Speaker 1: This is Bloomberg Business Week with Carol Masser and Jason
Speaker 1: Kelly on Bloomberg Radio. Christmas set Back with the CEO
Speaker 1: of Hilton Worldwide Holdings on the phone from McClean, Virginia.
Speaker 1: My friend, it has been sometime. A lot of things
Speaker 1: have happened since the last time we sat down together
Speaker 1: in New York City. How are you. I'm doing great, Jason,
Speaker 1: Thanks for having me. Boy, what a difference about a
Speaker 1: year may since I was looking back. I was looking
Speaker 1: back at my calendar to the last time we talked,
Speaker 1: and sadly it was about a year ago, and we
Speaker 1: were in the process of celebrating our hundred year anniversary
Speaker 1: UM as a company. UM, that's quite a milestone. We
Speaker 1: we were celebrating it in in great fashion, in the
Speaker 1: sense of the company was performing at the absolute highest
Speaker 1: levels in its history. We were growing faster than we
Speaker 1: ever had, innovating more than we ever had. We have
Speaker 1: been recognized as the number one great place to work
Speaker 1: in the United States, the number two great place to
Speaker 1: work in the world, UM, and in so many ways,
Speaker 1: UM riding high UH in that time frame and frankly,
Speaker 1: up until probably the early part of March, UM but
Speaker 1: it's a very different world, um as as as is
Speaker 1: depicted by the fact that, um, I'm on audio and
Speaker 1: not sitting in the studio like I was a year
Speaker 1: ago with you. I hate I hate that part, particularly
Speaker 1: as somebody that's in the business of movement and travel.
Speaker 1: But this, this is our life at the moment. But yeah,
Speaker 1: it's a uh it's been an interesting few months for sure.
Speaker 1: Interesting to say that Lee's Chris last you know, three
Speaker 1: months and also last almost three weeks here, and we
Speaker 1: want to talk about the state of the hotel industry
Speaker 1: and how you see it. Got to ask you about
Speaker 1: leadership though amid what's happened in uh Minneapolis, um, the
Speaker 1: protests against racism. You know, we keep hearing we've got
Speaker 1: to have leaders step up. Money talks and whether you
Speaker 1: know who you work with in terms of your supply chain,
Speaker 1: who you give internships to. You know, that's how you
Speaker 1: make a difference, That's how you make you know, you
Speaker 1: kind of move the conversation and actually move what's happening
Speaker 1: in our society. I got to get you to weigh
Speaker 1: in on this. Yeah, I couldn't agree more. Carol, and
Speaker 1: thanks and nice to talk with you. Wish I could
Speaker 1: see you. Um I'm saddened by everything that's going on.
Speaker 1: And this is something that as you can imagine, in
Speaker 1: a in an industry and in a company that is
Speaker 1: incredibly diverse, this is this is a huge issue. This
Speaker 1: is diversity is not a new thing for us. You know,
Speaker 1: We've been focused in this area for a long long
Speaker 1: time and and been recognized for number two Diversity inc
Speaker 1: um ranking in the United States for for diversity. UM
Speaker 1: But the reality is um as is depicted by what's
Speaker 1: going on, you know, right here in my hometown of Washington.
Speaker 1: You know, I could literally hear the protests going on
Speaker 1: from my house and explaining to my children, two of
Speaker 1: whom both in New York and Washington, ended up in
Speaker 1: the march, you know, to to support their black friends
Speaker 1: in the in this process. This is a sad day
Speaker 1: for America, and I think we've had many of these
Speaker 1: side sad days over the years and in recent years,
Speaker 1: and I think to your to your point in the question,
Speaker 1: it's high time we do something about it. That we
Speaker 1: not just talk about it, but that we act upon it.
Speaker 1: And that means that collectively as a society and as
Speaker 1: a country, as we think about reform. We need to
Speaker 1: think about this and we need to do something about it,
Speaker 1: including the criminal justice system. And that means each and
Speaker 1: every one of us um that has that, that our
Speaker 1: leaders across a broad range of industries, we need to
Speaker 1: even if we were we were focused on it, and
Speaker 1: even if we were, as is the case with Hilton,
Speaker 1: recognized for it, we have to recognize we have never
Speaker 1: done enough. And given what is going on and what
Speaker 1: we're seeing, what is abundantly clear is there is so
Speaker 1: much more to do, and so, like everything for me
Speaker 1: and for Hilton, it's about trying to be a constructive
Speaker 1: part of the solution. And so you know, we are
Speaker 1: very I I've been communicating like crazy with all of
Speaker 1: our team members, including our black team members, all around
Speaker 1: the country. The stories I've been hearing our heart wrenching
Speaker 1: that they're pouring their hearts out about the impact you know,
Speaker 1: throughout their life that racism has had on them. There's
Speaker 1: obviously no place in society, no place in in in
Speaker 1: our industry, and no place in our company for racism.
Speaker 1: And so as a company, as much as we've been
Speaker 1: focused on it, there is so much more that we
Speaker 1: can do at all levels of our company to create
Speaker 1: more opportunities for our black team members, and that means
Speaker 1: at the very top of the ecosystem as we think
Speaker 1: about and already we're thinking about our border directors to
Speaker 1: the lowest levels of the company, and to make sure
Speaker 1: that we're creating opportunities and a feeder system to to
Speaker 1: develop our teammates in the in the black unity in
Speaker 1: a way where they can have bigger and better opportunities.
Speaker 1: And so as they say, this is something we were
Speaker 1: focused on, Okay, but I don't want to rest on
Speaker 1: our laurels and the fact that we were ranked number two,
Speaker 1: and that's not good enough. I think for everybody, every leader,
Speaker 1: I think that the messages um we we obviously have
Speaker 1: not done enough, and that as society, as business leaders,
Speaker 1: as political leaders, we need to use this moment to
Speaker 1: rally for change and not have it be like it
Speaker 1: has honestly been in a number of other cases in
Speaker 1: recent years where we talk there's a burst of activity
Speaker 1: and then we go back to to uh, you know,
Speaker 1: back to where we were, and so we're really focused.
Speaker 1: I mean it has been I have a call literally
Speaker 1: as soon as we're done with this, I have a
Speaker 1: call with one of our team members who sent me
Speaker 1: the most heartbreaking email about her experiences in life and
Speaker 1: just ask I would like to talk to you. You
Speaker 1: and I met once. I just want to be heard,
Speaker 1: and so you know, I've been doing lots and lots
Speaker 1: of of those conversations to listen and learn, and I've
Speaker 1: encouraged all of our team, you know, take a moment,
Speaker 1: take a deep breath, like become part of the solution
Speaker 1: in the first step in that is trying to understand
Speaker 1: it better so that we can help get to better
Speaker 1: better answers. Well, and Chris, this is obviously coming at
Speaker 1: a time when you are listening and thinking about your
Speaker 1: business and probably the most existential and holistic way that
Speaker 1: you ever have. And you've been in this business for
Speaker 1: a long time. If you think of seven years, believe
Speaker 1: it or not, I would have said, did you start
Speaker 1: when you were five? What happened? Chris? Oh? I thank you, Carol.
Speaker 1: That's very kind of you, know I didn't. I'm older
Speaker 1: than you think. All the gray hairs that I that
Speaker 1: I have and a lot more than ninety days and
Speaker 1: I had had before. Exactly what's the biggest, single thing
Speaker 1: that's going to change about travel. I think here's the
Speaker 1: thing I think, guys, when you wake up, and you
Speaker 1: may think I'm being apollyon, and I'll answer the question.
Speaker 1: I think when you wake up in three years, okay,
Speaker 1: I think travel it's hard to see it right now,
Speaker 1: like it was hard to see it after nine eleven
Speaker 1: in the in the wake of that, I think travel
Speaker 1: and the experience in a hotel will look a lot
Speaker 1: more like it did ninety days ago than it does now. Okay.
Speaker 1: And now it looks like there's not many people in
Speaker 1: the hotels. You see people in ppe um, social distancing,
Speaker 1: you know, unbelievable. You know, hygiene protocols like our deal
Speaker 1: with Lysol and the Mayo Clinic to provide hospital cleanliness standards, etcetera.
Speaker 1: Some of that stuff will will go on and and
Speaker 1: some of it, you know, we'll we'll reverb back to normal.
Speaker 1: What will be different, you know, in my mind, is
Speaker 1: things that were already happening will accelerate. Okay. So example,
Speaker 1: we've made, and we talked about it last year when
Speaker 1: we were together, huge investments in technology. You know, I'm
Speaker 1: not just saying it because we've made these investments, uh,
Speaker 1: to promote Hilton that's my job. But but I'm saying
Speaker 1: because I think it will be broadly what you find
Speaker 1: in the industry. There are things with technology, the digitization
Speaker 1: of of our business that we're happening, but we're happening
Speaker 1: at a relatively slow pace, and I think many of
Speaker 1: those things will the adoption rate to the expansion of
Speaker 1: the digitization and the speed of that happening will excel
Speaker 1: accelerate like crazy. So example, we've already rolled out to
Speaker 1: almost every hotel in the world digital check in, digital
Speaker 1: room selection, and digital key So on your Hilton Honors
Speaker 1: app you can have you already could have had contactless entry.
Speaker 1: So for our Hilton Honors members, about a third of
Speaker 1: the people used it. Um I see. You know, when
Speaker 1: we have customers that are coming back in the hotels,
Speaker 1: you will see mass adoption of that and then people
Speaker 1: won't go back. It'll be like a cash flow machine was,
Speaker 1: you know, thirty five years ago, where everybody, you know,
Speaker 1: once it got adopted, people realize, wow, this is easy,
Speaker 1: this is seamless. Why wouldn't I do this? You know,
Speaker 1: other technologies like how you run everything in the room
Speaker 1: we call it connected room, how you run temperature, how
Speaker 1: you run lighting, how you run your audio visual um
Speaker 1: all of that which we developed in a proprietary technology
Speaker 1: called Connected Room, and we're rolling out not as extensively
Speaker 1: as Digital key. You will see that demand for that,
Speaker 1: an adoption of that accelerate. I do believe you also
Speaker 1: see hygiene standards while they were really good in the
Speaker 1: industry already. By the way Mayo Clinic was was was
Speaker 1: sort of shocked at how good we already were when
Speaker 1: we when we sat down with him to figure out
Speaker 1: what to do. There's no reason why you won't see
Speaker 1: those higher, higher standards. But it's digitization will accelerate. I
Speaker 1: gotta ask you because people are like, you know, tweeting
Speaker 1: at me and messaging me. I've got to ask you
Speaker 1: because she said it's going to be you know, three
Speaker 1: years from now, Well it'll look a lot like you know,
Speaker 1: more like it did you know ninety days ago, right
Speaker 1: pre COVID in terms of kind of the travel industry,
Speaker 1: the hotel industry coming back. But you know, what, what
Speaker 1: are you seeing so far? I mean, how robust a
Speaker 1: pickup and travel do you expect based on any of
Speaker 1: the advanced booking data that you're seeing. And I'm also
Speaker 1: curious about about business travel. Yeah, well, I think you know,
Speaker 1: there's three big segments in our business. There's leisure, transient,
Speaker 1: business transient, and then group business. You know, the vast
Speaker 1: majority of our business, well of our business relates to
Speaker 1: business related travel, either groups or business treans, and of
Speaker 1: it is what you would think of as leisure travel.
Speaker 1: Most people don't think about that, but that's sort of
Speaker 1: the breakdown of our business. And what we're seeing is
Speaker 1: significant recovery okay, but still um very significantly off of
Speaker 1: any sort of historical standards. So I'll give you put
Speaker 1: put some basic numbers. I think at the bottom, system
Speaker 1: wide occupancy for us in uh in eight in in
Speaker 1: May would have been you know, like ten or twelve percent.
Speaker 1: I think if you look at it like last night,
Speaker 1: it's like twenty seven or eight. So it's two or
Speaker 1: three times better than it was. But to keep that
Speaker 1: in perspective, we finished last year with an average occupancy
Speaker 1: of almost seventy okay, so it is meaningfully devastatingly um
Speaker 1: lower than where it was. But you are seeing a
Speaker 1: slow grind and the way it's happening, which is fairly
Speaker 1: typical by the way and other other declines, it's leisure first,
Speaker 1: it's business, and then it's group And right now what
Speaker 1: we're really seeing is predominantly growth and leisure. So like
Speaker 1: Memorial Day weekend, we had markets near beaches and you know,
Speaker 1: where people want to get out. We had hotels that
Speaker 1: we're at capacity, that lower capacity because of distancing and
Speaker 1: normal but as much capacity as we can handle. But
Speaker 1: business travel has not really come back in earnest because
Speaker 1: most people still aren't back in their offices and allowing
Speaker 1: people to travel. Does it take like a year to
Speaker 1: come back business travel? Chris, can you put a number
Speaker 1: on it? I think it's hard to say, Carol. My
Speaker 1: view is, and I've said this, you know, to a
Speaker 1: lot of different people. I think what you'll see is
Speaker 1: sort of a a significant shift up in level of
Speaker 1: occupancy over the next nine twenty days, which will be
Speaker 1: driven by a lot of leisure, particularly over the summer months,
Speaker 1: and a lot you know in the U S and
Speaker 1: the and and Western Europe and and absolute uh necessary
Speaker 1: business travel. That as businesses start to sort of reopen
Speaker 1: their doors and bring people back, but it will be anemic,
Speaker 1: and then I think you'll see a slow grind out
Speaker 1: from there. And it will take two or three years
Speaker 1: to get back to where it was. A lot of
Speaker 1: people would you might say, like, we will it ever
Speaker 1: get back. It will get back to where it was,
Speaker 1: it'll get beyond where it was. But here's what's happening. COVID.
Speaker 1: This is the statement of the obvious um. But COVID
Speaker 1: was a devastating pandemic and health crisis, and sadly a
Speaker 1: lot of people were sick and and and even more
Speaker 1: sadly people died. But the impact that that as a
Speaker 1: result of COVID that we had on the economy is
Speaker 1: going to be lasting in my view. And so when
Speaker 1: you get through the health crisis, which we're not through
Speaker 1: obviously but working our way through, you're gonna be in
Speaker 1: the middle of one of the toughest recessions that we've
Speaker 1: had in modern history that effects business. Businesses are letting
Speaker 1: people go, they are not hiring any incremental people, they've
Speaker 1: cut capital expenditures. All the things that helped generate activity
Speaker 1: um around our business have diminished. They will all come
Speaker 1: back as they always do. Okay, people are not going
Speaker 1: to zoom every They're not gonna stop traveling and do zoom.
Speaker 1: The rest of their life. They're gonna want to get
Speaker 1: back and see people in need to see people. But
Speaker 1: in the short over the next you know, sort of
Speaker 1: year or so, I think it will be I think
Speaker 1: business travel will be weak, and then I think it
Speaker 1: will sort of work its way back over to two
Speaker 1: or three years. And the same with groups, I mean
Speaker 1: congregating in large groups. At this point, you know, we
Speaker 1: do have people booking groups and we're you know, we're
Speaker 1: getting ready to launch a whole program around how to
Speaker 1: how to do it really responsibly. Conventions aren't happening, Chris, right,
Speaker 1: like Jason, and we're supposed to go to a bunch
Speaker 1: of things, just even something this week, a huge euro
Speaker 1: conventions happening, But they are going to start happening in
Speaker 1: the fall. They're not gonna happen in the summer. They're
Speaker 1: going to happen in the fall. And that's going to be.
Speaker 1: One of the other things that I think will be
Speaker 1: a lasting change is that people are going to be
Speaker 1: doing hybrid um conferences. They're gonna be doing part physical,
Speaker 1: part virtual. And so one of the things we're doing
Speaker 1: is investing in this time with partners and and getting
Speaker 1: pipe into all the big hotels so that you can
Speaker 1: accommodate that. Um Again, I would say, when you go
Speaker 1: fast forward three or four years, I think the group
Speaker 1: business will look a lot like it did ninety days
Speaker 1: ago because we will have figured out COVID nineteen. I
Speaker 1: am highly confident either with the therapeutics or hopefully a
Speaker 1: vaccine based on what's going on, and people will feel
Speaker 1: like it is not an unreasonable hazard for them to
Speaker 1: congregate and humans. Here's the thing. You go back to
Speaker 1: the Spanish flu. You go back to all these things
Speaker 1: that were, you know, as devastating as this is. You
Speaker 1: get back and look at history where things were much
Speaker 1: more impactful from a mortality point of view, and you
Speaker 1: study it, and people went back sooner than you thought
Speaker 1: to their prior patterns once they felt that they you know,
Speaker 1: we're in a healthy space. Not that it's the same
Speaker 1: by any means. But nine eleven I remember nine eleven,
Speaker 1: I lived through it. I was running another hotel company,
Speaker 1: and we remember sitting around talking with our board. Nobody's
Speaker 1: ever going to get on a plane again. Why would
Speaker 1: they get on a plane? They did, But three years
Speaker 1: is a long time. That's a long time to come
Speaker 1: to Chris I I do want to ask you about
Speaker 1: your employees and sort of the broader Hilton family as
Speaker 1: it were, and you know, understanding the way that you
Speaker 1: operate the business, there are lots of people who ultimately
Speaker 1: work for franchises and all of that, but you know
Speaker 1: they are they are Hilton folks. They have Hilton or
Speaker 1: or one of your brands on their shirt and there
Speaker 1: or there a part of our family, of our family,
Speaker 1: an important part of our family. And knowing how much
Speaker 1: the unemployment crisis has hit there, what do we need
Speaker 1: to do? What should the government be doing, what should
Speaker 1: we be thinking about in terms of protecting them? I know,
Speaker 1: you know you've talked to the President about this various times,
Speaker 1: a boun of times, and Secretary Manuchin and you know,
Speaker 1: talked to the leaders uh in the Senate, in the
Speaker 1: House and everybody else. And I would say, you know,
Speaker 1: I feel very good about our government's response to this.
Speaker 1: You know, they've worked in a very bipartisan way so far,
Speaker 1: you know, to address what I think have been the
Speaker 1: most meaningful issues, and that has been you know, our
Speaker 1: frontline teams not just for our industry, but you know,
Speaker 1: for a broader set of industries. The people that can
Speaker 1: least afford to be impacted are being most impacted. And
Speaker 1: so my comment to the President, to all the leaders
Speaker 1: UM in Congress was you know, we you know, they're
Speaker 1: really two things that I was I was reinforcing with
Speaker 1: them with it. The first job is take care of
Speaker 1: frontline teams that are being impacted by this because they
Speaker 1: they will not be able to feed themselves, take care
Speaker 1: of their families. And so you know what's happened with
Speaker 1: the unemployment insurance top ups from the federal government adding
Speaker 1: to the state I think has been extraordinarily helpful. UM.
Speaker 1: You know, they need to extend that. Do you think
Speaker 1: I think they need to extend it, And And I think
Speaker 1: they will, but I think they need to do it
Speaker 1: in a little bit different form, you know, just in
Speaker 1: the sense that UM, in many cases it is provided
Speaker 1: when when people when we want to bring people back
Speaker 1: on it's actually in some cases provided a distancenter from
Speaker 1: people to go back to work. And so we need
Speaker 1: to we need to sort of right size it in
Speaker 1: the in various markets to make sure that it is
Speaker 1: not providing sort of that that incentive. But I think
Speaker 1: yes is the answer. The most important thing we can
Speaker 1: do for our frontline team members though, is get them
Speaker 1: back to work, right then, you know, we got to
Speaker 1: give them a bridge. And I want to talk about
Speaker 1: our owner community, to which I assume you get to,
Speaker 1: but because that's the other, big, big, you know, block
Speaker 1: of things that I've been pushing the administration on. But
Speaker 1: the best thing we can do is provide a bridge
Speaker 1: while there is no work, but get activity going again
Speaker 1: so that there is work, and we can get folks
Speaker 1: back in jobs, because that's what they really want for
Speaker 1: their self esteem is not the government to take care
Speaker 1: and they want to be back in working. Our people
Speaker 1: love hospitality, they love their people, serving people, they love
Speaker 1: what they do, and they're they're not enjoying this existence,
Speaker 1: even if they're, even if they're, they're being helped to
Speaker 1: survive it. And the way to do that is to
Speaker 1: which I've been to respond, possibly continue to open economies,
Speaker 1: make sure that we have massive amounts of testing, very
Speaker 1: sophisticated contact tracing methods, use social distancing aggressively, use of PPE.
Speaker 1: Until further notice, we only have a couple of minutes left,
Speaker 1: tell us about the owner community, because I think this
Speaker 1: is really important because we've done a lot of stories
Speaker 1: at Bloomberg about temporary people who are out of work
Speaker 1: becoming permanent work. You know, workers who are out of work.
Speaker 1: So what do we need to do to help those owners? Well, well,
Speaker 1: we need to do and we've been doing through p
Speaker 1: PP and main street lighting programs, which again have been
Speaker 1: really responsible approaches. But we we need more access for
Speaker 1: the hospitality industry. We need the bridge of liquidity so
Speaker 1: that liquidity doesn't liquidity crisis doesn't become a solvency crisis.
Speaker 1: You know, most of our owners are small and medium
Speaker 1: sized businesses, their entrepreneurs, even if they have some reserves,
Speaker 1: no businesses built for zero revenues and so they have
Speaker 1: you know, they can't keep their employees because they'll go
Speaker 1: broke if do. And so PPP has been helpful in
Speaker 1: that regard, and the extension of it's been helpful, and
Speaker 1: the extending of the number of weeks it cover is helpful.
Speaker 1: But I think main street lending is going to going
Speaker 1: to be important, and I think ultimately we're going to
Speaker 1: continue to have to um do more for the ownership
Speaker 1: community to provide the bridge the liquidity to get to
Speaker 1: the other side. And then the next step is going
Speaker 1: to be which they're working on early days cares for
Speaker 1: is how do you stimulate uh, you know, with with
Speaker 1: a responsible system set up of testing and all the
Speaker 1: things to make sure it's healthy. How do you stimulate
Speaker 1: the economy. How do we stimulate mobility and travel and
Speaker 1: obviously a healthy and safe weight. We're good. That's the
Speaker 1: next step to get the bridges, the bridge of liquidity
Speaker 1: and then stimulate activity. Just gotta say, you gotta promise
Speaker 1: us next time we're going to be in studio when
Speaker 1: we do this. Okay, we got tobolutely alright. Christmas, Thank
Speaker 1: you so much, Charen's CEO of Hilton. We really appreciate it.