Hilton chief talks China, the Waldorf Astoria and tipping at NYU hospitality conference

CEO Christopher Nassetta spoke with New York Times columnist Andrew Ross Sorkin at NYU’s annual hospitality investment conference

Jun.June 04, 2019 02:15 PM
From left: Hilton Worldwide Holdings CEO Christopher Nassetta, the Waldorf Astoria at 301 Park Avenue, and China President Xi Jinping (Credit: Getty Images)

From left: Hilton Worldwide Holdings CEO Christopher Nassetta, the Waldorf Astoria at 301 Park Avenue, and China President Xi Jinping (Credit: Getty Images)

Hilton Worldwide Holdings’ dealings with the Chinese government, the Waldorf Astoria and tipping practices were all topics of conversation during a lunchtime interview with the hotel company’s chief executive.

Hilton CEO Christopher Nassetta got up on stage at the annual NYU International Hospitality Industry Investment Conference with New York Times columnist Andrew Ross Sorkin for the one-on-one chat under rote circumstances: Hilton was a major sponsor and the company’s centennial was a few days earlier. But the discussion quickly veered into unexpected territory.

Nassetta began by recalling his first job at a Holiday Inn where he was the first responder to any “Code Brown.”

When asked about Hilton’s strategy in China, Nassetta said the company’s goal is to “build a very big network effect” in China, largely targeting the “mid-market” sector in secondary and tertiary cities.

Nassetta explained that their aim is to build loyalty so that outbound Chinese travelers choose to stay at Hilton hotels.

He said Hilton doesn’t own hotels in the country, opting instead to negotiate management and licensing agreements with local owners, many of whom are connected to the government. Those political ties “we think, mitigate against much of the risk” of “trade issues or otherwise,” he said.

Sorkin asked whether Nassetta believes that outbound travel will continue to exist in the same way and the CEO responded unequivocally: “I think over the long term, the trend is unstoppable.”

China’s “gargantuan” middle class “wants to see the world,” he said, and though “in their system of government” travel is “stoppable,” he doesn’t see that happening.

“Who am I to tell Xi Jinping what he should be doing, but I think that at its core to stay in power… they want their people to be reasonably happy with a managed economy,” Nassetta said. “And I think part of that is travel.”

He characterized the trade dispute between the U.S. and China as having a “modest” impact on the American hospitality industry to date. (Within a day of his remarks, China issued a travel warning to citizens about harassment by American law enforcement agencies.)

When asked about the status of the Waldorf Astoria, which Hilton sold to Anbang Insurance Group for $1.95 billion in 2014, Nassetta said construction was “underway.”

“We’ve got to get the conference back over there,” Nassetta joked in response, before describing the “almost eerie” interior demolition that’s “completely gutted” the iconic hotel.

The massive renovation includes dramatically downsizing the hotel from more than 1,400 rooms to roughly 400 (and about 350 condos). After the Chinese government took control of Anbang last year and began selling off its operating assets, “they committed to keeping the Waldorf and completing the renovation,” Nassetta explained. He said he expects the hotel to open its doors in fall 2021. Hilton has a 100-year operating agreement for the property.

The interview concluded with Sorkin asking how much of a tip Nassetta planned to leave in his hotel room that night.

“I typically do not leave a tip,” replied the Hilton chief, whose total compensation in 2018 was about $19.8 million.

“Is that standard policy do you think?” Sorkin asked.

“I don’t know. How many people leave a tip?” Nassetta said, putting the question to the crowd. The majority of hands went up. “Wow. I’m not leaving tonight so…” he trailed off to laughter from the audience.

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