Hilton Worldwide CEO Chris Nassetta takes a rigorous approach to everything, be it turning around the world’s largest hospitality company or cooking one of his favorite Italian dishes.
Professionally, Nassetta’s discipline drove him to stick with Hilton’s in-depth, quarterly reporting structure of a public company — without the earnings calls — during the six years the company was owned by private equity, for instance.
Personally, it led to a series of eggplant parmigiana trials in his home kitchen, and frankly some pretty tough decisions: breading versus no breading, more parmesan cheese versus less, to fry or not to fry.
“I will do trial and error. I’m very diligent,”
said Nassetta, who loves to cook. “But I had not been able to crack the code on eggplant parmigiana and I finally did it.” Indeed, he’s as animated, if not more, talking about his culinary accomplishment as he is about Hilton’s first year back on Wall Street.
But it was no normal year. For Hilton, Nassetta’s relentless quest for perfection led to a $2.35 billion initial public offering in December 2013 that netted its parent private equity firm, The Blackstone Group, $12 billion. It was the hospitality industry’s largest-ever public market debut, and Businessweek called it “the best leveraged buyout ever.”
In the year since the IPO, Hilton has consistently exceeded its revenue and profit guidance, twice raising its full-year forecast for earnings per share and, as of this week, scoring $25.6 billion in market capitalization — topping market caps of rivals Marriott International Inc. and Starwood Hotels & Resorts Worldwide Inc.
The company also hit all of the milestones Nassetta laid out in his first post-IPO earnings call in February: It launched two new hotel brands, moved ahead on redeveloping part of the Hilton Hawaiian Village property, and found a deep-pocketed buyer for perhaps its shiniest portfolio gem, the Waldorf Astoria Hotel in New York City. That property’s sale, announced this fall to a Chinese insurer for nearly $2 billion, instantly ranked as the industry’s biggest hotel sale nationwide since 2008.
To be sure, not all of that is due to Nassetta’s diligence. Particularly rosy conditions in the hospitality sector fueled Hilton’s faster-than-expected growth in 2014, something Nassetta admits even he didn’t anticipate. A continued lag in hotel supply has driven up room rates, and Hilton now has the largest pipeline of hotels in the industry. Nassetta expects to end this year with top line growth of 6 percent to 7 percent, bottom line growth of 12 percent to 13 percent and 6 percent growth in its total number of hotel rooms.
“A pleasant surprise has been the macro conditions of our business,” Nassetta said. “We were optimistic coming into the year and the year ended up even better than we thought.”
Although he couldn’t have predicted the hotel industry’s dramatic bounce-back, he did see two things in Hilton when he took over in 2007, a time clouded by financial uncertainty for the hospitality giant: a challenge and an opportunity. These are two things he drills into listeners — for he rarely strays from the message of Hilton’s turnaround.