Fresh off Hilton Worldwide’s history-making 117.6 million-share, US$2.5 billion IPO, Chris Nassetta was in very good spirits in late January while attending the Americas Lodging Investment Summit in Los Angeles. The CEO who re-organized and re-energized a global hotel powerhouse overcame multiple hurdles en route to the December IPO, and at the end of the day proved his business plan worked.
Nassetta and his hand-picked Hilton team showed prospective investors that Hilton had successfully refinanced its balance sheet and developed the biggest pipeline in virtually all markets around the globe. Now the goal is to maintain the momentum, introduce new brands, sell assets where it makes sense and continue to deliver a fresh product to fickle consumers.
Nassetta sat down with HOTELS during ALIS to talk about the IPO process and what’s next for the company that has roared back to the NYSE with a record-setting IPO. Here is the first part of a three-part Q&A.
HOTELS: How did it feel ringing the bell at the New York Stock Exchange on that day Hilton went public?
Chris Nassetta: It was amazing. I had people, including the head of the Exchange, tell me that we activated the Exchange better than anybody they’ve ever seen. So it was a big day in a lot of ways. Obviously, we worked really hard over six years to totally transform the business and take a business that was certainly a good business and had all the pieces, but was not optimized and not hitting on all cylinders. And we transformed it in every way: organizationally, culturally and from a performance point of view to go from what was an average performer to a leading performer — both top line and bottom line, new unit growth, market share, brands, all of those things. You could tick them off and we went from average to the top, so it was very rewarding in every way.
The IPO was well received by the investment community as we came out at a good price and a great multiple. Generally, in the early days no matter the story there’s sort of a discount associated with new IPOs. We didn’t really suffer that, so I think that market received it well.
For me, being on the floor of the Exchange for that day was the culmination of all those things coming together. We obviously were watching the stock trade and trade well, but we had our team there. We had the Blackstone team there and our most senior people, but we activated the floor of the Exchange with front-line team members. If you look at me ringing the bell that day I was surrounded by front-line team members. It was really celebrating and sharing the excitement the way it should be shared with the people.
HOTELS: How did you celebrate the occasion of the IPO?
Nassetta: Probably the most special for me was the brunch we did afterward with a couple hundred front-line team members in a big fancy room in the Exchange. And I still remember walking down the hall and I heard this roar and thought, “Wow, someone is having a party.” And then someone told me, “That’s our party. They’re waiting for you.”
I walked into this room to an explosion of excitement, applause and celebration, and I spoke to our team. To see the looks on their faces, the pride they had in what we had done together was unbelievably rewarding because everything we did was about transforming the culture. We had great people and they wanted to do great things, but they just weren’t organized in a way structurally, but, more importantly, sort of spiritually around the core vision, mission, values and key priorities of what we had to do. Everybody wants that kind of vision, but you have to help give it to them to get them going in the same direction.
I had pride, but I had more pride in what our team had accomplished. We had everything we needed. Now the pieces of the equation were put together in the right way. The folks before us gave us that palette to work with, and then our job was to take the palette and put the paint in the right places and make the magic, and I think we did.
HOTELS: What’s next?
Nasetta: The IPO was not the end of something. It was one step in the continuum, and the next step is really about continuing to build on the cultural revolution that we’ve created and to execute, innovate and continue to expand the lead that we have in the business.
I’m out talking a lot to our team to continue to get everybody focused, motivated and excited about the next steps, and we are going to do some really amazing things.
We’re obviously going to keep performing on the revenue side, margins and bottom line, but we have some really interesting things, which I can’t get into yet, with the brands and on the technology side to innovate.
HOTELS: Does the IPO up the ante for Hilton?
Nassetta: I don’t think so. If you have a great strategy and you’ve built a great performance-based culture, you keep a steady hand on the wheel and the short term takes care of itself.
I didn’t wake up on January 1 saying, “Uh-oh, you know, something’s changed.” I woke up saying we have to keep doing it, keep churning, grinding it out, executing and innovating, and work the plan. I’m focused on keeping people focused on the future and the things that we’re going to do to continue to move the company forward.
HOTELS: How does going public change your job?
Nasetta: My job changed probably as much as anybody in the company’s. Along with CFO Kevin Jacobs, we have to spend a lot of time with the debt side, but particularly on the equity side with the investment community. We have not been absent from the investment community, but clearly we can do more of it.
I want to spend more time with the institutional community. Other than that, we have to execute against that strategy, we needed to innovate, make sure that we’re communicating the story, and then delivering on it.