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The man behind Hilton's turnaround

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press
Friday, August 1, 2014 - 8:34 am

McLEAN, Va. – Nearly every weekend, Chris Nassetta is cooking in his family’s oversized kitchen, outfitted with two commercial-grade refrigerators, three sinks and a deep fryer.

These aren’t small meals. Between his wife, six daughters, friends, neighbors and relatives, there are often 40 people dining.

“I’m not a gourmet chef,” Nassetta says. “I tend to cook what the kids beg for: my grandmother’s old recipes of spicy red sauces, some sausage and ziti.”

Most of the time, Nassetta is on the road. In his day job as CEO of Hilton hotels, he has about 732,000 guests per night to make happy.

When Nassetta took over in 2007, Hilton lagged behind other hoteliers. He had to restructure not only the operations, but the culture.

Nassetta focused on lucrative international markets — at the time, only 19 percent of Hilton’s new hotels were planned for overseas. He also franchised more hotels.

Today, Hilton Worldwide is the largest hotelier in the world, by rooms, with 679,000. Of its planned hotels, 60 percent are now outside the U.S. Its initial public offering last December raised $2.35 billion. It was the second-largest IPO of the year and the biggest ever for a hotel.

Nassetta, 51, is as likely to greet you with a high five as a handshake. He gets animated about the gifts he’s received from world leaders who welcomed Hilton into their country.

“I know I’ve got a dagger here,” Nassetta says, rummaging through an office cabinet.

Hilton was once an innovator. The pina colada cocktail is said to have been invented in 1954 at the Caribe Hilton in Puerto Rico. Hilton pioneered the idea of an airport hotel in 1959 in San Francisco. And highlighting its cultural importance, in 1975 the Muppet characters Statler and Waldorf were introduced, named after two Hilton properties in New York.

But by 2007, many of Hilton’s rooms were tired-looking. Private equity firm Blackstone Group purchased the company; Nassetta was brought in to turn it around. He moved the headquarters from Beverly Hills, Calif., to the Virginia suburbs of Washington, D.C. There was a massive bloodletting: Of the 600 headquarters employees, only 130 moved east.

“If you want to change a culture, you change 80 percent of the people,” he says. “We had lost touch with the front line.”

So Nassetta and his senior executives started spending one week each year working at hotels — in housekeeping, engineering and the front desk.

“Their job is harder than your job,” Nassetta says. “You get in there, and you pay them the respect.”

Growing up, Nassetta had a newspaper delivery route, then expanded it, getting other kids to do deliveries under his supervision. He also had a lawn mowing and snow plowing business. The summer before college, he got his first formal job — an entry-level position in the Holiday Inn Capitol Hill’s engineering department. Primarily, he unclogged toilets.

“I think all our hotels, in all brands, need to appeal to the millennial,” he says. “Millennials grow up and their needs change. All of our brands need to be relevant to a broad array of customers.”

Part of that is accepting what needs to go away. Rolling suitcases have eliminated the need for bellmen, and Nassetta questions if guests truly desire robes, slippers or nightly turndown service. Or at least are willing to pay the higher room rates they require.

He made headlines last year with a decision to eliminate traditional room service in big-city hotels. The labor costs involved with delivering food to rooms makes it a money-loser for the hotel. But guests aren’t happy either with often overpriced, mediocre food. So Hilton and other hotels are testing a “grab-and-go” food outlets, particularly for breakfast.

“The customer gets a better price, better service and ultimately, in their minds, a better product,” Nassetta says.