To an industry outsider, the name “Hilton” may conjure up images of a certain jet-setting heiress with pint-sized puppies and perfume lines. It may even evoke words such as dynasty, luxury or class. In fact, a better-fitting word to describe the long-standing hotel chain is resilience.
The ability to withstand a hurricane of change is ingrained in Hilton’s storied history. Interestingly, Hilton hotels would not exist had its founder, Conrad Hilton, landed in Cisco, Texas, in 1919 and purchased the bank he had his eye on. Instead, Hilton became intrigued by the booming business a local hotel was generating and bought the 40-room Mobley Hotel.
By the 1950s, Hilton had unveiled numerous innovations, including “Hilcron,” a centralized reservation office where customers could make a reservation at any of his properties by telephone, telegram or Teletype. Shortly after, air conditioning was installed in guestrooms.
The Hilton brand was eventually established in Canada in 1953 in Montreal, followed by the opening of full-service properties in key markets such as Toronto, Windsor, Ont. and Edmonton in the subsequent years. By 1964, the company spun off its international operations, resulting in two separate operating companies: Hilton Hotels Corp., based in Beverly Hills, Calif., which oversaw U.S. hotels; and Hilton International, based in Watford, U.K., which was responsible for international properties, including Canada.
Operating as two separate entities created headaches and development restrictions, not to mention branding nightmares and overall disjointedness, so executives came to an agreement in 1997 to share logos, promote each other’s brands and share a reservation system.
Some industry leaders can trace their roots to Hilton. In 1973, Philippe Gadbois, SVP of Operations at Montreal-based Atlific Hotels, got his start in hospitality as a doorman at the Queen Elizabeth hotel in Montreal, then managed by Hilton International. The property housed the Hilton University in Canada, an in-house training centre for Hilton employees who would travel from around the world to attend the school for up to six weeks (today, it’s offered online). “[The Hilton Queen Elizabeth] was the biggest hotel in Hilton International’s stable and therefore the training ground that carved out pretty good careers in this industry,” reminisces Gadbois, who became chairman and president of Hilton Canada in 1994.
Up until the late ’90s, brand diversification was limited to a handful of full-service units. But that changed in 1999 when Hilton Hotels Corp. acquired Memphis, Tenn.-based Promus Hotel Corporation, which brought new brands, including DoubleTree Hotels, Embassy Suites, Hampton Inn and Homewood Suites, to Hilton’s stable. “The brands were very clear on what they [offered],” says Vito Curalli, executive director, Canada, Latin America & International for Hilton Worldwide. “But what they got when they were purchased was the Hilton engine — the reservation engine, the marketing, the sales, all the things that we offer to franchisees today.”
The transformations continued in 2006 when Hilton Hotels Corp. acquired Hilton International. Then, before the financial crash, Hilton Hotels Corp. was acquired by New York-based private equity firm Blackstone Group LP in a $26-billion deal. Hilton Worldwide Holdings Inc. was taken public last December, raising an industry record-setting $2.35- billion IPO.
Nearly a century and 4,200 hotels since Conrad Hilton put his stamp on the Mobley, the hotel baron continues to make his mark on audiences — he’s been immortalized on the hit TV show Mad Men, and his properties have been featured in blockbuster movies such as Godzilla.
Meanwhile, throughout the years, Hilton Worldwide’s subsidiary, Hilton Canada, based in Mississauga, Ont., has been amassing a stable of more than 100 units (and growing). And, in 2013, Hilton Canada generated $543 million in sales, a two-per-cent bump over the previous year’s estimated $532 million. “It’s a big achievement, particularly in this day and age,” enthuses Tony Pollard, president of the Ottawa-based Hotel Association of Canada. “Everyone’s very competitive and trying to work within new realities of finances…. For Hilton to achieve 100 hotels, our hats go off to them.”
Mapping Success
Part of the formula for Hilton’s continued development is planting seeds in growing markets with neighbouring amenities, industry and office space. “We want to be in the best locations in town, and are willing to take a pass on projects if they aren’t, because the location makes the hotel perform,” Thomas Lorenzo, Hilton Worldwide’s VP and managing director of Development – Canada & Northeast U.S., explains, adding the development team is making inroads into secondary and tertiary markets as well. Hampton Inn has the strongest distribution in Hilton’s [Canadian] stable, adds Lorenzo, with 42 locations in Canada, it also has nine under construction, seven approved and 15 to 20 in working deals. “It’s a substantial portion of our pipeline,” he says.
These days, franchisees are turning their attention to the western markets. The team is on track to open six hotels during the next six months in Lloydminster, Alta., Airdrie, Alta., Sherwood Park, Alta., Saskatoon and Victoria, and further projects have been approved in Medicine Hat, Alta., Edmonton, Calgary and Saskatoon.
An integral part to the ongoing expansion is cultivating franchisee relationships. From Markham, Ont.-based Easton’s Group of Hotels to Mississauga, Ont.-based Manga Hotels, multi-unit franchisees comprise more than 75 per cent
of Hilton’s franchisee base, Lorenzo estimates.
Some multi-unit franchisees are optimizing the markets they’re already in by opening dual-branded hotels. “Usually, every dual-branded project includes an extended-stay and a transient-style hotel. It could be a Hilton Garden Inn, Homewood or a Hampton, but [franchisees want] to go after a unique segment of business, so they don’t overlap,” explains Lorenzo. “They get synergies from both a capital investment perspective, because there would be shared infrastructure items like pools, eating spaces, gyms, employee break rooms and laundry [rooms].”
Hilton’s 100th property in Canada builds on this trend. Located on the former site of The Citadel Halifax Hotel in Nova Scotia, it features a Homewood Suites by Hilton and Hampton Inn by Hilton. The Halifax-based property combo, which opened in the summer, is part of a five-property, $220-million investment from Vancouver-based SilverBirch Hotels & Resorts, which includes three other Hilton-branded projects in Edmonton and Regina.
GM Trevor Morgan, who serves as area director of Operations for Atlantic Canada for SilverBirch Hotels & Resorts, has returned to his roots in Halifax, having managed the former Citadel Halifax Hotel from 2001 to 2003. “Halifax is a business hub in Atlantic Canada,” says the GM of the new development, which has a combined occupancy of 53.5 per cent for 2014, at an average daily rate of $148, with $79 in RevPAR. “It has been a stable market for a long time, but the additional demand that will be created through the shipbuilding contract is attractive, especially when it comes to Homewood Suites.”
Building on the momentum of its 100th unit, Hilton is ushering in new brands domestically and globally. SilverBirch recently opened Canada’s first Home2 Suites by Hilton in Edmonton, a 127-suite extended-stay hotel packed with studio suites and an integrated fitness and laundry room. And, Hilton’s newest brand, Curio, which is yet to be signed in Canada, is a curated collection of four- to five-star properties with unique experiences in each, with hotels such as the boutique Highland Dallas in Texas and the upscale SLS Las Vegas in Nevada.
Serve and Connect
For most hotel operators, ensuring repeat business takes more than offering imaginative hotel design, thoughtful customer service and hyper-clean rooms. In fact, loyalty programs are a big part of Hilton Canada’s marketing incentives. Hilton HHonors, which was launched in 1987, has grown to include 38-million members worldwide.
The loyalty program is split into four tiers, from Blue (lowest) to Silver, Gold and Diamond. Each tier offers different perks, ranging from specific room choices and complimentary in-room Wi-Fi to the use of executive lounges.
A significant portion of Hilton’s business stems from its über-loyal Hilton HHonors guests. Franchisees invest marketing fees to fuel this program, but it generates the highest-rated business, explains Lorenzo. “Most of [the loyalty members] are corporate customers, and they’re not angling to get the lowest rate possible — they just want quality accommodations.”
Canadians, especially, are interested in loyalty programs, explains Curalli, speaking of the benefits that accompany incentive initiatives such as HHonors. In fact, enrolment numbers in Canada are increasing every year for the Hilton program, which is continually evolved and improved to attract new members.
The uptake in reward membership programs may have grown during the recession, but either way the trend is echoed by Hotel Association of Canada research, says Pollard. “When we first started doing the [Hotel Association of Canada] survey around 2005, the importance of loyalty programs for business travellers and even leisure travellers had gone from over 20 per cent to over 60 per cent in nearly 10 years; so if you are a hotel company with a very strong loyalty program you’ll continue to admit it’s a big driver,” he adds.
Meanwhile, Hilton’s digital team has been streamlining the check-in process for its smartphone-wielding loyalty members. In July, it announced a system-wide innovation that will allow Hilton HHonors members to check-in on their smartphone and select their room from a floor plan. They can also purchase upgrades and make special requests. By the end of the year, digital check-in is expected to be available across all Hilton branded properties. Next year, the company will begin to equip its hotels with door locks that can be unlocked with a guest’s smartphone.
Hilton employees are also connecting with guests on social media in new ways, beyond traditional Facebook and Twitter. For example, employees tweet restaurant recommendations and provide local information to guests using Hilton’s @HiltonSuggests Twitter handle. The feed is monitored by locally appointed team members, from housekeepers to office managers, who give clout to the local vibe. After all, today’s discerning customers expect more than a place to lay their head after a busy day — they expect an experience that extends beyond their stay.
