Hilton CEO Chris Nassetta Talks Hotel Pipeline, Loyalty, and More

Hilton has built the largest pipeline of hotels in its history, and its top boss attributes that achievement to the power of the group’s brands.

Christopher J. Nassetta, president and CEO, said in a Skift interview that one out of every five hotels under development worldwide is set to carry Hilton flags. If all of those hotels materialize, Hilton would expand its global market share.

Nassetta chalked up that potential share gain to the group’s brands, which he said have earned a reputation among owners for driving high returns.

The company’s loyalty program is one part of that reputation, Nassetta said. Hilton has more than doubled the number of members of its loyalty program over the past five years. The larger the loyalty program, the lower the costs of customer acquisition for owners, on average.

Nassetta also discussed Hilton’s effort to tame carbon emissions at franchised properties, not just the corporate office. While noting that his company has made progress in reducing emissions across its portfolio, he said the company is leaning on incentives and data-sharing to encourage further energy reductions by franchisees.

Record Pipeline

Skift: Hilton’s development pipeline was 462,400 rooms as of year-end, an 11% jump year-over-year. Some of your brands are enjoying outsized share gains in pipeline growth. Why?

It’s true that 2023 was a record year for Hilton, with strong top-and-bottom-line results and record growth of our development pipeline.

I’m so proud of our teams for achieving a record year of signings, which allowed us to end the year with the largest pipeline in our history.

And in Q4, we opened more new rooms than any other quarter in our history.

These are significant milestones that show the momentum of our business in a period of phenomenal growth.

The truth is that the industry remains highly fragmented globally, with major hotel brands representing a fraction of the global hotel market. There is so much opportunity ahead for increased global scale, and we’re proud to be leading the industry with one in every five hotel rooms under construction globally set to fly a Hilton flag.

While there are megatrends behind the expansion of the hospitality industry, at Hilton we firmly believe the power of our brands accelerates our growth. Owners know our distinctive, premium brands, loyalty value proposition, and commercial engines drive higher returns for them.

In 2023, we launched two brands that will expand our portfolio into new territories and bring new guests into our Hilton family — and both are growing at an astonishing pace.

With LivSmart Suites by Hilton, we tap into the road warriors who never stopped traveling during the pandemic—the traveling nurse or long-term construction crew—who need quality, apartment-style accommodations for 20 nights or more.

And with Spark by Hilton, we’re offering a premium economy option that delivers quality and consistency at a lower price point.

Guests at these brands will start a lifelong journey with Hilton when they stay with us. They will grow with us as they progress in their lives and need new brands for new trip occasions.

Loyalty Program Growth

Skift: Hilton’s loyalty program has seen membership rise about 110% in the past five years. Hilton outpaced similarly-sized peers Marriott (60%), Wyndham (78%), and IHG and Accor (sub-50%). Why has Hilton excelled?

I’ve been known to say that you’d have to be crazy not to be a Hilton Honors member, and it seems that the traveling public agrees! At the end of the day, we have an incredible portfolio of brands in sought-after destinations around the world, and as a member, the value is undeniable.

We have a number of fabulous partnerships that offer our members money-can’t-buy experiences, ways to spend points beyond reward stays, and a lot of other cool things in the works.

For example, we recently announced that we are launching an exclusive partnership with Small Luxury Hotels of the World — the latest illustration of how we’re expanding to offer our guests even more ways to dream about and book incredible luxury experiences with Hilton.

We expect this partnership to dramatically expand our luxury distribution over the next couple of years, with a heavy orientation to resort locations. Adding this extraordinary portfolio to our strong and growing luxury offerings will strengthen our already powerful network effect and give our Honors members even more opportunities to earn and redeem points with Hilton.

Add to this the incredible technology platform we’ve built that enables Honors members to do most anything from their app — from check-in and check-out to digital keys, choosing a room, booking reward stays, and texting with on-property Team Members — and you get to the heart of a successful formula that delivers real value for guests and continues to drive growth.

Hotel Carbon Emissions

Skift: Hilton has been a relatively high performer in reporting on carbon emissions that happen at the property level with its franchisees. But how will Hilton get its franchisees to quickly reduce their energy use and tame their emissions when you don’t directly control them?

Since 2009, we have used our proprietary corporate responsibility management platform, LightStay, to measure the environmental footprint of our portfolio around the globe. This tool has been a game-changer in our ability to understand which initiatives have the most positive impact.

Reporting energy, water, waste, and social impact, including community volunteer hours and donations, into LightStay is a global brand standard across all our properties — including franchised hotels.

To date, LightStay data indicates that we’re making strong progress across our portfolio of hotels over our 2008 baseline. We’ve cut over $1 billion in utility costs and reduced emissions intensity by 44%, reduced our water intensity by 38%, and reduced our landfill intensity by nearly 58%.

The key to gaining alignment across all our properties, regardless of management company, is to drive efforts at scale that enhance the guest experience and are good for the planet and the bottom line.

We’ve long said that we think we can do well by doing good — and this applies squarely to our initiatives to reduce our environmental impact.

For example, LED lighting costs significantly less to operate than traditional lighting, which cuts utility costs, reduces waste, lowers emissions, and makes for better design. Our turnkey LED lighting program makes bulbs more affordable and utility incentives more accessible, reducing out-of-pocket costs for our owners.

Accommodations Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.

Read the full methodology behind the Skift Travel 200.