 million Hilton shares from the charitable trust he controls.
Took a Gamble
Hilton, an avid poker player, wanted to increase his company's involvement in the gaming industry. He was denied a gaming license in Atlantic City by the New Jersey Casino Control Commission in 1985, when alleged ties to organized crime were discovered. The commission stated that Hilton's 13-year relationship with Sidney Korshak, a Chicago labor attorney associated with organized crime figures, was the main reason the gaming license was denied. Hilton had already spent $320 million to build the casino, "the largest undertaking in the company's history," according to the 1984 annual report. Hilton sold his newly built property to Donald Trump, a real estate and casino czar. Hilton ended relations with Korshak in 1984, because the New Jersey authorities made it clear that Korshak was an obstacle to getting a license in Atlantic City. In 1991, Hilton finally received permission to operate a casino in Atlantic City.
Describing Hilton's caution in hotels and boldness in gaming, Amy Barrett wrote in Financial World in 1992, "Barron Hilton has been agonizingly prudent. During the past decade, while much of the hotel industry took part in a frenzy of overbuilding and outrageously priced buying … Hilton Hotels quietly passed. … Hilton actually sold assets in the second half of the Eighties. … But within the past year, Barron Hilton has undergone an awesome change in style, trading in his cautious stance for a gambler's studied swagger. His … company is leading the charge to build new casinos as a wave of legalized gaming rolls across the U.S. Readying a riverboat casino in New Orleans and joining two other gaming heavyweights … Hilton is no longer content to sit back and let others test the waters." In 1991, over half of the company's $185 million in operating income came from gaming.
Bollenbach Took Helm
In the 1990s, the question of choosing a successor arose. Hilton's son David, born in 1952, and head of operations at the Flamingo Hilton in Las Vegas, was a possibility. His brother, Eric, who runs the company's international real estate development, was also under consideration. In 1996, Stephen Bollenbach, the former finance chief at Walt Disney Co., was named CEO of Hilton Hotels, becoming the first non-family CEO in the company's history. Fortune said of Bollenbach's new job, "Lazy and indecisive, Hilton has rested on its name in hotels and gaming while rivals such as Marriott and Promus rapidly expanded their franchises-and profits. Bollenbach will drive for growth in hotels, an industry that is reviving rapidly. Hilton carries a conservative amount of debt, seemingly odd for a company that owns casinos but catnip for Bollenbach, an apostle of leverage. He's going to roll the dice, pledging not only to buy big urban hotels but to challenge Marriott as well by building a slew of suburban inns. 'Now that the excess supply is gone,' he says, 'this is a wonderful time to grow in the hotel business."'
In the late 1990s, Hilton Hotels was the third-largest lodging company in the world. It owned, managed, and franchised more than 250 hotels worldwide, including New York City's Waldorf-Astoria, Hilton Hawaiian Village, and Chicago's Palmer House Hilton. The company plans on expanding the Hilton Garden Inns, targeted at budget-conscious business travelers. In 1998, the company purchased the Mississippi gaming operations of Grand Casinos. Hilton then split into two companies so it could focus solely on hotels. The new company, Park Place Entertainment, now owns all of Hilton's gambling operations. Hilton had considered a split for years, hoping to boost his company's stock price by capitalizing on investors' willingness to pay much higher prices for lodging firms than for gaming companies.
Hilton has been a private pilot since 1947 with multi-engine, helicopter, glider, and lighter-than-air ratings. He served on the Experimental Aircraft Association Museum Board. In 1956, Hilton formed the Air Finance Corporation for the purpose of leasing aircraft to commercial airlines. He and his wife, Marilyn, own a Nevada ranch. There they fly a hot-air balloon, a helicopter, and various airplanes. Hilton also enjoys shooting clay pigeons and fishing for trout and bass in his two private ponds.
Hilton is a director of The Conrad N. Hilton Foundation, The Southern California Visitors Council, and the Executive Council on Foreign Diplomats. He is an honorary director of the Boy Scouts of America and of the Great Western Council. Hilton is a Trustee of the City of Hope, Saint John's Hospital and Health Center Foundation in Santa Monica, California, the World Mercy Fund, the Eisenhower Medical Center, and the Criminal Justice Legal Foundation. He is a Chevalier of Confrerie de la Chaine Des Rotisseurs, a Magisterial Knight of the Sovereign Military Order of Malta, a member of Conquistadores del Cielo, the International Order of St. Hubert, the PEACE Foundation Council, and the National Honorary Advisory Committee of the Naval Aviation Museum Foundation. In 1986, the University of Houston conferred an honorary degree of Doctor of Humane Letters, and he was inducted into the Culinary Institute of America's Hall of Fame.
In 1998, Hilton received the honorary title of Knight Commander of St. Gregory the Great, a Catholic honor. He and his wife are generous donors to Catholic causes. Hilton has also received the Ellis Island Medal of Honor and the Freedom of Flight Award. On the list of the 400 Richest People in America, hotelier William Barron Hilton came in last, with a fortune of $500 million.
Financial World, April 4, 1989; May 26, 1992.
Forbes, January 25, 1988.
Fortune, May 27, 1985; March 4, 1996.
Nation's Restaurant News, July 18, 1988; December 19, 1988.
Travel Weekly, February 23, 1987. □
"Barron Hilton." Encyclopedia of World Biography. . Encyclopedia.com. (August 21, 2017). http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/barron-hilton
"Barron Hilton." Encyclopedia of World Biography. . Retrieved August 21, 2017 from Encyclopedia.com: http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/barron-hilton
Hilton, William Barron
HILTON, WILLIAM BARRON
William Barron Hilton's (1927–) name has become nearly synonymous with the word "hotel." The son of Conrad Hilton (1887–1979), he was arguably one of the founders of the U.S. hotel tradition. Hilton struggled with tough competitors, like Marriott and Hyatt, but with the record and reputation of his own father. For several years Hilton was told that if business was good, it was because of the assets his father put together, and if business was bad, then it was William Hilton's own fault. However, Hilton's assumed control of the family-owned Hilton Corporation in 1979, after his father's death, and the company prospered to the point where, in the late 1990s, it ranked as one of the country's largest holders of real estate.
William Barron Hilton was born in Dallas, Texas, in 1927. His father, Conrad Hilton, was the legendary founder of the Hilton hotel chain. When William was eight, the Hilton family relocated to southern California in the midst of the hotel chain's enormous growth. Before growing into manhood the young Hilton watched his father go through two divorces.
As a young man Hilton showed little interest in taking up the family business. Instead, he joined the Navy and served as a naval photographer during World War II (1939–1945). After the war he started his own business selling orange juice products in California; he was soon the owner/operator of his own citrus distributorship. It wasn't for another five years that Hilton considered joining his father's business. When he did, in 1951, he started in the operations department of the Hilton Hotel Corporation, at the bottom of the corporate ladder. Hilton showed an early talent and initiative for the work in the hospitality business, and in 1954 he assumed the role of vice president of the corporation, with his father in the role of president.
Variety in business ventures seemed important to the younger Hilton. In 1960, while still vice president of the company, he turned his attention to establishing the Los Angles Chargers football team, a team of the American Football League. The following year he moved the team to San Diego, California, and served as its president until 1966.
That same year he took on the role of president and chief executive officer (CEO) for the Hilton Hotels. In 1970 he bought two Las Vegas hotels, beginning the company's involvement in the gaming industry. Gaming interests grew rapidly, and within 25 years they accounted for 46 percent of the firm's revenues.
With the death of his father in 1979, Hilton became chairman of the board of the company's operations. The will of the senior Hilton specified that the bulk of his estate go to the Conrad Hilton Foundation, a charity to aid Catholic nuns. William Hilton fought successfully to alter the terms of the will, and he obtained sufficient shares of Hilton Hotel stock to control 25 percent of the company.
Only after a long struggle did William Hilton come to be seen as the company's master strategist. During the 1970s, when other hotel chains plunged ahead with the development of luxury hotels and vacation resorts, Hilton sat back and watched his competitors' successes and failures before making any of his own moves. He was also cautious during the 1980s, when it seemed that everyone else in the business was either buying or selling.
Hilton made the move, finally, to sell off his less profitable hotels and retain choice properties like New York City's famed Waldorf-Astoria. He decided also to manage and franchise the rest of the hotels bearing the Hilton name. His cautious yet strategic maneuvers caused the company stock to rise while other hotel operations were seeing a downturn. William Hilton obtained the reputation of a cautious, prudent, and savvy strategist in real estate dealings.
During the 1990s, however, he became aggressive about the gaming industry and led the pack with construction of new casinos and proposals for gambling complexes. In 1996 Hilton began expanding internationally. His aim was to bring his total hotel room capacity to 100,000 by the year 2000—by 1997 he had already reached his goal. By the late 1990s the Hilton Corporation operated 16 casinos and 240 hotel properties, and in 1996 Hilton bought the Bally Entertainment Corporation for $43 billion.
At the close of the twentieth century, as owner of more than 25 percent of the company's shares William Barron Hilton was president of a vast hospitality empire employing 62,000 people. His personal wealth was estimated to be over $600 million, which made him a regular on Forbes magazine's list of the "400 Richest People in America" since 1982.
"Dr. Jekyll and Mr. Hilton." Financial World, May 26, 1992.
"New Baron Now Calls Hilton Shots." Hotel and Motel Management, March 4, 1996.
"New Hilton Chief: Chain Will Grow by Investing in Hotels and Gaming." Travel Weekly, May 27, 1996.
"Rumors at the Inn: The Wall Street Sharks are Circling Hilton Hotels, Eager to Break up the Family Dynasty." Financial World, April 4, 1989.
"The Son Also Rises." Forbes, January 25, 1988.
"Hilton, William Barron." Gale Encyclopedia of U.S. Economic History. . Encyclopedia.com. (August 21, 2017). http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/hilton-william-barron
"Hilton, William Barron." Gale Encyclopedia of U.S. Economic History. . Retrieved August 21, 2017 from Encyclopedia.com: http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/hilton-william-barron