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Hilton Hotels Corporation

Hilton Hotels Corporation

9336 Civic Center Drive
Beverly Hills, California 90210
U.S.A.
Telephone: (310) 278-4321
Fax: (310) 205-7678
Web site: http://www.hilton.com

Public Company
Incorporated: 1946
Employees: 74,000
Sales: $3.85 billion (2003)
Stock Exchanges: New York
Ticker Symbol: HLT
NAIC: 721110 Hotels (Except Casino Hotels) and Motels

Hilton Hotels Corporation is a leading hospitality company that owns, manages, and franchises over 2,000 hotels across the country. The company's international arm, Conrad Hotels, has locations in Australia, England, Ireland, Egypt, Belgium, Turkey, Hong Kong, and Singapore. Though publicly traded, the chain was for most of its history led by members of the Hilton family from 1919, when founder Conrad Hilton bought his first hotel. By the late 1940s, Hilton owned a worldwide chain of premium hotels. In the 1960s, Hilton sold its international operations and concentrated on management contracts and franchising. The company created innovative joint-venture arrangements that became standard industry practice. It then entered what would become a prime source of revenue for the company: casino-hotels. Hilton expanded into gaming in 1971; by 1989, gaming provided 44 percent of the company's income. In 1996, Barron Hilton relinquished day-to-day management of the chain to Stephen F. Bollenbach. Asserting that "Big companies do big things," Bollenbach revitalized the company with bold actions. He spun off the company's gaming operations as Park Place Entertainment Corporation in 1998. One year later he orchestrated the $3.7 billion acquisition of Promus Hotel Corporation, which added the Doubletree, Embassy Suites, Hampton Inn, Homewood Suites, and Harrison Conference Centers brand names to its line-up.

Early 20th-Century Origins

Conrad Nicholson Hilton was born in San Antonio, New Mexico, the second of eight children. Before he was 18, Conrad had worked as a trader, a clerk, a bellboy, and a pianist. By age 25 he had also worked in politics and banking. In 1919, following the death of his father, Hilton left the army and went to Texas. He had intended to take advantage of the oil boom by buying a small bank. Instead, he found bank prices prohibitive and hotels so overbooked he could not find a place to sleep. When one owner in Cisco, Texas, complained he would like to sell his property in order to take advantage of the oil boom, Hilton struck a deal. Hilton pulled together an investment group and the funds were transferred within a week. The Mobley, in Cisco, became Hilton's first hotel.

The hotel was booked solid, and Conrad and his partner, L.M. Drown, rented their own beds and slept on chairs in the office. They also converted much of the hotel's public space into additional guest quarters. Making use of wasted space became a hallmark of the Hilton chain. With the Mobley running smoothly, Hilton bought two more Texas properties in 1920; the Melba, in Fort Worth, and the Waldorf in Dallasnamed after the prized New York hotel. In 1925 Conrad Hilton built the first hotel to carry his name, in Dallas.

With expansions well underway, Hilton consolidated his properties into Hilton Hotels, Incorporated, in 1929, when the stock market crashed. The El Paso Hilton was completed in November 1930 and opened with a fanfare. A year later, Hilton owned eight hotels and was more than half a million dollars in debt when a young bellboy slipped him $300his life savingsso Hilton could feed himself and his family.

Depression-Era Wrangling over Corporate Ownership

In 1931 the Moody family of Galveston, Texas, from whom Hilton had borrowed, took possession of his hotels when he defaulted on a $300,000 loan. The Moodys then hired Hilton to manage their own and his hotels, now known as the National Hotel Company. Nine months later, in 1932, Hilton and the Moodys decided to part. The separation, however, was in no way peaceful. The Moody family and Hilton sued and countersued each other regarding the terms of their agreement for separation, which Hilton claimed allotted him one-third of the hotels and one-third of the stock if the arrangement failed to prove satisfactory. In 1933, while Hilton continued to battle the Moodys in court, the Moodys defaulted on the loan for the El Paso Hilton, and Conrad Hilton managed to raise the necessary $30,000 to buy back that hotel. In 1934 Hilton settled with the Moodys, who lent him $95,000 and returned the Lubbock, Dallas, and Plainview hotels. According to Conrad Hilton, while Depression-era hotel owners saved less than one hotel out of five, Hilton emerged with five of his eight hotels, and he met his debts by the summer of 1937.

In 1938, Hilton bought his first hotel outside of Texas, the Sir Francis Drake in San Francisco. He sold it two years later at a $500,000 profit to raise capital to purchase the Stevens in Chicago, then the largest hotel in the world.

Although U.S. entry into World War II spawned caution, Hilton acquired three new properties, one in Los Angeles and two in New York. Thus, in 1942, his name stretched from coast to coast. The New York properties included the Roosevelt and the Plaza. Hilton claimed he was practicing for New York's Waldorf-Astoria, a picture of which he had clipped from a magazine and carried with him since the hotel opened in 1931.

Postwar Expansion

In 1945, Hilton traveled to Chicago to complete the purchase of the Stevens, which he had initiated in 1940, and ended up acquiring the Palmer House as well. In May 1946, Hilton Hotels Corporation was formed. It made history the next year as the first hotel company to have its stock listed on the New York Stock Exchange. Conrad N. Hilton was president and the largest stockholder.

Despite its reputation, the Waldorf-Astoria was not a profitable hotel. While negotiations to lease that hotel were taking place, Hilton worried his board members with his interest in international hotels in a postwar climate uncertain for international business. Nevertheless, Conrad Hilton pursued the venture that would become the Caribe Hilton in San Juan, Puerto Rico. An agreement was made to form a wholly owned subsidiaryHilton Hotels Internationalfor which Hilton formed a separate board. In 1949 Conrad Hilton bought the lease on the Waldorf-Astoria. The Waldorf made a $1 million profit in its first year under Hilton management. The first European Hilton was opened in Madrid in 1953.

The largest hotel merger in the industry took place in 1954 when Hilton Hotels purchased the Statler Hotel Company for $111 million. The Statler chain consisted of eight hotels, with two more under construction. Statler was noted for its fine properties and solid reputation. The chain was about to be sold to a New York realty firm when Hilton made a plea to Statler's widow. She agreed to sell to Hilton, in order to keep the hotels in "the hands of hotel people." Earnings per share nearly doubled between 1953 and 1955, largely as a result of this acquisition. In 1955, another overseas Hilton was opened, in Turkey, and the Continental Hilton of Mexico City opened the following year. In 1964 Hilton International was spun off and became a public company with Conrad Hilton as its president. Hilton was made chairman of the board of Hilton Hotels that same year.

Second Generation of Management Introduces Casino-Hotels

The late 1960s saw significant changes, beginning with the 1965 formation of Statler Hilton Inns, a corporate franchising subsidiary, and a change of presidents. In 1966 Hilton's son, William Barron Hiltonknown as Barronassumed the presidency. Barron Hilton's conservative fiscal strategies set a decidedly different course for the company his father had built. The following year, Barron Hilton persuaded his father, as the largest shareholder of Hilton International, to swap his stake in the overseas operation for shares of Trans World Airlines (TWA). Hilton remained chairman of Hilton International. The expectation had been that TWA stock would rise, but its value halved over the next 18 months. Meanwhile, foreign travel boomed, and Hilton lost the rights to his name overseas.

In 1970, Barron Hilton engineered the $112 million purchase that would generate the largest percentage of the company's revenues within a decade: two casino-hotels in Las Vegas, Nevada. While Conrad Hilton had dabbled in gaming via a Puerto Rican casino in the late 1940s, the acquisition of the Las Vegas Hilton and the Flamingo Hilton marked the launch of a consistent strategy. This move paid for itself, particularly during the late 1970s and early 1980s, when the occupancy rate at both hotels remained steady in contrast to industry-wide trends.

Barron Hilton then concentrated on franchising the Hilton name and managing other hotels. In 1973, the company launched a computerized hotel reservation dubbed "HILTRON." The system served not only the Hilton chain but was also employed by other chains in the industry, providing yet another source of revenue. In 1975 Hilton sold a 50 percent interest in six major hotels to Prudential Life Insurance Company of America for $85 million. Hilton continued to manage the properties in exchange for a percentage of room revenues and gross profits. This was one of the first management leaseback deals in the industry. Joint-venture arrangements later became standard industry practice.

Company Perspectives:

By providing the best service, value and amenities, along with a wide variety of hotel products and price points, we are focused on our mission of being the first choice of the world's traveler.

In 1977 the purchase of the Waldorf-Astoria's building and land was finalized for $35 million. The decade closed with the death of Conrad N. Hilton in 1979, at age 91. Barron Hilton became chairman of the board. During the 1980s Hilton continued to make its money primarily though casino gambling, leasing and management, and franchise fees. These were sound measures during recession years: while revenues for owned hotels increased an average of 4 percent in 1980 and 1981, management contract fees increased by 6 percent in 1980 and 14 percent in 1981. Overall earnings for Hilton increased by 6 percent during these years, and the company grew rich in liquid assets. It put this capital to use in hotel improvements and in 1981, the $34.4 million purchase of another casino-hotel in Nevada, the Sahara Reno. Barron Hilton maintained a no-partnership policy for the company's casino-hotels. Although the hotels suffered from the loss of convention bookings during the recession, an addition to the Las Vegas Hilton in 1982 made it the largest hotel in the world, and further convention facilities were added in 1985.

Having sold the international rights to the Hilton name, the corporation resumed international growth in 1982 under a new subsidiary, Conrad International Hotels. Construction began on a casino-hotel in Australia the following year. Over the course of the next decade, this division established hotels (many of them joint ventures) in Turkey, Egypt, Hong Kong, Uruguay and New Zealand.

By 1985 gaming was providing 40 percent of the company's operating income, and earnings had increased 20 percent annually since Hilton's entry into that industry. In 1985, however, after spending $320 million to build a casino in Atlantic City, New Jersey, Hilton was denied a license to operate. The New Jersey Casino Control Commission's primary objection was Hilton Hotel's longstanding relationship with Chicago labor attorney Sidney Korshak, who had been linked with organized crime figures and who the New York Times in 1976 had labeled "a behind-the-scenes fixer." Hilton severed its ties with Korshak, who had acted as a labor consultant for the company, and the gaming commission granted a new hearing. In April 1985, before the rehearing took place, however, the hotel-casino was sold to Donald Trump at cost.

While Hilton focused on the casino-hotels, Marriott and Hyatt were expanding in the luxury-hotels market. To keep pace with its competitors, Hilton pledged $1.4 billion to renovate older properties during the late 1980s. Barron Hilton also concentrated on solving the problem of his father's will.

Dispute over Founder's Will Spans 1980s

When Conrad Hilton died, he had bequeathed the bulk of his holdinga 27 percent block of Hilton sharesto the Conrad N. Hilton Foundation. This foundation, incorporated in 1950, gives aid to Roman Catholic nuns. This provision left Barron Hilton with 3.6 percent of Hilton Hotels, but he claimed to have exercised an option on the foundation's shares immediately, buying their portion at the market rate of $24. Ownership of the stock was contested for the next decade. At issue was the interpretation of an option Conrad Hilton had allotted Barron Hilton in his will: Barron Hilton claimed the will allowed him to buy the entire stock from the foundation at the 1979 price. The estate's executor, who was Conrad's personal attorney, claimed the will intended that Barron Hilton be entitled to no more than 7 percent of the shares. Meanwhile, Hilton and ex-wife Zsa Zsa Gabor's daughter also contested the will. The attorney general's office of California joined the case, arguing that the foundation was entitled to the shares at market value, or $225 million, in 1985. To complicate the issue further, Golden Nugget casino's chairman Steve Wynn attempted to buy the disputed shares in 1985 at their current market price$72 a sharein order to launch a takeover of Hilton.

A November 1988 settlement gave Barron Hilton four million of the disputed shares, a stake valued at $204 million. The foundation kept 3.5 million shares, worth $178 million at the time, and six million shares, a $306 million stake, went into a trust with Barron Hilton serving as executor. Perhaps most significant, the agreement gave the CEO the trust's voting privileges, for a total voting presence of 25 percent. In addition, Hilton was to receive 60 percent of the trust's share dividends until 2008, after which they would revert to the foundation.

The chain closed the decade enjoying a 70 percent occupancy rate in its newly rejuvenated domestic hotels, greater international expansion, and properties totaling an estimated $4 billion to $6 billion. In May 1989, Chairman Barron Hilton solicited bids for the chain. By December 1989, however, the company had not received a satisfactory bid, and Hilton decided not to sell.

The 1990s and Beyond

After three decades of leadership, Barron Hilton relinquished the chief executive office of the corporation in 1996. While his final years at the helm were criticized as indecisive and overly conservative, the fact remained that its revenues increased from less than $1 billion in 1989 to $1.6 billion in 1995. Net income increased at an average annual rate of 19.6 percent, from $84.3 million in 1991 to $172.8 million in 1995.

Key Dates:

1919:
Conrad Hilton buys his first hotel.
1925:
The first hotel carrying the Hilton name is constructed in Dallas.
1946:
Hilton Hotels Corporation is formed.
1947:
Becomes the first hotel company to have its stock listed on the New York Stock Exchange.
1949:
Hilton buys the lease on New York's Waldorf-Astoria.
1953:
The first European Hilton opens in Madrid.
1964:
Hilton International is spun off as a public company.
1970:
The company buys two casino hotels in Las Vegas.
1982:
Subsidiary Conrad International Hotels is formed to oversee international growth.
1996:
Stephen F. Bollenbach becomes the first non-Hilton to guide the company; Hilton merges with Bally Entertainment Corporation.
1998:
Hilton spins off its gaming operations as Park Place Entertainment Corporation.
1999:
Hilton acquires Promus Hotel Corporation for $3.7 billion.

In 1996 53-year-old Stephen F. Bollenbach became the first non-Hilton to guide the company. He came to the job with incontrovertible credentials, having engineered both a debt restructuring for the Trump empire and Walt Disney's $19 billion acquisition of Capital Cities/ABC. A spate of high-profile deals quickly ensued. Within five months, the new CEO had merged Hilton with Bally Entertainment Corporation via a stock swap valued at $2 billion. In one move, the deal created the world's largest gaming concern and made casino gambling Hilton's largest business. However, in the interest of equilibrium, Bollenbach also executed several key moves to expand the hotel chain. First, he repurchased the Prudential Insurance Company's stake in six Hiltons for $433 million. He also pledged to increase via franchising Hilton's budget Garden Inns chain by 50,000 rooms over the remaining years of the decade.

Before 1996 had ended, Bollenbach had also pulled off a reunification of the global Hilton presence. By the mid-1990s, ownership of Hilton International (and the overseas rights to the Hilton name) had passed to London's Ladbroke Group plc. Hilton purchased a 3 percent stake in Ladbroke and in return the British concern agreed to invest in future Hilton enterprises. The two companies planned to create cooperative marketing programs (including honoring each other's frequent stay plans) and develop new hotels together.

On January 27, 1997, Hilton bid $55 per share for New York-based ITT Corporation, aiming primarily to acquire its ITT Sheraton subsidiary's 415 hotels and 14 casinos. The company's hostile takeover attempt eventually failed when Starwood Lodging Trust outbid Hilton in a very public and heated battle. Bollenbach was undeterred by the failure and forged ahead with his strategy to take Hilton into the next millennium. Believing that Hilton's hotel and casino operations could achieve a higher stock value if they became separate entities, Bollenbach set plans in motion to spin off the firm's gaming arm. Shareholders agreed with the plan and in 1998, Park Place Entertainment Corporationnow known as Caesar's Entertainment Inc.began operating as a public company. Bollenbach was named chairman of the new firm.

Hilton Hotels' next big move came one year later when it made a $3.7 billion play for Promus Hotel Corporation. A September 1999 Wall Street Journal article summed up the company's reasoning for the deal claiming, "The transaction is designed to launch Hilton into a competitive triumvirate of top hotel companies with Marriott International Inc. and Starwood Hotels & Resorts Worldwide Inc." Indeed, as a result of the deal Hilton increased its portfolio to over 1,800 hotels located in all 50 states and added Doubletree, Embassy Suites Hotels, Hampton Inn, Hampton Inn & Suites, Homewood Suites, and Harrison Conference Centers to its hotel arsenal.

With the Promus deal under its belt, Hilton stood on solid ground as it entered the new millennium. During 2000, the company formed a joint venture with Hilton Group plc to strengthen and expand its Conrad Hotels unit overseas. The company signed an agreement the following year with Hoteles Camino Real S.A. de C.V. The partnership added the Camino Real hotels and resorts in Mexico and Texas to Hilton's brand portfolio. Bollenbach hinted at the company's future acquisition strategy in a 2001 Hotel and Motel Management article stating, "A lot of changes have occurred at Hilton in the last five years, going from a company that was about half gambling company and a half hotel company to today being focused on the hotel business. We have a company that is forever one of the major competitors in the hotel business." He went on to claim, "Hilton is what you think of as a strategically complete company. It means we don't need to add anything to what we have in our collection of businesses."

While Hilton digested its Promus purchase, it faced challenges due to a weak economy as well as a slowdown in travel as a result of the September 11, 2001, terrorist attacks. In fact, Hilton's stock fell to its lowest point in ten years during 2001. Revenues dropped in both 2001 and 2002, however net income increased by 19 percent in 2002. While net income fell in 2003, sales increased by nearly 51 percent over the previous yeara sure sign that the company had a solid business strategy in place. With Bollenbach at the helm, Hilton appeared to be well positioned for future growth in the years to come.

Principal Subsidiaries

Conrad International (Belgium) Corporation; Conrad International Corporation; Doubletree Corporation; Doubletree Hotels Corporation; Grand Vacations Realty LLC; Grand Vacations Title LLC; Hilton Chicago Corporation; Hilton Grand Vacations Club LLC; Hilton Grand Vacations Company LLC; Hilton Holdings Inc.; Hilton Hotels Partners I LLC; Hilton Hotels Partners II LLC; Hilton Hotels U.S.A. Inc.; Promus BPC Corporation; Promus Hotel Corporation; Promus Hotel Services Inc.; Promus Hotels Florida Inc.; Promus Hotels Minneapolis Inc.; Promus Hotels Inc.

Principal Competitors

Hyatt Corporation; Marriott International Inc.; Starwood Hotels & Resorts Worldwide Inc.

Further Reading

Binkley, Christina, "Hilton Shareholders Approve the Spinoff of Gambling Unit," Wall Street Journal, November 25, 1998, p. 1.

Binkley, Christina, and Neal Templin, "Hilton Agrees to Pay $4 Billion for Promus," Wall Street Journal, September 8, 1999, p. A4.

Gibbs, Melanie F., "Hilton Hotels Corp.: The Sleeping Giant Wakes," National Real Estate Investor, February 1997, pp. 4041.

Goldgaber, Arthur, "Honeymoon Hotelier: Hilton's Stock Quickly Doubled after Stephen Bollenbach Took Over as CEO," Financial World, January 21, 1997, pp. 3437.

Higley, Jeff, "Bollenbach: Hilton's Portfolio Set for Long Haul," Hotel and Motel Management, February 19, 2001.

Hilton, Conrad N., Be My Guest, New York: Prentice-Hall Press, 1957.

Lee, Daniel R., "How They Started: The Growth of Four Hotel Giants," Cornell Hotel & Restaurant Administration Quarterly, May 1985, pp. 2232.

Liou, Su-Lan Bethany, Hilton Hotels Corporation: A Strategic Analysis, 1993.

Lubove, Seth, "Hilton's Head," Forbes, March 8, 1999, p. 50.

Moore, Thomas, "Barron Hilton Fights for Hilton Hotels," Fortune, May 27, 1985.

Picker, Ida, "Saying Good-bye to ITT," Institutional Investor, January 1998, p. 91.

Whitford, Marty, and Robert Selwitz, "A Deal in the Cards?," Hotel and Motel Management, October 4, 1999.

Wrubel, Robert, "Rumors at The Inn: The Wall Street Sharks Are Circling Hilton Hotels, Eager to Break Up the Family Dynasty," Financial World, April 4, 1989, pp. 3233.

Carol I. Keeley

updates: April Dougal Gasbarre and

Christina M. Stansell

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Hilton Hotels Corporation

Hilton Hotels Corporation

9336 Civic Center Drive
Beverly Hills, California 90209
U.S.A.
(310) 278-4321
Fax: (310) 205-4611
Web site: http://www.hilton.com

Public Company
Incorporated:
1946
Employees: 48,000
Sales: $3.9 billion (1996)
Stock Exchanges: New York Pacific
SICs: 7011 Hotels & Motels; 7999 Amusement and Recreation, Not Elsewhere Classified; 5812 Eating Places; 6794 Patent Owners & Lessors

Known as the granddaddy of the hospitality industry, Hilton Hotels Corporation is best known for its 240 hotels and almost 100,000 rooms. Its 1996 acquisition of Bally Entertainment Corp., however, made gambling the companys largest business interest, with that segments 17 casinos contributing about 60 percent of revenues.

Though publicly traded, the chain was for most of its history led by members of the Hilton family from 1919, when founder Conrad Hilton bought his first hotel. By the late 1940s, Hilton owned a worldwide chain of premium hotels. In the 1960s, Hilton sold its international operations and concentrated on management contracts and franchising. The company created innovative joint-venture arrangements that became standard industry practice. It then entered what would become a prime source of revenue for the company: casino-hotels. Hilton expanded into gaming in 1971; by 1989, gaming provided 44 percent of the companys income. In 1996, Barren Hilton relinquished day-to-day management of the chain to Stephen F. Bollenbach. Asserting that Big companies do big things, Bollenbach revitalized the company with bold actions. His merger with Bally made Hilton the worlds largest gaming company, and a 1997 bid to acquire ITT Corp. proposed to form the biggest hotel chain in the world.

Early 20th-century Origins

Conrad Nicholson Hilton was born in San Antonio, New Mexico, the second of eight children. Before he was 18, Conrad had worked as a trader, a clerk, a bellboy, and a pianist. By age 25 he had also worked in politics and banking. In 1919, following the death of his father, Hilton left the army and went to Texas. He had intended to take advantage of the oil boom by buying a small bank. Instead, he found bank prices prohibitive and hotels so overbooked he could not find a place to sleep. When one owner in Cisco, Texas, complained he would like to sell his property in order to take advantage of the oil boom, Hilton struck a deal. Hilton pulled together an investment group and the funds were transferred within a week. The Mobley, in Cisco, became Hiltons first hotel.

The hotel was booked solid, and Conrad and his partner, L. M. Drown, rented their own beds and slept on chairs in the office. They also converted much of the hotels public space into additional guest quarters. Making use of wasted space became a hallmark of the Hilton chain. With the Mobley running smoothly, Hilton bought two more Texas properties in 1920; the Melba, in Fort Worth, and the Waldorf in Dallasnamed after the prized New York hotel. In 1925 Conrad Hilton built the first hotel to carry his name, in Dallas.

With expansions well underway, Hilton consolidated his properties into Hilton Hotels, Incorporated, in 1929, when the stock market crashed. The El Paso Hilton was completed in November 1930 and opened with a fanfare. A year later, Hilton owned eight hotels and was more than half a million dollars in debt when a young bellboy slipped him $300his life savingsso Hilton could feed himself and his family.

Depression-Era Wrangling over Corporate Ownership

In 1931 the Moody family of Galveston, Texas, from whom Hilton had borrowed, took possession of his hotels when he defaulted on a $300,000 loan. The Moodys then hired Hilton to manage their own and his hotels, now known as the National Hotel Company. Nine months later, in 1932, Hilton and the Moodys decided to part. The separation, however, was in no way peaceful. The Moody family and Hilton sued and coun-tersued each other regarding the terms of their agreement for separation, which Hilton claimed allotted him one-third of the hotels and one-third of the stock if the arrangement failed to prove satisfactory. In 1933, while Hilton continued to battle the Moodys in court, the Moodys defaulted on the loan for the El Paso Hilton, and Conrad Hilton managed to raise the necessary $30,000 to buy back that hotel. In 1934 Hilton settled with the Moodys, who lent him $95,000 and returned the Lubbock, Dallas, and Plainview hotels. According to Conrad Hilton, while Depression-era hotel owners saved less than one hotel out of five, Hilton emerged with five of his eight hotels, and he met his debts by the summer of 1937.

In 1938, Hilton bought his first hotel outside of Texas, the Sir Francis Drake in San Francisco. He sold it two years later at a $500,000 profit to raise capital to purchase the Stevens in Chicago, then the largest hotel in the world.

Although U.S. entry into World War II spawned caution, Hilton acquired three new properties, one in Los Angeles and two in New York. Thus, in 1942, his name stretched from coast to coast. The New York properties included the Roosevelt and the Plaza. Hilton claimed he was practicing for New Yorks Waldorf-Astoria, a picture of which he had clipped from a magazine and carried with him since the hotel opened in 1931.

Postwar Expansion

In 1945, Hilton traveled to Chicago to complete the purchase of the Stevens, which he had initiated in 1940, and ended up acquiring the Palmer House as well. In May 1946, Hilton Hotels Corporation was formed. It made history the next year as the first hotel company to have its stock listed on the New York Stock Exchange. Conrad N. Hilton was president and the largest stockholder.

Despite its reputation, the Waldorf-Astoria was not a profitable hotel. While negotiations to lease that hotel were taking place, Hilton worried his board members with his interest in international hotels in a postwar climate uncertain for international business. Nevertheless, Conrad Hilton pursued the venture that would become the Caribe Hilton in San Juan, Puerto Rico. An agreement was made to form a wholly owned subsidiaryHilton Hotels Internationalfor which Hilton formed a separate board. In 1949 Conrad Hilton bought the lease on the Waldorf-Astoria. The Waldorf made a $1 million profit in its first year under Hilton management. The first European Hilton was opened in Madrid in 1953.

The largest hotel merger in the industry took place in 1954 when Hilton Hotels purchased the Statler Hotel Company for $111 million. The Statler chain consisted of eight hotels, with two more under construction. Statler was noted for its fine properties and solid reputation. The chain was about to be sold to a New York realty firm when Hilton made a plea to Statlers widow. She agreed to sell to Hilton, in order to keep the hotels in the hands of hotel people. Earnings per share nearly doubled between 1953 and 1955, largely as a result of this acquisition. In 1955, another overseas Hilton was opened, in Turkey, and the Continental Hilton of Mexico City opened the following year. In 1964 Hilton International was spun off and became a public company with Conrad Hilton as its president. Hilton was made chairman of the board of Hilton Hotels that same year.

Second Generation of Management Guides Development of Casino-Hotels

The late 1960s saw significant changes, beginning with the 1965 formation of Statler Hilton Inns, a corporate franchising subsidiary, and a change of presidents. In 1966 Hiltons son, William Barron Hiltonknown as Barrenassumed the presidency. Barron Hiltons conservative fiscal strategies set a decidedly different course for the company his father had built. The following year, Barron Hilton persuaded his father, as the largest shareholder of Hilton International, to swap his stake in the overseas operation for shares of Trans World Airlines (TWA). Hilton remained chairman of Hilton International. The expectation had been that TWA stock would rise, but its value halved over the next 18 months. Meanwhile, foreign travel boomed, and Hilton lost the rights to his name overseas.

In 1970, Barron Hilton engineered the $112 million purchase that would generate the largest percentage of the companys revenues within a decade: two casino-hotels in Las Vegas, Nevada. While Conrad Hilton had dabbled in gaming via a Puerto Rican casino in the late 1940s, the acquisition of the Las Vegas Hilton and the Flamingo Hilton marked the launch of a consistent strategy. This move paid for itself, particularly during the late 1970s and early 1980s, when the occupancy rate at both hotels remained steady in contrast to industrywide trends.

Company Perspectives:

Hilton Hotels Corporation is the worlds leading lodging and casino gaming company. Among our 240 hotels are some of the most well-known properties to be found anywhere, including the Waldorf-Astoria, Hilton Hawaiian Village and Palmer House Hilton. Our hotels offer guests and customers the finest accommodations and amenities for business or leisure. As the worlds largest gaming company, our 17 hotel casinos and riverboat casinos provide the excitement of gaming entertainment in such major destinations as Las Vegas, Atlantic City and Australia. For more than 75 years, the Hilton brand name has been synonymous with excellence in the hospitality industry.

Barron Hilton then concentrated on franchising the Hilton name and managing other hotels. In 1973, the company launched a computerized hotel reservation dubbed HILTRON. The system served not only the Hilton chain but was also employed by other chains in the industry, providing yet another source of revenue. In 1975 Hilton sold a 50 percent interest in six major hotels to Prudential Life Insurance Company of America for $85 million. Hilton continued to manage the properties in exchange for a percentage of room revenues and gross profits. This was one of the first management lease-back deals in the industry. Joint-venture arrangements later became standard industry practice.

In 1977 the purchase of the Waldorf-Astorias building and land was finalized for $35 million. The decade closed with the death of Conrad N. Hilton in 1979, at age 91. Barron Hilton became chairman of the board. During the 1980s Hilton continued to make its money primarily though casino gambling, leasing and management, and franchise fees. These were sound measures during recession years: while revenues for owned hotels increased an average of four percent in 1980 and 1981, management contract fees increased by six percent in 1980 and 14 percent in 1981. Overall earnings for Hilton increased by six percent during these years, and the company grew rich in liquid assets. It put this capital to use in hotel improvements and in 1981, the $34.4 million purchase of another casino-hotel in Nevada, the Sahara Reno. Barron Hilton maintained a no-partnership policy for the companys casino-hotels. Although the hotels suffered from the loss of convention bookings during the recession, an addition to the Las Vegas Hilton in 1982 made it the largest hotel in the world, and further convention facilities were added in 1985.

Having sold the international rights to the Hilton name, the corporation resumed international growth in 1982 under a new subsidiary, Conrad International Hotels. Construction began on a casino-hotel in Australia the following year. Over the course of the next decade, this division established hotels (many of them joint ventures) in Turkey, Egypt, Hong Kong, Uruguay and New Zealand.

By 1985 gaming was providing 40 percent of the companys operating income, and earnings had increased 20 percent annually since Hiltons entry into that industry. In 1985, however, after spending $320 million to build a casino in Atlantic City, New Jersey, Hilton was denied a license to operate. The New Jersey Casino Control Commissions primary objection was Hilton Hotels longstanding relationship with Chicago labor attorney Sidney Korshak, who had been linked with organized crime figures and who the New York Times in 1976 had labeled a behind-the-scenes fixer. Hilton severed its ties with Korshak, who had acted as a labor consultant for the company, and the gaming commission granted a new hearing. In April 1985, before the rehearing took place, however, the hotel-casino was sold to Donald Trump at cost.

While Hilton focused on the casino-hotels, Marriott and Hyatt were expanding in the luxury-hotels market. To keep pace with its competitors, Hilton pledged $1.4 billion to renovate older properties during the late 1980s. Barron Hilton also concentrated on solving the problem of his fathers will.

Dispute over Founders Will Spans 1980s

When Conrad Hilton died, he had bequeathed the bulk of his holdinga 27 percent block of Hilton sharesto the Conrad N. Hilton Foundation. This foundation, incorporated in 1950, gives aid to Roman Catholic nuns. This provision left Barron Hilton with 3.6 percent of Hilton Hotels, but he claimed to have exercised an option on the foundations shares immediately, buying their portion at the market rate of $24. Ownership of the stock was contested for the next decade. At issue was the interpretation of an option Conrad Hilton had allotted Barron Hilton in his will: Barron Hilton claimed the will allowed him to buy the entire stock from the foundation at the 1979 price. The estates executor, who was Conrads personal attorney, claimed the will intended that Barron Hilton be entitled to no more than seven percent of the shares. Meanwhile, Hilton and ex-wife Zsa Zsa Gabors daughter also contested the will. The attorney generals office of California joined the case, arguing that the foundation was entitled to the shares at market value, or $225 million, in 1985. To complicate the issue further, Golden Nugget casinos chairman Steve Wynn attempted to buy the disputed shares in 1985 at their current market price$72 a sharein order to launch a takeover of Hilton.

A November 1988 settlement gave Barron Hilton four million of the disputed shares, a stake valued at $204 million. The foundation kept 3.5 million shares, worth $178 million at the time, and six million shares, a $306 million stake, went into a trust with Barron Hilton serving as executor. Perhaps most significant, the agreement gave the CEO the trusts voting privileges, for a total voting presence of 25 percent. In addition, Hilton was to receive 60 percent of the trusts share dividends until 2008, after which they would revert to the foundation.

The chain closed the decade enjoying a 70 percent occupancy rate in its newly rejuvenated domestic hotels, greater international expansion, and properties totaling an estimated $4 billion to $6 billion. In May 1989, Chairman Barron Hilton solicited bids for the chain. By December 1989, however, the company had not received a satisfactory bid, and Hilton decided not to sell.

The 1990s and Beyond

After three decades of leadership, Barron Hilton relinquished the chief executive office of the corporation in 1996. While his final years at the helm were criticized as indecisive and overly conservative, the fact remained that its revenues increased from less than $1 billion in 1989 to $1.6 billion in 1995. Net income increased at an average annual rate of 19.6 percent, from $84.3 million in 1991 to $172.8 million in 1995.

In 1996 53-year-old Stephen F. Bollenbach became the first non-Hilton to guide the company. He came to the job with incontrovertible credentials, having engineered both a debt restructuring for the Trump empire and Walt Disneys $19 billion acquisition of Capital Cities/ABC. A spate of high-profile deals quickly ensued. Within five months, the new CEO had merged Hilton with Bally Entertainment Corp. via a stock swap valued at $2 billion. In one move, the deal created the worlds largest gaming concern and made casino gambling Hiltons largest business. However, in the interest of equilibrium, Bollenbach also executed several key moves to expand the hotel chain. First, he repurchased the Prudential Insurance Companys stake in six Hiltons for $433 million. He also pledged to increase via franchising Hiltons budget Garden Inns chain by 50,000 rooms over the remaining years of the decade.

Before 1996 had ended, Bollenbach had also pulled off a reunification of the global Hilton presence. By the mid-1990s, ownership of Hilton International (and the overseas rights to the Hilton name) had passed to Londons Ladbroke Group pic. Hilton purchased a three percent stake in Ladbroke and in return the British concern agreed to invest in future Hilton enterprises. The two companies planned to create cooperative marketing programs (including honoring each others frequent stay plans) and develop new hotels together.

On January 27, 1997, Hilton bid $55 per share for New York-based ITT Corp., aiming primarily to acquire its ITT Sheraton subsidiarys 415 hotels and 14 casinos. If completed, the merger would create the worlds biggest hostelry.

Principal Subsidiaries

Destination Resorts, Inc.; Hapeville Investors, Inc.; Hilton Employee Relief Fund; Hilton Equipment Corp.; Hilton Gaming Corp.; Hilton Hawaii Corp.; Hilton Hotels Partners I, Inc.; Hilton Hotels Partners II, Inc.; Hilton Hotels U.S.A., Inc.; Hilton Inns, Inc.; Hilton Insurance Corp.; Hilton Pennsylvania Hotel Corp.; Hilton Recreation, Inc.; Hilton Resorts Corp.; Hilton San Diego Corp.; Hilton Suites, Inc.; Hilton Systems, Inc.; Hilton Washington Corp.; Kenner Investors, Inc.; Beverly Hilton Corp.; Hotel Waldorf-Astoria Corp.; New Yorker Hotel Corp.; Palmer House Hilton Hotel Co.; Attiki Casinos, Hsa (Greece) (50%); Compass Computer Services, Inc. (50%); Earlsfort Centre Hotel Proprietors Ltd. (Ireland) (14.7%); Greenroll Ltd. (Hong Kong) (30%); Hilton Service Corp. (51%); International Company for Touristic Investments, Sae (Egypt) (20%); Jupiters Management Ltd. (Australia) (66.6%); Jupiters Ltd. (Australia) (19.9%); Windsor Casino, Ltd. (Canada) (33.3%); Yeditepe Beynelmilel Otelcilik Turizm Ve Ticaret Anonim (Turkey) (25%); Hilton Beverage Corp.; New Orleans Hilton Beverage Corp.

Further Reading

Gibbs, Melanie F., Hilton Hotels Corp.: The Sleeping Giant Wakes, National Real Estate Investor, February 1997, pp. 4041.

Goldgaber, Arthur, Honeymoon Hotelier: Hiltons Stock Quickly Doubled after Stephen Bollenbach Took Over as CEO, Financial World, January 21, 1997, pp. 3437.

Hilton, Conrad N., Be My Guest, New York: Prentice-Hall Press, 1957.

Lee, Daniel R., How They Started: The Growth of Four Hotel Giants, Cornell Hotel & Restaurant Administration Quarterly, May 1985, pp. 2232.

Liou, Su-Lan Bethany, Hilton Hotels Corporation: A Strategic Analysis, n.p., 1993.

Moore, Thomas, Barron Hilton Fights for Hilton Hotels, Fortune, May 27, 1985.

Wrubel, Robert, Rumors at The Inn: The Wall Street Sharks Are Circling Hilton Hotels, Eager to Break Up the Family Dynasty, Financial World, April 4, 1989, pp. 3233.

Carol I. Keeley

updated by April Dougal Gasbarre

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Hilton Hotels Corporation

Hilton Hotels Corporation

9336 Civic Center Drive
Beverly Hills, California 90209
U.S.A.
(213) 278-4321
Fax: (213) 859-2513

Public Company
Incorporated:
1946
Employees: 38,000
Sales: $998.20 million
Stock Exchanges: New York Pacific

Hilton Hotels Corporation began as a single hotel purchased by Conrad N. Hilton, who was, in fact, shopping for a bank. By the late 1940s, Hilton owned a worldwide chain of premium hotels. In the 1960s, Hilton sold its international operations and concentrated on management contracts and franchising. The company created innovative joint-venture arrangements that are now standard industry practice. It then entered what would become a prime source of revenue for the company: casino-hotels. Hilton expanded into gaming in 1971; by 1989, gaming provided 44% of the companys income. In the late 1980s the company recommitted itself to international expansion under the name Conrad Hotels, and began to expand domestically with the CrestHil line of moderately priced hotels and a suite-only line of hotels.

Conrad Nicholson Hilton was born in San Antonio, New Mexico, the second of eight children. Before he was 18, Conrad had worked as a trader, a clerk, a bellboy, and a pianist. By age 25 he had also worked in politics and banking. In 1919, following the death of his father, Hilton left the army and went to Texas. He had intended to take advantage of the oil boom by buying a small bank. Instead, he found bank prices prohibitive and hotels so overbooked he could not find a place to sleep. When one owner in Cisco, Texas, complained he would like to sell his property in order to take advantage of the oil boom, Hilton struck a deal. Hilton pulled together an investment group and the funds were transferred within a week. The Mobley, in Cisco, became Hiltons first hotel.

The hotel was booked solid, and Conrad and his partner, L.M. Drown, rented their own beds and slept on chairs in the office. They also converted much of the hotels public space into additional guest quarters. Making use of wasted space became a hallmark of Hiltons. With the Mobley running smoothly, Hilton bought two more Texas properties in 1920; the Melba, in Fort Worth, and the Waldorf in Dallasnamed after the prized New York hotel he later added to his chain. In 1925 Conrad Hilton built the first hotel to carry his name, in Dallas.

With expansions well underway, Hilton had consolidated his properties into Hilton Hotels, Incorporated, in 1929, when the stock market crashed. The El Paso Hilton was completed in November 1930 and opened with a fanfare. A year later, Hilton owned eight hotels and was more than half a million dollars in debt when a young bellboy slipped him $300his life savingsso Hilton could feed himself and his family.

In 1931 the Moodys, a Galveston, Texas, family from whom Hilton had borrowed, took possession of his hotels when he defaulted on his $300,000 loan. The Moodys then hired Hilton to manage their own and his hotels, now known as the National Hotel Company. Nine months later, in 1932, Hilton and the Moodys decided to part. The separation, however, was in no way peaceful. The Moodys and Hilton sued and countersued one another regarding the terms of their agreement for separation, which Hilton claimed allotted him one-third of the hotels and one-third of the stock if the arrangement failed to prove satisfactory. In 1933, while Hilton continued to battle the Moodys in court, the Moodys defaulted on the loan for the El Paso Hilton, and Conrad Hilton managed to raise $30,000 and buy back that hotel. In 1934 Hilton settled with the Moodys, who lent him $95,000 and returned the Lubbock, Dallas, and Plainview hotels. According to Conrad Hilton, while Depression-era hotel owners saved less than one hotel out of five, Hilton emerged with five of his eight hotels, and he met his debts by the summer of 1937.

In 1938, Hilton bought his first hotel outside of Texas, the Sir Francis Drake in San Francisco. He sold it two years later at a $500,000 profit to raise capital to purchase the Stevens in Chicago, then the largest hotel in the world.

Although U.S. entry into World War II spawned caution, Hilton acquired three new properties, one in Los Angeles and two in New York. Thus, in 1942, his name stretched from coast to coast. The New York properties included the Roosevelt and the Plaza. Hilton claimed he was practicing for New Yorks Waldorf-Astoria, whose picture he had clipped from a magazine when the hotel opened in 1931 and carried with him since.

In 1945, Hilton traveled to Chicago to complete the purchase of the Stevens, which he had initiated in 1940, and ended up acquiring the Palmer House as well. In May 1946, Hilton Hotels Corporation was formed. It made history the next year as the first hotel company to have its stock listed on the New York Stock Exchange. Conrad N. Hilton was president and the largest stockholder.

Despite its reputation, the Waldorf-Astoria was not a profitable hotel. While negotiations to lease that hotel were taking place, Hilton worried his board members with his interest in international hotels in a postwar climate uncertain for international business. Nevertheless, Conrad Hilton pursued the venture that would become the Caribe Hilton in San Juan, Puerto Rico. An agreement was made to form a wholly owned subsidiaryHilton Hotels Internationalfor which Hilton formed a separate board. In 1949 Conrad Hilton bought the lease on the Waldorf-Astoria. The Waldorf made a $1 million profit in its first year under Hilton management. The first European Hilton was opened in Madrid in 1953.

The largest hotel merger in the industry took place in 1954 when Hilton Hotels purchased the Statler Hotel Company for $111 million. The Statler chain consisted of eight hotels, with two more under construction. Statler was noted for its fine properties and solid reputation. The chain was about to be sold to a New York realty firm when Hilton made a plea to Statlers widow. She agreed to sell to Hilton, in order to keep the hotels in the hands of hotel people. Earnings per share nearly doubled between 1953 and 1955, largely as a result of this acquisition. In 1955, another overseas Hilton was opened, in Turkey, and the Continental Hilton of Mexico City opened the following year. In 1964 Hilton International was spun off and became a public company with Conrad Hilton as its president. Hilton was made chairman of the board of Hilton Hotels that same year.

The late 1960s saw significant changes, beginning with the 1965 formation of Statler Hilton Inns, a corporate franchising subsidiary, and a change of presidents. In 1966 Hiltons son, William Barron Hiltonknown as Barronassumed the presidency. Barron Hiltons conservative fiscal strategies set a decidedly different course for the company his father had built. The following year, Barron Hilton persuaded his father, as the largest shareholder of Hilton International, to swap his stock for that of Trans World Airlines (TWA). Hilton remained chairman of Hilton International. The expectation had been that TWA stock would rise, but its value halved over the next 18 months. Meanwhile, foreign travel boomed and Hilton lost the rights to his name overseas.

In 1971, Barron Hilton engineered the $112 million purchase that would generate the largest percentage of the companys revenues within a decade: two casino-hotels in Las Vegas, Nevada. The Las Vegas Hilton and the Flamingo Hilton marked the companys entry into gaming. This move paid for itself, particularly during the late 1970s and early 1980s, when the occupancy rate at both hotels remained steady in contrast to industrywide trends. Barron Hilton then concentrated on franchising the Hilton name and managing other hotels. In 1975 Hilton sold a 50% interest in six major hotels to Prudential Life Insurance Company of America for $85 million. Hilton continued to manage the properties in exchange for a percentage of room revenues and gross profits. This was one of the first management leaseback deals in the industry. Joint-venture arrangements later became standard industry practice.

In 1977 the purchase of the Waldorf-Astorias building and land was finalized for $35 million. The decade closed with the death of Conrad N. Hilton in 1979, at age 91. Barron Hilton became chairman of the board. During the 1980s Hilton continued to make its money primarily though casino gambling, leasing and management, and franchise fees. These were sound measures during recession years: while revenues for owned hotels increased an average of 4% in 1980 and 1981, management contract fees increased by 6% in 1980 and 14% in 1981. Overall earnings for Hilton increased by 6% during these years, and the company grew rich in liquid assets. It put this capital to use in hotel improvements and in 1981, the $34.4 million purchase of another casino-hotel in Nevada, the Sahara Reno. Barron Hilton maintained a no-partnership policy for the companys casino-hotels. Although the hotels suffered from the loss of convention bookings during the recession, an addition to the Las Vegas Hilton in 1982 made it the largest hotel in the world, and further convention facilities were added in 1985. In 1982, a new international subsidiary was founded, Conrad International Hotels. Construction began on a casino-hotel in Australia the following year.

By 1985 gaming was providing 40% of the companys operating income, and earnings had increased 20% annually since Hiltons entry into that industry. In 1985, however, after spending $320 million to build a casino in Atlantic City, New Jersey, Hilton was denied a license to operate. The New Jersey Casino Control Commissions primary objection was Hilton Hotels long-standing relationship with Chicago labor attorney Sidney Korshak, who had been linked with organized crime figures and who The New York Times in 1976 had labeled a behind-the-scenes fixer. Hilton severed its ties with Korshak, who had acted as a labor consultant for the company, and the gaming commission granted a new hearing. In April 1985, before the rehearing took place, however, the hotel-casino was sold to Donald Trump at cost.

While Hilton focused on the casino-hotels, Marriott and Hyatt were expanding in the luxury-hotels market. To keep pace with its competitors, Hilton pledged $1.4 billion to renovate older properties. Barron Hilton also concentrated on solving the problem of his fathers will.

When Conrad Hilton died, he had bequeathed the bulk of his holdinga 27% block of Hilton sharesto the Conrad N. Hilton Foundation. This foundation, incorporated in 1950, gives aid to Catholic nuns. This provision left Barron Hilton with 3.6% of Hilton Hotels, but he claimed to have exercised an option on the foundations shares immediately, buying their portion at the market rate of $24. Ownership of the stock was contested for the next decade. At issue was the interpretation of an option Conrad Hilton had allotted Barron Hilton in his will: Barron Hilton claimed the will allowed him to buy the entire stock from the foundation at the 1979 price. The estates executor, who was Conrads personal attorney, claimed the will intended that Barron Hilton be entitled to no more than 7% of the shares. Meanwhile, Hilton and ex-wife Zsa Zsa Gabors daughter also contested the will. The attorney generals office of California joined the case, arguing that the foundation was entitled to the shares at market value, or $225 million, in 1985. To complicate the issue further, Golden Nugget casinos chairman Steve Wynn attempted to buy the disputed shares in 1985 at their current market price$72 a sharein order to launch a takeover of Hilton.

In November 1988 a settlement was reached. Barron Hilton got 4 million of the disputed shares, the foundation kept 3.5 million shares, and 6 million shares went into a trust, with Hilton serving as the executor of the trust. In addition, Hilton was to receive 60% of the trusts share dividends until 2008, after which they revert to the foundation.

Hilton closed the decade enjoying a 70% occupancy rate in its newly rejuvenated domestic hotels, greater international expansion, and properties that are estimated to put Hiltons value between $4 billion and $6 billion. In May 1989, Chairman Barron Hilton solicited bids for the chain. By December 1989, however, the company had not received a satisfactory bid, and Hilton decided not to sell.

For the 1990s, Hilton is concentrating on two areas of development: its growth overseas through Conrad International and the launching of two new hotel concepts, all-suite hotels and CrestHil by Hilton, a line of moderately priced hotels. International properties under construction in 1990 included hotels in Hong Kong, Turkey, and Belgium. In 1990 more than 270 hotels and inns in the United States were operating under the Hilton name.

Principal Subsidiaries

BAG 1-11 Corp; Benco, Inc.; Hapeville Investors; Hilton Hawaii Corp.; Hilton Casinos, Inc.; Hilton Hotels U.S.A.; Hilton Inns, Inc.; Hilton New Jersey Corp.; Hilton Hotel Partners I, Inc.; Hilton Hotel Partners II, Inc.; Hilton Pennsylvania Hotel Corp.; Hilton Products, Inc.; Hilton Quebec, Inc. (Canada); Hilton Washington Corp.; Hilton Tours, Inc.; Hilton Equipment Corp.; Hotel Waldorf-Astoria Corp.; Hotels Statler Co., Inc.; Hilton Systems, Inc.; Palmer House Co.; Hilton Gaming Corp.; Kenner Investors, Inc.; Stevens Hotel Corp.; The Beverly Hilton Corp.; The New York Hotel Corp.; Compass Computer Services, Inc. (50%); Hilton Service Corp. (51%); Main & Hokombe Corp. (40%); Statler Dallas Corp. (49%).

Further Reading

Hilton, Conrad, Be My Guest, New York, Prentice Hall Press, 1957; Moore, Thomas, Barron Hilton Fights for Hilton Hotels, Fortune, May 27, 1985.

Carol I. Keeley

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Hilton Hotels Corporation

Hilton Hotels Corporation

founded: 1919


Contact Information:

headquarters: 9336 civic center dr.
beverly hills, ca 90210 phone: (310)278-4321 fax: (310)205-4599 url: http://www.hilton.com

OVERVIEW

The Hilton name has become nearly synonymous with hotel, and rightly so. In 1998 Hilton was the seventh-largest hotel company in the United States, and it has worldwide name recognition through its global hotel and gaming operations. The company develops, owns, manages, and franchises hotels, hotel-casinos, resorts, and vacation-ownership resorts. Through its subsidiaries, Hilton also has interests in designing and furnishing hotels and computer reservation systems for rental cars and hotels.

Hilton's lodgings division includes 231 hotels and resorts across the United States. Of this total, 51 are owned and/or managed by Hilton, while 180 operate under franchise agreements. The company's flagship properties include New York's Waldorf-Astoria, the Hilton Hawaiian Village, and the Chicago Hilton and Towers. Hilton's Grand Vacations subsidiary manages 18 vacation-ownership (time share) resorts in Florida and Nevada. The company continues to expand its hotel operations through the acquisition of full-service properties and through the addition of new mid-price hotels, such as the Hilton Garden Inn properties.

In 1997 Hilton announced a strategic alliance with Britain's Ladbroke Group PLC, owners of the Hilton name outside the United States. The alliance reunites the Hilton name worldwide for the first time in more than 30 years. With more than 400 hotels and resorts in 49 countries, the reunification by both companies adds further luster to Hilton's leadership position in the hospitality industry.

With 16 gaming facilities worldwide, Hilton Hotels Corp. is considered the world's largest casino gambling company. The company's acquisition of Bally Entertainment Corp. in late 1996 helped to vault Hilton into this leadership position in the world of gaming. Hilton's gaming division owns and operates eight hotel-casinos in New Jersey and Nevada, as well as riverboat casinos in Louisiana, Mississippi, and Missouri. In the Canadian province of Ontario, the company manages the Casino Windsor and the Northern Belle Casino with a partner.


COMPANY FINANCES

In 1997 Hilton Hotels Corporation reported net earnings of $250 million on revenue of $5.30 billion, compared with net income of $82 million on revenue of $3.94 billion in 1996. Per-share earnings of $.94 in 1997 were up sharply from $.41 per share in 1996. In 1995 the company reported a net of $173 million on revenue of $1.65 billion, compared with 1994 net earnings of $122 million on revenue of $1.51 billion. Per-share earnings for 1995 and 1994 were $.89 and $.63, respectively.

In 1997 room rentals accounted for 36 percent of Hilton's total revenue, while its casino operations generated 34 percent of the total. Food and beverage sales brought in another 19 percent of revenue; 1 percent was accounted for by management and franchise fees; and the remaining 10 percent came from other operations.


ANALYSTS' OPINIONS

The appointment of Stephen F. Bollenbach as president and CEO had the pundits opining—overtime—about Hilton's prospects. There is no single consensus, save for general agreement that Bollenbach's appointment was a wise decision.

"[Bollenbach] brings [Hilton] financial acumen—an in-depth knowledge of the hotel business and gaming business [and] he brings leadership skills," said Los Angeles-based hotel consultant Saul Leonard in an article in Hotel & Motel Management. "Steve Bollenbach has been a success at every place he's been. I see no reason not to see him continue his success at Hilton."

The investment community also scrutinized the situation. "Bollenbach is also taking steps to market and leverage the respected, if underutilized, Hilton name more aggressively," explains Financial World. "[One analyst] explains that Hilton missed the boat on the three-star, limited-service hotel market segment over the past 10 years and is now actively franchising the mid-price Hilton Garden Inn chain. The company expects to have 100 signed franchises by 2000."

Analysts wonder how all of these moves will translate into revenue and earnings gains. While Wall Street is excited about the prospects, its outlook for the company is more modest than Hilton's own. Joyce Minor of Lehman Brothers, for example, expects the stock's price to reach the mid-30s [sic] within a year or so and recommends the stock.

Another analyst, quoted in Financial World, insists that "analysts are conservative in their estimates." He also thinks they have "not really given credit for Hilton's hotel acquisitions and what they will mean for earnings growth."


HISTORY

Around the turn of the century Conrad Hilton rented out rooms in his family's home. It was a passion that was to last a lifetime. In 1919 Hilton left New Mexico and headed to Texas, where he planned to buy a bank. Hilton's plans for a career in banking were abandoned when he spotted a small hotel for sale in Cisco, Texas, between Abilene and Fort Worth. With the purchase of this small-town hotel, Hilton launched his career in the lodging business. He soon purchased additional properties, but his plans were stalled by the Depression. Hilton devised a scheme to lease the land on which hotels were located rather than buy the hotels themselves.

Determined to grow his business, Hilton made his way to California, where he began purchasing hotels in 1938. There he met a young starlet by the name of Zsa Zsa Gabor—they were married but later divorced.

Hilton Hotels Corporation was officially formed in 1946 with Conrad Hilton as its president. Trading in the company's stock was begun on the New York Stock Exchange. By 1948 Hilton had amassed enough properties in the United States and Mexico to necessitate the formation of Hilton International to manage his foreign assets. He opened his first European hotel in 1953. The following year he made the biggest transaction in the industry to date when he purchased 10 hotels in the Statler chain for a record $111 million.

Hilton made its first foray into gaming in 1949 when it opened a casino in San Juan, Puerto Rico, at the behest of the governor of Puerto Rico. Barron Hilton tells the story: "My father had been born and raised in the small town of Socorro, New Mexico, and had learned to speak Spanish even before he could speak English. So in responding to the Governor, he wrote back in Spanish. I believe the Governor was touched by this, and that this letter in his native language played a major role in our company securing the agreement to operate what became the Caribe Hilton."

The company continued to acquire properties and began franchising the Hilton name in 1965. Conrad's son, Barron Hilton, was appointed president in 1966 and chairman of the company upon his father's death in 1979; he remains chairman.

Stephen F. Bollenbach gained much attention in the 1990s for putting together Disney's $19-billion acquisition of Capital Cities/ABC while serving as CFO at Disney. He joined Hilton as CEO in 1996. Bollenbach is the first non-family member to head Hilton. Much was made of this transfer of power, and since confidence in Bollenbach was high, the market responded. Hilton's stock rose 21 percent within two days of his hiring.

In 1997 an alliance was hammered out between Hilton and Britain's Ladbroke Group PLC, which owns the rights to the Hilton name outside the United States. The agreement reunites the Hilton name worldwide for the first time in more than 30 years. More than 400 hotels and resorts in 49 countries bear the Hilton name.

STRATEGY

In its global strategy to expand its international hotel network, Hilton won some and lost some in the latter half of the 1990s. In 1996 the company acquired Bally Entertainment for $3 billion and announced plans to build 100 Hilton Garden Inns, a mini-chain of mid-price hotels. That same year, Hilton bought out Prudential's interests in six hotels, including Chicago Hilton & Towers, San Francisco Hilton & Towers, and New York Hilton & Towers.

Unsuccessful, however, was Hilton's hostile takeover bid for ITT, the owner of Sheraton hotels and Caesars World. ITT managed to elude Hilton for months through a series of escape maneuvers and eventually accepted a higher offer from Starwood, a real estate investment management company.

FAST FACTS: About Hilton Hotels Corporation


Ownership: Hilton Hotels Corporation is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: HLT

Officers: Barron Hilton, Chmn., 70, $600,000; Stephen F. Bollenbach, Pres. & CEO, 55, $945,000; Matthew J. Hart, Exec. VP & CFO, 45, $715,000; Dieter H. Huckestein, Exec. VP & Pres., Hotel Operations, 54, $600,000

Employees: 61,000

Chief Competitors: As a major force in the hospitality industry, Hilton Hotels Corporation faces competition in the hotel and resort industry as well as the gaming business. Major competitors include: Accor; Boyd Gaming; Host Marriott; Hyatt; ITT Corporation; Loews; Marriott International; Mirage Resorts; and Westin.


INFLUENCES

Among the trends that has shaped the strategy of the lodging industry in recent years, none has been more powerful than the economic boom in the United States and other parts of the world (much of Asia being a notable exception). According to a January 1998 report in Business Week, hotel room rates, bolstered by a combination of strong demand and a shortage of hotel rooms, climbed nearly 13 percent during 1996 and 1997.

However, what goes up must eventually come down. Business Week reported that U.S. hotel occupancy rates, which slipped slightly from 65.1 to 64.5 percent in 1997, will probably drop more in 1998, according to analyst Bjorn Hanson of Coopers & Lybrand. This slowing in hotel demand puts into question the need for the 140,000 new hotel rooms coming on line in 1998. Business Week reported that while the supply of hotel rooms will grow by 3.4 percent in 1998, the demand for rooms will climb by only 2.6 percent. While none of these trends is likely to result in a major industry shakedown, they do indicate that the going may be rougher in the remaining two years of the decade.

A saving grace in all of this for Hilton is the likelihood that demand for space in full-service hotels in gateway cities will continue to be strong. Most of Hilton's holdings fall into this category. Hilton's CEO Stephen F. Bollenbach remarked in Business Week, "For our hotels, these are the best of times, and it will continue."

CURRENT TRENDS

In an article assessing the positive aspects of the 1998 outlook for the lodging industry, Business Week predicted that room rates will increase by about 5.3 percent and many upscale hotels will continue to experience room shortages. On the downside, however, the article indicated that budget, mid-price, and extended-stay hotels are likely to be hurt by overdevelopment, and that occupancy levels in many parts of the United States are declining.

One trend that Hilton executives have tracked very closely is the growing American love affair with the Internet and electronic business. When marketing executives first campaigned for a sophisticated Internet site that would allow customers to book reservations on-line, those in charge of the bottom line insisted on some guarantees, according to a 1998 report in InformationWeek. Dieter Huckestein, president of Hilton's hotel division, said, "We wanted to be leading, not bleeding." According to Bruce Rosenberg, Hilton's vice president of marketing and distribution, every dollar spent on the company's web site generates about $10 in revenue. The company estimates that on-line room reservations produce roughly $2 million of revenue monthly.


PRODUCTS

Hilton Hotels Corporation develops, owns, manages and franchises hotels, hotel-casinos, resorts, and vacation-ownership resorts throughout the United States. The company's major units include Hilton Hotels Divisions, Hilton Gaming Division, Hilton Reservations Worldwide, and Hilton Equipment Corporation. As of early 1998 the company had 231 properties in 7 different product categories, including airport hotels, mid-priced hotels and resorts.


CORPORATE CITIZENSHIP


Hilton Hotels Corporation is involved in numerous charitable activities, particularly in the communities in which their properties are located. Among the corporatewide programs are Kids Voting USA, a national voter-education program, and the Hilton Gaming Scholarship Program, which grants scholarships to the children of employees.

CHRONOLOGY: Key Dates for Hilton Hotels Corporation


1919:

Conrad Hilton purchases a small hotel in Crisco, Texas

1938:

Hilton begins purchasing hotels in California

1946:

Hilton Hotels Corporation is officially formed with Conrad as president

1953:

Hilton opens his first hotel in Europe

1954:

The company purchases 10 hotels in the Statler chain for $111 million

1965:

The company begins franchising the Hilton name

1966:

Barron Hilton, Conrad's son, becomes chairman of the company

1979:

Conrad Hilton dies

1997:

An alliance between Hilton and the Ladbroke Group PLC (which owns the rights to the Hilton name outside the U.S.) reunites the Hilton name worldwide


In 1996 Hilton instituted a program for compulsive gamblers at its Australian property. The program provides information on where to seek assistance, as well as crisis intervention training for casino staff.

GLOBAL PRESENCE

For more than 30 years Hilton's domestic and international hotel operations were separated, with Lad-broke Group PLC managing Hilton hotels outside the United States. In 1997 Hilton and Ladbroke negotiated a strategic alliance that linked their operations and reunited the Hilton name worldwide. As part of their agreement, Peter George, Ladbroke's CEO, was given a seat on Hilton's board of directors.

Hilton has gaming operations in a number of foreign countries, including Turkey, Uruguay, and Australia. Conrad International Hotels has luxury properties in numerous international cities, including Jakarta, Brussels, Hong Kong, Dublin, and Barcelona.


EMPLOYMENT

In an effort to optimize the use of its human resources and improve management of team operations through all levels of its business, Hilton has instituted a program of five-day workshops called "Professional Development for Directors of Human Resources." The courses cover such topics as hiring costs, terminations, turnover, training, compensation, internal surveys, and grievances.

Hilton attaches a high level of importance to training at all levels of its operations. According to company literature, "the ongoing training of every Hilton team member is a crucial element of the continued success of the brand. Well-trained team members—from general managers to line workers—provide the consistent service that our customers expect and the quality lodging experience that keeps them coming back to Hilton." Such training begins at the top. New managers attend courses at the Hilton Quality Service Institute. Other training courses, held regionally, cover a variety of job skills as well as customer relations.

SOURCES OF INFORMATION

Bibliography

gibbs, melanie f. "hilton hotels corp.: the sleeping giant wakes." national real estate investor, february 1997.

golden, fran. "hilton chief: more purchases likely: hotel company looks to future in wake of $2 billion bally acquisition." travel weekly, 13 june 1996.

golden, fran. "new hilton chief: chain will grow by investing in hotels and gaming." travel weekly, 27 may 1996.

goldgaber, arthur. "honeymoon hotelier: hilton's stock quickly doubled after stephen bollenbach took over as ceo. now he must deliver." financial world, 21 january 1997.

henkoff, ronald, and andrew serwer. "it ought to be no contest: hilton vs. itt." fortune, 3 march 1997.

hilton gaming news. beverly hills, ca.: hilton hotels corporation, winter 1996.

hilton hotels corporation 1995 annual report. beverly hills, ca.: hilton hotels corp., 1996.

hilton hotels corporation home page, 1 june 1998. available at http://www.hilton.com.

"hilton hotels corporation." hoover's online, 1 june 1998. available at http://www.hoovers.com.

morris, kathleen. "industry outlook: services: lodging." business week, 12 january 1998.

violino, bob. "trends: hilton hotels-reservations online." informationweek, 27 april 1998.


For an annual report:

on the internet at: http://www.hilton.com/corporate/index.html


For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. hilton hotels corporation's primary sics are:

5812 eating places

6794 patent owners and lessors

7011 hotels and motels

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Hilton Hotels Corporation

Hilton Hotels Corporation

9336 Civic Center Dr.
Beverly Hills, California 90210
USA
Telephone: (310) 278-4321
Fax: (310) 205-7678
Web site: www.hiltonworldwide.com

IT HAPPENS AT THE HILTON CAMPAIGN

OVERVIEW

Ownership of the Hilton Hotel brand had been split apart in 1964. As a result, the hotel chain was controlled by two distinct groups—Hilton Hotel Corporation (HHC), which held the rights to the brand in the United States, and Hilton International Company (HIC, a division of the Ladbroke Group PLC), which owned the brand abroad. Since their breakup, HHC and HIC had maintained separate marketing and public relations efforts. In 1997, however, facing intense competition in both domestic and international markets, the two companies formed the Hilton Alliance, which was committed to creating a single global image for the hotel chain. After changing the Hilton logo, the companies selected advertising agency Bozell Worldwide to produce a branding campaign that would differentiate Hilton from its competitors. The company wanted a unique message to position itself advantageously among the other massive global hotel chains competing for the patronage of business and leisure consumers. The result was the "It Happens at the Hilton" campaign, which debuted on October 5, 1998, and used photographs of celebrities and everyday travelers to "convey the strength of the Hilton name and its association with quality, achievement, innovation, and timeless style," said Robert Dirks, the senior vice president of marketing for HHC.

Hilton allocated a budget of approximately $10 million for the first three months of the campaign, which was comprised mainly of print ads. "It Happens at the Hilton" sought to epitomize the Hilton experience for its audience. Unlike traditional advertising for major hotel chains, which typically focused on the nuts and bolts of the visiting experience—mainly rooms or services—Hilton's campaign used striking photos of past and present celebrities at various Hilton hotels. One spot featured ex-Beatle John Lennon and his wife Yoko Ono during their "Bed-in for Peace" at the Amsterdam Hilton. Political figures Winston Churchill and Nelson Mandela, as well as celebrities Larry King and Naomi Campbell, also appeared in ads bearing the "It Happens at the Hilton" tag line. To ensure that consumers were not alienated by a celebrity-laden campaign, however, Hilton also ran a substantial number of ads that portrayed average Hilton guests, ranging from CEOs and other business people to families on vacation. One print piece, for instance, depicted a family at a Hilton pool. "Relaxation now available in a convenient family size," the copy chirped. The company's goal was straightforward. "We want to show that so many things happen at the Hilton, from weddings to romance, and that Hilton is part of the community," Dirks told Advertising Age International. Hilton declared itself pleased with the campaign's result.

HISTORICAL CONTEXT

The Hilton chain had come a long way from its beginning in 1925 when Conrad Hilton built the first hotel to carry his name in Dallas, Texas. By 1998 more than 400 Hilton hotels—ranging from resorts and casinos to airport business hotels—were operating in 50 countries. The company's 1964 decision to spin off its global properties into a separate entity, however, impeded Hilton from developing a consistent worldwide image. After Hilton's international wing was acquired by Trans World Airlines, HHC and HIC agreed not to develop their franchises in the other's zones. Nevertheless, the erstwhile siblings bickered over trademarks.

In the early 1990s HHC had struggled to forge an identity. Pernicious price wars among upper-class hotels led HHC, and its ad agency McCann-Erickson, to craft ads focused more on price and perks than on the chain's own attributes. The result was a frequently chaotic marketing strategy that relied heavily on special promotions, often to the detriment of HHC's bottom line. In an effort to rectify this situation, HHC severed its relationship with McCann in 1992 and hired Daley & Associates to develop a new ad campaign. The resulting "Take Me to the Hilton" effort helped the company overcome some of its difficulties, but HHC was still hampered by its inability to expand in overseas markets. The burgeoning travel market, both domestically and internationally, had generated a wave of consolidations in the industry, as hotel chains teamed up in order to offer broader options to consumers. As an industry insider explained in the January 16, 1995, issue of Brandweek, "just to be a domestic brand does not insure long-term visibility." HIC faced similar limitations by virtue of its exclusion from the sizeable U.S. market. Recognizing the importance of presenting a more unified front to its rivals, HHC and HIC linked their advertising, sales, loyalty programs, and development strategies, and then sought to leverage this new alliance into enhanced business opportunities.

TARGET MARKET

According to Advertising Age International, "It Happens at the Hilton" strove to appeal to people between the ages of 35 and 50 who were "active achievers among business and leisure groups." It would certainly be a challenge to attract an audience this broad within the confines of a single campaign. To do so, HHC opted to use a diverse array of photographs in the "It Happens at the Hilton" ads in the hope that this multifaceted approach would connect with consumers on various levels. For example, HHC chose to use images of celebrities from different generations at Hilton hotels both to grab people's attention with the famous faces and to reinforce the notion that Hilton had a long and storied history. The use of political icons such as Nelson Mandela and Winston Churchill was intended to lend the campaign a particular gravitas, which was calculated to appeal to the elite business travelers Hilton wanted to reach.

At the same time, the images of iconoclast John Lennon and supermodel Naomi Campbell ensured that the campaign would appear neither stuffy nor dated. In fact, the incorporation of celebrities such as these into the branding campaign let Hilton speak to a more status-conscious and upscale group of travelers. "The implied message to Hilton customers is, 'If it happens for these people at Hilton, it can happen for me too,'" Dirks explained. In a period when affluent business and recreational travelers had a slew of hotel options, "It Happens at the Hilton" provided the hotel chain a certain cachet that played well to its more status-oriented guests.

AN INCLUSIVE CAMPAIGN

"It Happens at the Hilton" was praised by South Africa's Commission for Racial Equality for its presentation of prominent black figures, such as Nelson Mandela and Naomi Campbell. Mandela was pictured at a Hilton in London during an African National Congress meeting, while Campbell was captured at the National Italian American Foundation Banquet at a Washington, D.C. Hilton. "It is always good to see black people portrayed in a positive light," a CRE spokesperson told The Voice. "However, all this does is emphasize how easy it is to produce a good advertisement and how biased other campaigns can be."

But Hilton was careful not to pursue this more upscale and business-oriented identity at the expense of other travelers. "We wanted consumers to know the hotel is accessible, not just for the rich and famous," Ken Sakoda, a Bozell vice president, said in the October 5, 1998, issue of Advertising Age. The company therefore presented a variety of scenes of everyday people enjoying the Hilton's amenities in order to balance the celebrity shots. Bozell also injected humor into these projects, and stressed the pleasure and convenience Hilton could bring to any vacation. In an ad for Hilton's line of resorts, a couple is shown sprawled in lounge chairs on the beach. "Tailored vacations call for a fitting," the tag line declared. By presenting real-life scenarios—such as weddings or stressed-out families in dire need of respite—Hilton made it possible for a whole other sector of consumers to relate to the scenes.

COMPETITION

Hilton's quest to forge a unified brand image occurred while many of its rival upscale hotel chains were striving to do the same. According to the Wall Street Journal, hotel occupancy rates in 1998 had reached a four year low because of overbuilding. At the same time, the industry was in the midst of a significant consolidation. Chains such as Marriott and Renaissance merged with each other to help bolster their presence on a national and global scale. The result of these agglomerations was a degree of industry-wide uniformity, as local or regional properties with their distinct characteristics, selling points, or histories, were folded into often generic multinational conglomerates. "If you ever stay in a three- or four-star hotel, they are increasingly offering more or less the same product and levels of comfort," Greg Delaney, one of the creative forces behind "It Happens at the Hilton," told Marketing Week. While hotels had once used such features as excellent service or a four-star dining room to differentiate themselves, by the mid-1990s, "these [were] standard in each sector," noted Marketing Week. "The only way that hoteliers [could now] stand out [was] through brand building."

One of Hilton's most formidable rivals was the Hyatt Hotels Corporation, which embarked on an updated global branding campaign in 1999. Created by agency Cramer Krasselt, these print ads targeted individual business and leisure travelers, meeting planners, travel agents, and corporate travel planners. While the campaign built upon Hyatt's slogan from a pre-existing campaign, "Feel the Hyatt Touch," it avoided the conventional formula of using service and traveler bonus programs as its focal point. Like Hilton, Hyatt acknowledged that "in the minds of our target audience, the difference between major hotel chains is becoming less and less apparent," a Hyatt spokesperson told Advertising Age on October 19, 1998.

Another large hotelier, Holiday Inn Worldwide, had launched its first branding campaign in 1997 to support its Crowne Plaza chain of high-end hotels. This campaign, "Get to Know Us, We'll Get to Know You," used famous "business personalities … to give the somewhat stony corporation a relatable face," explained the January 27, 1997, Brandweek. With agency Scaros & Casselman, Crowne selected celebrities who reflected the interests of its targeted guests to appear in its ads. For instance, Crowne used Armour Golf CEO Michael Magerman in a television spot that humorously showed hotel staffers so accustomed to Magerman's indoor golfing that they gracefully avoid golf balls flying across lobby floors as a matter of course. "A lot of upscale hotel users' principal hobby is golf," Crowne's marketing vice president told Brandweek. "Michael Magerman is an up-and-coming CEO, and, at 34, a prototypical Crowne Plaza user." Other spots depicted various comparable business leaders.

Some of Hilton's other competitors began to institute similar marketing programs as well. Marriott International, which had acquired Renaissance in 1997, consolidated its massive ad account in 1998 in order to better broadcast its message. Promus Hotels Corporation's Doubletree and Wyndham Hotels and Resorts, on the other hand, continued to stress the traditional attributes of pleasant rooms and attentive service, according to the June 28, 1999, issue of Advertising Age.

MARKETING STRATEGY

Hilton's challenge was to distinguish its brand from the numerous competing upscale hotel chains. It's first objective was, therefore, to make "It Happens at the Hilton" stand out from other hotel advertising. "There is a lot of hotel advertising out there, but if you take the logo off, they are almost interchangeable," a Bozell executive told Advertising Age on October 5, 1998. Using celebrities to represent the brand was essential to this agenda. But this approach was not without its danger. While "celebrity-driven ad campaigns [were] immediate attention-getters" that could break "through the clutter," of other advertising, the Chicago Tribune noted, Hilton's effort ran the risk of having consumers confuse its brand with those of other companies the celebrities had endorsed in the past. Alternately, consumers might assume that Hilton was too exclusive, if the likes of Naomi Campbell lodged there. "We had been concerned that the creative concept featuring personalities might not be relevant to everyday guests," Dirks said to Advertising Age International. To alleviate this risk, Hilton and Bozell conducted extensive pre-launch testing in key Hilton markets, such as Los Angeles, New York, and London, to ensure that "It Happens at the Hilton" was accessible to its target audience.

Having cleared this hurdle, Hilton's next task was to bring the message of the campaign—that guests should expect a memorable experience when staying at the Hilton—to its chosen audience of elite business and leisure travelers. Print was the predominant medium used because of its ability to hone in on select niches. For instance, since frequent business travelers were a key market, Hilton erected poster versions of the spots at international airports and ran them in in-flight magazines such as American Way and Delta Sky. To address business people even when they were not on the road, Hilton also advertised in publications including the Financial Times, Business Week, Time, Newsweek, U.S. News & World Report, as well as major market newspapers, such as the Wall Street Journal, USA Today, and the New York Times. Moreover, Hilton utilized travel magazines so that it could connect with consumers planning leisure travel. Hilton placed ads in Travel & Leisure and Conde Nast Traveler as well as in family-focused magazines such as Family Fun and Travel & Leisure Family. Finally, Hilton pitched "It Happens at the Hilton" to meeting planners at large corporations by printing the pieces in meeting planner magazines. There was also a small portion of the campaign devoted to television. For the most part, Hilton would trade rooms for airtime on programs such as Entertainment Weekly and broadcasts of the Oscars and Grammys. These short 15-second spots employed the "It Happens at the Hilton" tag line.

The campaign was global in its scope, running on four continents. The first two print pieces broke not only in the United States and Canada, but also in Australia, the United Kingdom, Germany, and various Asian nations. Publications in each country were used, such as the Frankfurter Allgemeine Zeitung in Germany. The international focus was imperative if Hilton was to reach the growing market of American business people who traveled frequently, as well as international business travelers around the world. According to a company press release, Hilton wanted the campaign to be seen by more than three-quarters of international business travelers.

OUTCOME

Hilton was delighted with the results of "It Happens at the Hilton." Consumer surveys indicated that the campaign had performed well above expectations in reaching its target audience. Moreover, research revealed that Hilton had successfully negotiated the risks of incorporating famous personalities, according to Hilton's vice president of marketing. Despite the company's concerns, the campaign had remained rooted to the product it touted. Consumers understood that the celebrity photos were used to underscore the unique qualities of the hotel—that things "happened there"—and did not feel put off by them. Hilton continued the campaign into 1999.

The company was so impressed with the effectiveness of "It Happens at the Hilton" that it extended the campaign for internal use. Just as "It Happens at the Hilton" signaled to consumers a new identity for the venerable old hotel, the company inaugurated "Hilton Pride Makes It Happen" to bring this same message to its staff. These posters strove to remind employees that the "new" Hilton was their creation and responsibility and that they should take pride in the hotels where they worked.

FURTHER READING

Cuneo, Alice. "Hilton Touts Some Famous Hotel Goers." Advertising Age, October 5, 1998.

Fannin, Rebecca. "Hilton Features Celebrities, Reaches for Everyday Guests." Advertising Age International, January 11, 1999.

Goetz, Thomas. "Hotel Occupancy Rates Hit Four Year Low." Wall Street Journal, May 14, 1998.

Killgren, Lucy. "Hotel Chains Wake Up to the Power of Branding." Marketing Week, January 11, 1999.

Lazarus, George. "Star Power Gets the Lead in New Hilton Campaign." Chicago Tribune, September 28, 1998.

Salomon, Alan. "Hilton Hotels: Alison Kal." Advertising Age, June 28, 1999.

――――――. "Hyatt Slates $6 Million for '99 Branding Campaign." Advertising Age, October 19, 1998.

Underwood, Elaine. "Hilton versus Hilton." Brandweek, January 16, 1995.

――――――. "$7 Million Crowne Push Taps CEO Power." Brandweek, January 27, 1997.

                                        Rebecca Stanfel

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