hilton strategic management presentation

HiltonAlex Mutch- Marketing Management

Brenna Adamski- Marketing Management

David Hong- Marketing Management

Edwin Chao- Marketing Management

Leslie Teater- Marketing Management

Hilton Worldwide Brands

Introduction Mission Statement Opportunity Statement Sustainable Competitive Adv.

Background and History

Background & History

1919

1927

Conrad Hilton bought

first hotel

First hotel to add

amenities

1946

Hilton Hotels

Corporation goes public

Multi-hotel reservation

system

1948

1957

Marriot enters

industry

Hyatt founded

1959

First airport hotel

opened

1929 - 1939

Great Depressio

n

Introduction Background & History Mission Statement Opportunity Statement


1962

1964

Hyatt goes public

Hilton International Corporation splits to go

global

Barron Hilton

replaces Conrad

Hilton as President

1967

1973

Hilton has customer service

breakthrough

Introduces HHonors

loyalty program

1987

1995

First Hilton website launches

Hilton International

sold

Conrad Hilton passes

away

1979



1996

2006Stephen

Bollenbach is first

non-Hilton CEO

Hilton International reacquired

Blackstone Group buys

Hilton and goes

private

2007

2008

Airbnb founded

Lightstay introduced

2009

2013

Hilton returns to

NYSE

Christopher Nassetta becomes president and CEO

Become Hilton

Worldwide and

changes HQ

Hilton launches a vacation

subsidiary

2002


Mission Statement

Mission Statement

“To be the preeminent global hospitality company - the first choice of guests, team members, and owners alike.”

Background & History Mission Statement Opportunity Statement Sustainable Competitive Adv.

Opportunity Statement

Opportunity Statement

The hospitality industry is highly competitive, filled with pricing and sales promotions, resulting in price wars. In this industry, Hilton possesses a pristine

brand image that has the ability to be further leveraged in order to differentiate itself from competitors in the future. With the current influx of consumers in the

lodging industry, Hilton is now presented the opportunity to further utilize its intellectual capital and create sustainable competitive advantage.

Mission Statement Opportunity Statement Sustainable Competitive Adv. Significance to Leadership

Definition of Sustainable Competitive Advantage

Sustainable Competitive Advantage

A long-term competitive advantage that is not easily duplicated by other competitors. This is developed by solidifying a pristine brand image, utilizing

intellectual capital, offering exceptional services, and strengthening customer loyalty.

Opportunity Statement Sustainable Competitive Adv. Significance to Leadership Research Methodology

Significance To Leadership

Significance To Leadership

Hilton is a part of a highly competitive and fast growing industry in hotel service.

As a result, we have uncovered new forms of underleveraged resources within the company and have developed detailed programmatic recommendations

that will maximize these forms of sustainable competitive advantage.

Sustainable Competitive Adv. Significance To Leadership Research Methodology Expected Outcomes

Research Methodology

Research MethodologySecondary research

Environmental scanning & monitoring

Trusted, peer-reviewed sources

Google Finance

Business Insider

Forbes

Wall Street Journal

Domestic focusSignificance to Leadership Research Methodology Expected Outcomes Leadership

Expected Outcomes

Expected OutcomesImproved customer database

Differentiated customers

Increase in customer loyalty

Increased customer share

Move to value-based pricing

Leverage strategic alliances

Movement away from third-party sources

Decrease in long-term debtResearch Methodology Expected Outcomes Leadership Corporate Culture

Leadership

Leadership● Three Presidents; Nine Executive Vice Presidents

● Most have worked with Hilton eight years or less

● High levels of experience in the hospitality industry

Joe Berger Kristin Campbell

Christopher Nassetta

Kevin JacobsIan Carter Jim Holthouser William Margaritis

Matt Richardson Martin Rinck Matthew Schuyler Chris Silcock Simon Vincent Mark Wang

Expected Outcomes Leadership Corporate Culture Human Resources Management

Conrad HiltonCEO & Founder of Hilton

Emphasis on innovation and empowerment

Focus on charity and developing the community

“Success seems to be connected with action. Successful people keep moving. They make mistakes, but they don't quit.

”

“Enthusiasm is a vital element toward the individual success of every man or woman.”

“The practice of charity will bind us... will bind all men in one great brotherhood.”

(CEO 1919-1967)


http://www.searchquotes.com/quotation/Success_seems_to_be_connected_with_action._Successful_people_keep_moving._They_make_mistakes%2C_but_th/232606/







http://www.searchquotes.com/quotation/Enthusiasm_is_a_vital_element_toward_the_individual_success_of_every_man_or_woman./28677/

Stephen Bollenbach Prior CEO of Hilton

Worked as Donald Trump’s CFO

Worked with Disney & Marriott as CFO & Treasurer

Recruited by Barron Hilton in 1996

Focused on making profit with every decision

“There are a lot of bargains out there, ... Every acquisition you make is accretive to earnings. It's a real value creator.”

“We want to continue getting out of the real estate business and more into the fee business.”

(CEO 1996-2007)


Christopher NassettaPreviously worked for Host Hotels and Resorts as COO

Later became CEO

Hired by Jonathan Gray of Blackstone Group as President and CEO for Hilton in 2007

Made a worldwide Hilton tour

Began changes in organizational structure

“People were living in ivory towers. Some in Beverly Hills. We didn’t have the connectivity. The hotels were saying, ‘Leave us alone.

I don’t like you corporate types.’ We had become siloed.”

(CEO 2007-Present)


Christopher NassettaImplemented a corporate wide CRM system

Emphasis on leveraging intellectual capital

Customer focused

“Even the posters listing corporate guidelines differed from hotel to hotel, driving Nassetta — who puts great stock in

business culture — crazy.”

“There was a lot of what he did that was simply listening to the customer.”


(CEO 2007-Present)

Joe BergerExecutive Vice President and President of the Americas

Oversees the operations of over 350 corporately owned Hilton hotels in the Americas

Graduated with a masters degree in finance

Career in the Hotel Industry

Prior to Hilton, four years at LXR as Co-President

Worked internationally in operations and finance for Marriott

(VP 2007-Present)


William (Bill) MargaritisOversees corporate branding, internal and external

communications, government relations, issues and crisis management, and corporate responsibility programs

Been with the company since August 2015

Spent prior fifteen years at FedEx as Senior Vice President, Global Communications & Investor Relations

One of the only Executives without hospitality experience

Graduated from Michigan State with a degree in business

(VP 2015-Present)


https://www.linkedin.com/title/senior-vice-president%2C-global-communications-%26-investor-relations?trk=mprofile_title

https://www.linkedin.com/title/senior-vice-president%2C-global-communications-%26-investor-relations?trk=mprofile_title

William (Bill) Margaritis

"As we continue to gain momentum and accelerate our growth around the world, finding additional ways to reach, engage and connect with our most critical stakeholders becomes even more important. Bill’s breadth of experience and his broad understanding of global

business and markets will help us build, strengthen and execute an integrated strategy across Hilton that will enhance our industry leadership position and our ability to

differentiate ourselves in the marketplace.”

- Christopher Nassetta

Background & History Mission Statement Opportunity Statement Significance of LeadershipExpected Outcomes Leadership Corporate Culture Human Resources Management

Chris SilcockLeads the company's global commercial team, including

sales, revenue management, regional marketing and eCommerce, and Hilton reservations and customer care

Twenty years in Hilton

Began his career with Hilton as a catering and banquet waiter

Head of Sales and Revenue Management

Head of Online and Regional Marketing

Degree in Computer Studies from University of Essex

(VP 1995-Present)


Corporate Culture

ValuesHospitality “We're passionate about delivering exceptional guest experiences.”

Integrity “We do the right thing, all the time.”

Leadership “We're leaders in our industry and in our communities.”

Teamwork “We're team players in everything we do.”

Ownership “We're the owners of our actions and decisions.”

Now “We operate with a sense of urgency and discipline.”

Leadership Corporate Culture Human Resources Management Operations

Corporate Culture


Hilton’s Diversity Statement “Our priority is to understand and embrace unique global cultures to ensure that our

Team Members are seen, heard, valued and respected. As a result, our senior leadership is committed to investing in programs that promote diversity such as, inclusion training and celebrations of international traditions and customs. Globally, we also aim to increase our presence in local communities through employee volunteerism, partnerships

and giving programs.”

“Ultimately, I have a very simple philosophy on diversity: It is what allows us to perform and deliver for our customers and, frankly, outperform the competition.”


Internal Diversity ProgramsExecutive Diversity CouncilTeam Member Resource Groups

Diversity Compliance Training

Diversity, Inclusion You e-Training course

Internal Communications

“As a part of our commitment to diversity and inclusion, we created the Executive Diversity Council, comprised of the company's most senior leaders, and chaired by our President and CEO, Christopher J. Nassetta. The Executive Diversity Council provides oversight and direction to

the overall diversity strategy related to our culture, talent and marketplace.”

- Christopher NassettaLeadership Corporate Culture Human Resources Management Operations

Organizational StructureChristopher Nassetta

CEO

Jim HolthouserKevin Jacobs

Matthew Schuyler Simon Vincent Matt Richardson

Kristin Campbell Ian Carter

Martin Rinck

Mark Wang

William MargaritisEVP Corporate

Affairs

Joe BergerEVP, President, Americas

Chris SilcockEVP and CMO

Middle Management

Staff Members


Organizational Structure


“People were living in ivory towers. Some in Beverly Hills. We didn’t have the connectivity. The hotels were saying, ‘Leave us alone. I don’t like you corporate

types.’ We had become siloed.”


Human Resources

Human Resources

Corporate Culture Human Resources Management Operations Finance

“You first have to get the right people on the bus, get the wrong people off the bus, make sure the right people are in the right seats before you decide where you’re driving the bus’

… that was a philosophy that I followed.”


Human Resources: RecruitingCore School Alliances

16 schools where recruiters look for potential interns

Career page Indeed.com

● Hilton Worldwide University


Human Resources: Hiring

Corporate Culture Human Resources Management Finance Marketing

Application is online

Resume sent to different departments


Human Resources: TrainingPart-Time: 20 hours

Full-Time: 45 hours

Hilton Worldwide University

Five Different Colleges

Corporate Culture Human Resources Management Finance MarketingCorporate Culture Human Resources Management Operations Finance

Human Resources: Training


Human Resources: Retaining

“Our Team Members are at the heart of our success and we are committed to ensuring Hilton is a place where they can grow both personally and professionally.”

-Christopher J. Nassetta


Human Resources: RetainingProfessional development opportunities

Nassetta’s annual “Catch Me at My Best”

30 paid days of holiday/vacation

Tuition reimbursement of $1200

GED Assistance Program

Parental Leave Program


Operations

Operations: Overview HQ in McLean, Virginia

Previous HQ was in Beverly Hills, California until 2009

Total of 157,000 Team Members around the world

Human Resource Management Operations Finance Marketing

Operations: StatisticsBrand Hotels Total Rooms

Hilton 560 28.1%

Hampton 2,005 27.8%

Doubletree 410 14.1%

Hilton Garden Inn 618 12.0%


Operations: Ownership


Hampton Inn Franchise Ranking by Entrepreneur.com

Finance

Human Resources Management Finance Marketing Conclusion

Financial Introduction

Operations Finance Marketing External Analysis


Stock Price (2 Years)

Human Resources Management Finance Marketing External AnalysisOperations Finance Marketing External Analysis

IPO: $20; 117,640,624 Shares (NYSE: HLT)Current: $23.37; 1.232 M Shares


Income Statement - Numbers in Millions



Balance Sheet - Numbers in Millions


Current RatioMeasures a company’s ability to pay short-term obligations

Current Assets Current Liabilities


Short-Term Solvency


Cash RatioMeasures the ability to pay off debt obligation using cash on

hand

Cash and EquivalentsCurrent Liabilities


Short-Term Solvency


Total Debt RatioA conservative measure of

long-term solvency

Total LiabilitiesTotal Assets


Long-Term Solvency


Debt-to-Equity RatioA measure of debt leverage

Total LiabilitiesTotal Stockholder’s Equity

Human Resources Management Finance Marketing External Analysis

Long-Term Solvency


Total Asset TurnoverSales generated per dollar of

assets

SalesTotal Assets


Asset Utilization


Profit MarginShows what percentage of

every dollar is kept in earnings

Net IncomeSales


Profitability


Return on AssetsEarnings that are generated

from invested capital

Net IncomeTotal assets


Profitability


Price Earnings RatioAmount investors pay for one

dollar of earnings

Market Value per ShareEarnings per Share


Market Value


The percentage of all rental units (rooms) are occupied or

rented at a given time


Occupancy Rate


Marketing

Products

Finance Marketing Conclusion Finance Marketing External Analysis SWOT

Products

Finance Marketing External Analysis SWOT

Products


Price: Average Daily Rate (ADR)

$141.52 $150.67$169.89Finance Marketing External Analysis SWOT

Price: Pricing Strategies


● Premium pricing strategy○ High-level prices

■ Perceived to have excellent quality and additional characteristics and features

● Variable pricing

Price


● Guaranteed lowest price

● Why book directly with Hilton?○ Always find the lowest price on our

websites or we'll give you $50.

PlaceWebsite booking on

hilton.com

Third-party booking


Place4,440 hotels

Over 730,000 rooms

97 countries and territories

All 50 states


PlaceThree major factors when a new Hilton location is considered:

Where - The Geographical location must be convenient

When - Timely response to a customer’s schedule

How - Events and meetings tailored to customer’s needs


Promotion

Advertising


Average: $246 Million per Year

Public Relations


● “Nassetta Inducted into Hospitality Industry Hall of Honor”- 10/21/2015

● “Hilton Hawaiian Village Prepares Thanksgiving Meals for Hundreds in Need”- 11/25/15

● “Hilton Atlanta Sells for $146 million”- 10/30/15

● “Hilton Hotel Reports POS Data Breach” 11/26/15

● “Hilton Brings Digital Key to Android”- 10/6/15

Sales Promotion


Personal Selling

Finance Marketing Conclusion

● “Globally Motivated, Individually Focused”

● Over 700 sales professionals in 34 regional offices around the world

● Strategic Account Management team dedicated to negotiating customizable deals with customers

● Drives profit and leads to stronger and more committed relationships


Direct Marketing


● HHonors program and app○ Various tiers

● Developed customer database● Strong social media presence and

interaction


Direct Marketing


External Analysis

Macroeconomic Factors● Volatile industry● Changes in demands for hotel rooms, occupancy levels, and room rates

○ High dependency on the economic cycle● Changes in the consumer location preference● Dependent on transportation industry● Cyclical and seasonal● Environmental laws● Government regulation

Marketing External Analysis SWOT Sustainable Competitive Adv.

Macroeconomic Factors

Finance Marketing External Analysis

● War, political conditions or civil unrest● Decreased corporate or government travel-related budgets and spending● Statements, actions, or interventions by governmental officials● Negative media exposure in certain locations (Ebola, Sars, H1N1, Avian flu)● Cyber-Attacks● Natural or man-made disasters


Industry Competition: Direct


● Current Stock Price: 71.11 per share○ P/E Ratio: 26.45○ Average Volume of 26.2 M

● Social Involvement● “We Embrace Change”

○ Innovation has always been part of the Marriott story


Industry Competition: Direct


● Current Stock Price: 50.06 per share○ P/E Ratio: 27.42○ Average Volume of 440,492

● Environmental Friendly● “We make a difference in the lives of

those we 'touch' every day.”


Industry Competition: Indirect

Finance Marketing Conclusion Marketing External Analysis SWOT Sustainable Competitive Adv.

Industry Technology● Apps● Digital Key● Website


Industry Consumer


● According to “Small Business” by Demand Media, “Trend Watching”, and “Hospitality Technology”, the industry consumer is:○ Looking for value○ Typically possesses disposable income○ Appreciates option of Rewards program○ Prefer self-service check-ins and online transactions○ Interested in personal health and wellness


SWOT Analysis

Positive Negative

Internal Strengths Weaknesses

External Opportunities Threats

SWOT Analysis

StrengthsCorporate leadership

Corporate culture

Strong intellectual capital

Ethnic diversity amongst employees

Organizational structure

HRM

HHonors database & app

Industry leader in market share

Premium brand image

Positive Negative

Internal Strengths Weaknesse

s

External

Opportunities Threats

External Analysis SWOT Sustainable Competitive Adv. Viable Alternatives

WeaknessesLack of advertising measurability

High long-term debt

Decreasing timeshare profitability

HHonors promotions

Underleveraged HHonors database

Underleveraged strategic alliances

Lack of room standardization

Research and Development department

Positive Negative


s

External



OpportunitiesExclusive booking to Hilton.com

App & technology development

Economic recovery

Increase in consumer disposable income

Decreased transportation costs

Growing availability of strategic alliances

Reduced threat of disease

Increased credit card security

Positive Negative


s

External



ThreatsIncrease of competition (direct and indirect)

New forms of travel stay

Growth of third-party booking sites

Marriott’s recent acquisition of starwood

High market volatility

International civil unrest

Decrease in international travel

Industry wide cyber attacks

Increase in government regulations

Positive Negative


s

External



Sustainable CompetitiveAdvantage

Sustainable Competitive Advantage

A long-term competitive advantage that is not easily duplicated by other competitors. This is developed by solidifying a pristine brand image, utilizing

intellectual capital, offering exceptional services, and strengthening customer loyalty.

SWOT Sustainable Competitive Adv. Viable Alternatives Minor Recommendations

New Sources of Sustainable Competitive Advantage

Develop our database asset

Comprehensive loyalty program and application

Leverage intellectual capital

Empower front-line employees

Promote and enhance positive consumer perception of brand image

SWOT Sustainable Competitive Adv. Viable Alternatives Minor Recommendations

Viable Alternatives

Viable AlternativesImplement an on-going immersion program

Management develops a stronger connection to employees and customers

Expensive and time-consuming

Initiate a Business Leadership Summit

Collaborate with and learn from leaders in other industries

Difficult to implement

Sustainable Competitive Adv. Viable Alternatives Minor Recommendations Major Prog. Recommendation

Viable AlternativesStandardize, renovate, and modernize all rooms

Provides brand continuity

Expensive

Create a new Research & Development department

Leverages new opportunities and fosters innovation

Costly undertaking

Sustainable Competitive Adv. Viable Alternatives Minor Recommendations Major Prog. Recommendation

Minor Recommendations

Minor RecommendationsStreamline distribution channels

Utilize our leverage in relationships with third party sources

Strengthen and create strategic alliances

Establish Matrix structure

Develop an Employee Service Representative position

Connect with employees

Viable Alternatives Minor Recommendations Major Prog. Recommendation Areas of Future Study

Major Programmatic Recommendation

Customer TiersBlue (0 Points) Silver (1,000) Gold (7,000) Diamond

(12,000)

● Room selection

● Digital key● Room

customization

● Blue rewards● iPads● Premium Wi-fi● Spa access● Premium

Spotify & Hulu access

● Late check-out● Digital check-in

● Silver Rewards● Personal

assistant● Premium Starz

access● VIP parking● Exclusive hors

d’oeuvres

● Gold Rewards● Exclusive

concert access

● Sleep Number bed

$1 of hotel = 1 Point$1 of spa = 2 Points

$1 of event space = 2 Points

Minor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?

A continuation of some of the services from HHonors

Selecting a specific room

Digital room key

Additional customization options that Hilton can store in database

Number of pillows

Housekeeping times

Temperature of the room

Shampoo type

Drinks upon arrival

Blue Tier


(0 Points)

Premium Wi-fi

Exclusive spa access

Pool, sauna, and shower access

Spotify & Hulu access

Late check-out

Digital check-in

iPads

Silver Tier


(1,000 Points)

Menu of options

Per geographic location

Uncovered during research

Personal assistant per Dwell floors (as needed)

Digital access to assistants

Starz premium access

VIP parking

Exclusive hors d’oeuvres upon arrival

Gold Tier


(7,000 Points)

Exclusive event access

Meet and greets

Concert access

Red carpet access

Sleep Number beds

Diamond Tier


(12,000 Points)

Cultural FeasibilityCorporate philosophy

Positive attitudes toward change and innovation

Customer focus

Eager to improve

“We were complacent. There was no culture of innovation. It was more a culture of do it at a relatively slow pace and do it the way we’ve always

done it... It just wasn’t organized in the right way.” - Christopher NassettaMinor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?

Financial Feasibility44 million HHonors members

50% of guests are HHonors members

$720 Million spent in 2014 for HHonors

Additional profit loss from redeemed reward nights

$730 Million of Cash flow in 2014


RolloutIn January 2016:

150 strategic, domestic locations with varying demographics

Opt-in for current HHonors members

One year of data gathering

Survey

In January 2017:

One year to redeem points

Six-months of final point accumulation

Phase out HHonors program


RolloutIn July 2017:

One year to redeem points

Six-months of Dwell points

Final phase out HHonors program

In January 2018:

Full implementation of Dwell program


Expected OutcomesImproved customer database

Differentiated customers

Increase in customer loyalty

Increased customer share

Move to value-based pricing

Leverage strategic alliances

Movement away from third-party sources

Decrease in long-term debtMinor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?

MetricsEnrollment Data

Carry over from HHonors

New Dwell members

Changes in tier population

Member retention rates

Member Satisfaction Survey

Time spent on app and with value-added programs

Track spa revenue

Metrics based on geographic location

Third-party booking changes


5 Golden QuestionsAs an enrolled Hilton Dwell Member…

How did you hear about Dwell?

What did you like about the Dwell?

What did you dislike about Dwell?

Will you be using the Dwell Program more often?

Would you like to opt-in for more loyalty member information?


Areas of Future Study

Areas of Future StudyHRM program

Differentiate employees by valueFurther utilize matrix structure and diversity

High school and college curriculumBrand expansion opportunities

Major Prog. Recommendation Areas of Future Study Would You Invest? Spiritual Implications

Would You Invest?

Would You Invest?

Yes!

Areas of Future Study Would You Invest? Spiritual Implications Conclusion

Spiritual Implications

Spiritual Implications1 Timothy 6:10

“For the love of money is a root of all kinds of evils. It is through this craving that some have wandered away from the faith and pierced themselves with many pangs.”

Colossians 3:23

“Whatever you do, work heartily, as for the Lord and not for men”

Would You Invest? Spiritual Implications Conclusion

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HiltonAlex Mutch- Marketing Management

Brenna Adamski- Marketing Management

David Hong- Marketing Management

Edwin Chao- Marketing Management

Leslie Teater- Marketing Management

Extra Slides

Additional Finance PointsBlackstone acquired Hilton Hotels in 2007

Purchased at $26 billion including debt

“Right now, income is being used to service debt and not invest in the business. This could hamstring Hilton for a while.”

- Michelle Grant, A Travel and Tourism Manager at Euromonitor (2007)

2006 Revenue

$730 Million Cash

2006 DebtFrom Hilton’s 2006 Annual Report:

“At December 31, 2006, we had total debt of $6.97 billion (net of approximately $500 million of debt and capital lease obligations resulting from

the consolidation of certain joint-venture entities and a managed hotel, which are non-recourse to us). Subsequent to the acquisition of Hilton International, we

reduced our indebtedness by approximately $1.6 billion. A focus of our financial strategy for 2007 is further debt reduction through operating cash flow and the proceeds of asset sales. Total cash and equivalents (including restricted

cash of approximately $293 million) were approximately $431 million at December 31, 2006.”

Timeshare● Introduced in 2002

○ Invested $60 million on new development● Collaboration with premier timeshare real estate

development firms● 240,000 Club Members● A collection of 60 club affiliated resorts

○ Includes those developed, managed, and franchised by Hilton Worldwide

● According to 2014 Annual Report:○ Pulling away from timeshares

■ High cost, low demand = deteriorating profit margin

Timeshare● Three main areas of revenue:

○ Timeshare sales■ Does so with Hilton and third party

vendors○ Resort operations

■ HGV club■ Rental revenue, enrollment fees, annual

fees, and transaction fees○ Financing

■ Interest from the provided loans for customers buying timeshares

Timeshare CompetitionCompete with other hotel and resort timeshare operators for sales based on:

Location

Quality of accommodations

Price

Financing terms

Quality of service

Terms of property use

Opportunity for timeshare owners to exchange into time at other timeshare properties or other travel rewards

Brand name recognition and reputation

Resale companies and owners reselling existing timeshare intervals

Timeshare Competition (Cont.)Primary competitors:

Hyatt Residence Club

Marriott Vacations Worldwide Corp.

Starwood Vacation Ownership

Wyndham Vacation Resorts

A Customer’s JourneyDecembe

r 2015January 2016

July2016

November

2016

February2017

61,000 HHonors

Points

Silver HHonors Tier

61,000 HHonors

Points

Blue HHonors Tier

1,000 HHonors Points

(60,000 HHonors points redeemed for 2 free nights)

Blue HHonors Tier

1,000 HHonors Points

1,000 Dwell Points

Blue HHonors Tier

Silver Dwell Tier

0 HHonors Points

4,000 Dwell Points

Silver Dwell Tier

HHonors Blue Tier

HHonors Silver Tier

HHonors Gold Tier

HHonors Diamond Tier

HHonors Details

“When points are earned by Hilton HHonors members, the property or affiliated partner pays Hilton HHonors based on an estimated cost per point for the costs of

operating the program, which include marketing, promotion, communication, administration and the estimated cost of award redemptions… We provide Hilton

HHonors as a marketing program to participating hotels, with the objective of operating the program on a break-even basis to us.”

- Christopher Nassetta, 2014 Annual Report

R&D Expense

Overview of U.S. Franchise Fees

Hampton Inn Franchise

Uber Partnership

J.D. Power Guest Satisfaction

Background & History● 1962: Hyatt became a public company

● 1964: Hilton began to expand his operations outside of the United States and renamed the company

○ It became one of the largest hotel businesses in the world. The company expanded its operations into credit cards, car rentals, and other services

● 1965: Launch of Lady Hilton, the first hotel concept designed exclusively for women travelers

● 1967: Conrad Hilton resigns his presidency to become chairman● 1968: Hyatt International was formed● 1969: Marriott opens its first international hotel in Acapulco, Mexico● 1970: Hilton becomes the first NYSE-listed company to enter the domestic

gaming business

Additional History1972: Marriott named J.W. Marriott, Jr. Chief Executive Officer

1972: Hugh M. Friend, Jr because the new president of Hyatt

1973: Hilton develops the first centralized reservation service using computer technology, a breakthrough in customer service

1979: Conrad Hilton died on January 3, in Santa Monica, California

1985: J. Willard Marriott, Sr. passes away, and J.W. Marriott, Jr. is elected Chairman of the Board, Marriott

1987: Hilton introduces Hilton HHonors™, its guest loyalty program

1989: Hampton Hotels is the first hotel company to promise 100% Satisfaction Guarantee

1994: Hilton HHonors™ surpasses competing hotel loyalty programs by offering members both points and air miles

1995: The first Hilton website launches: www.Hilton.com

http://www.hilton.com/

http://www.hilton.com/

Additional History2007: The average daily rate for a hotel room surpasses $100

2009: Hilton launches its first application for mobile devices

2011: Hampton Hotels, part of the Hilton brand, is named the #1 franchise opportunity by Entrepreneur Magazine

2013: Becomes the first hotel brand to earn over 1 million Facebook likes

Hilton Worldwide At-A-Glance

Kristin CampbellResponsible for leading Hilton Worldwide's global legal,

compliance and government relations functions

Graduated from Cornell with a Law degree

Prior to Hilton, worked with Staples for eighteen years, serving as the company's senior vice president, general counsel, and corporate secretary

Ian CarterWas Chief Executive Officer of Hilton International prior to its

re-acquisition by the company in 2006

Graduate of the University of West London, School of Business and Management, and received an honorary doctorate from the University for his industry accomplishments and ongoing support of the development of future hospitality leaders

Prior to Hilton, served as Officer and President of Black & Decker Corporation, Middle East, Africa and Asia

Responsible for all International operations

Prior to Black & Decker, served as President of General Electric Specialty Chemical, after working his way up in the company

Jim HolthouserCompany's global leader for brand management and customer

marketing across nine consumer brands

MA in economics/political science from the University of Louisville and international MBA from the American Graduate School of International Management

Series of senior management positions within Hilton Worldwide in the branding, franchising and marketing arenas

More than 20 years of experience in the lodging, restaurant and gaming industries

Kevin JacobsOversees all of the company's global finance functions, as well

as its global information technology function and all real estate and asset management aspects

Joined the company in 2008 as Senior Vice President, Corporate Strategy

Elected Treasurer in 2009

Appointed Executive VP and Chief of Staff in 2012

Prior to Hilton Worldwide, served as Senior Vice President, Mergers & Acquisitions and Treasurer of Fairmont Raffles Hotels International

Prior to Fairmont, spent seven years with Host Hotels & Resorts, Inc., leading the company's strategic planning and investor relations functions

Matt RichardsonOversees the company's global efforts regarding new build

projects, capital improvements, technical advisory services, interior design and construction

Prior to Hilton, served as Senior Vice President and Chief Development Officer for Host Hotels & Resorts, Inc., where he oversaw all of the company's design and construction activities

Bachelor's degree in Urban Planning and his Master's degree in Business Administration from the University of Virginia

Martin RinckResponsible for the operations of over 90 trading hotels in

the 18 countries across Asia Pacific

Includes expansion plans - Doubling in the next year

Been with Hilton since November 2008

Was Executive Vice President and Chief Development Officer for The Rezidor Hotel Group, where he drove significant growth for The Rezidor Hotel Group's hotel portfolio in Europe, the Middle East and Africa

Experience in the global hospitality and restaurant industries

MBA from Brunel University

Matthew SchuylerChief Human Resources Officer for Hilton Worldwide and leads

the company's global human resources organization

Been with Hilton for past seven years

Prior to Hilton, spent five years as Chief Human Resources Officer at Capital One Financial Corporation

MBA from University of Michigan

Serves on the Board of Directors for the Make-A-Wish Foundation of America

Member of Penn State's College of Information Sciences and Technology Advisory Board

Simon VincentExecutive Vice President & President, Europe, Middle East &

Africa for Hilton Worldwide

Based in London

Been with company for eight years

Overseen the opening of more than 100 hotels and spearheaded growth in the multi-brand proposition

Includes Hampton and DoubleTree

Twenty-year veteran of the leisure and travel industry

Spent 13 years at the Thomas Cook Group, latterly as Chief Operating Officer of the UK Travel Division

Mark WangPresident, Hilton Grand Vacations for Hilton Worldwide and

oversees all of the company's global timeshare operations

Been in role for seven years

Previously Head of Hilton Grand Vacations, Asia

Joined Hilton Grand Vacations in 1999 as Managing Director, Hawaii

Held various positions since

Prior to Hilton, founded and co-founded multiple hotel and hotel-consulting companies

Ronen NissenbaumVice President of Operations for Luxury Hotels, America

Hilton announced his appointment in November 2015

Previously worked in senior management for global corporations such as DIsney and InterContinental Hotel Group

“Ronen’s ascension to this newly created role reflects our strong commitment to the luxury sector and to growing our

luxury portfolio within the Americas,” - Joe Berger

Christopher NassettaMost recently CEO of Host Hotels & Resorts, inc.

Also served as Executive Vice president and COO for this companyCo-founded Bailey Capital Corporation in 1991Served as Chief Development Officer at the Oliver Carr Company, a commercial

real estate firmUnder Nasetta’s leadership, Hilton launched the Travel With Purpose

initiative, a corporate commitment to diversity and inclusion, cultural awareness, community building and sustainable living

Christopher Nassetta“A balanced guy,” according to Edward Walter Relationally oriented, prioritizes family, talkative, loves traditionFocused on Employees

Still visits many locations personally“With all his success in business, he always has stayed a really good guy,” -

Jonathan Gray, Blackstone Group

Christopher NassettaGot rid of ⅔ of executive leadership,

“I was committed to look them in the eye, tell them what I’m doing, give them the reasons why and answer questions for as long as they wanted.”

Improvement of business processes which saved a lot of money“We were able to save a ton of money without affecting performance one bit,” said

Jacobs

Believed his task was risky but possible“I went through the rationale. I said we’re all in this together and, if we don’t take

steps to ensure our future, the risks of material damage to the business are significant.”

“A lot of people were thinking we were going to fail,” Nassetta said. “And frankly, a lot of people were wanting us to fail. And we didn’t.”

● Hilton created the Conrad N. Hilton Foundation in 1944, which awards an annual prize to exemplary organizations that work to end suffering in the world. It also supports programs for the blind and the homeless as well as education initiatives

● Team Member Resource groups

○ African American Team Member Resource Group○ Asian and Pacific Islander Team Member Resource Group○ Women's Team Member Resource Group○ Hispanic/Latino Team Member Resource Group○ LGBT & Friends Team Member Resource Group

Team Member Resource Groups

Diversity Compliance TrainingDiversity Compliance Training

Recognize the unique insights, perspectives, and background of othersCreate competitive advantages for ourselves by leveraging the diversity of

our Team MembersDevelop an environment of trust, respect, and inclusion; andAvoid discrimination and disrespectful behavior

Diversity AwardsExternal Recognition for Diversity (2013)

Black EOE Journal – Top Diversity Employer (2013)Black EOE Journal – Top Supplier Diversity Program (2013)DiversityBusiness.com - Top 50 Organizations for Multicultural Business Opportunities,

45th Place HispanicBusiness.com – Top 25 Leaders in Supplier Diversity – Fred Lona, S. Director,

Supplier Diversity (2013)DiversityBusiness.com - America 's Top Diversity Champions for 2013 – Fred Lona, Sr.

Director, Supplier Diversity (2013)DiversityInc – 25 Noteworthy Companies (2013)DiversityInc – Top 10 Companies for Supplier Diversity (2013)DiversityInc – Top 10 Companies for Latinos (2013)

Diversity Awards (Cont.)External Recognition for Diversity (Cont.)

Hispanic Network Magazine – Top Diversity Employer (2013)Hispanic Network Magazine – Top Supplier Diversity Program (2013)LATINA Style Magazine – LATINA Style 50 Best Companies for LatinasMan About World – 2013 Editors Choice Award for Very Best in Gay Travel (2013)MBN USA 75 Leading Men in Corporate Supplier Diversity – Fred Lona, Sr. Director,

Supplier Diversity (2013)Professional Women’s Magazine – Top Diversity Employer for Women (2013)Professional Women’s Magazine – Top Supplier Diversity Program for Women (2013)Working Mother Magazine – Best Company for Hourly Workers (2013)HRC Corporate Equality Index – 100 percent

Hilton’s View of AirBNBNassetta considers AirBNB to be in a different segment of the market than

Hilton

"The bulk of the demand is in higher rated, high-occupancy urban markets. It is longer length of stay with a predominantly leisure and value focus and stay occasions where customers are willing to accept inconsistent product with very limited

services."

“AirBNB doesn’t scare us.”

"But I suspect over time everybody will see it for what it is: a really good business but a business that is largely distinct from what we do. There is every opportunity for both of

us to have really successful business models."

Hilton’s Differentiation from Competition

“We believe that our position as a multi-branded manager, franchisor, owner and operator of hotels makes us one of the largest and most geographically diverse

lodging companies in the world.”


The Marketing BreakdownHilton has many direct marketing that they implement

Telemarketing

Postal Mail

“... hospitality intermediaries generally employ aggressive marketing strategies, including expending significant resources for online and television advertising campaigns to drive consumers to their websites.”

-Hilton 2014 Annual Report

Profitability, HRM, & Renovations

“We have focused on maximizing the cost efficiency and profitability of the portfolio by, among other things, implementing new labor management practices and systems and reducing fixed costs. Through our disciplined approach to asset

management, we have developed and executed on strategic plans for each of our hotels to enhance the market position of each property, and at many of our

hotels we have renovated guest rooms and public spaces and added or enhanced meeting and retail space to improve profitability.”
