Hilton remerges
In the concentration of the business-class hotel market, key firms like Starwood (Sheraton, Westin) and Marriott have balanced extensive US holdings with a major global presence. The Hilton name has been equally global, but it has since 1964 been divided between two separate companies.
On one side the US-based Hilton Hotels Corp., with 2,300 hotels in the chain, both owned and franchised, That company also owns the chains Hilton Garden Inn, Hampton Inn, Doubletree, Embassy Suites, and Homewood. On the other side is London-based Hilton Group PLC, with 400 hotels under the Hilton and Scandic brands, located throughout the world buy not in the US. The company also is a major owner of betting parlors in the UK.
In recent years the two companies have done some cooperative marketing (including a joint loyalty program) and have started jointly the luxury-class Conrad hotel brand, a major brand in Asia. Nevertheless, the entities have remained separate.
Now Hilton Hotels has announced it will acquire the hotel assets of the Hilton Group for around $5.7 billion. The London-based company will hold on to its gambling assets, and change its name to Ladbrokes PLC. That company will concentrate on a single industry, one where it is #2 in the UK.
The deal, when completed, will give Hilton Hotels a total of nearly 2,800 affiliated hotels in 80 countries.
According to a Wall Street Journal article ("Hilton Tie-Up Targets Global Rivals". 12/29/05)
Acquiring a large chunk of owned hotels goes counter to the current industry trend. Most major lodging companies spent much of this year selling hotels to focus on the fees garnered from managing and franchising them.
This year, Hilton has sold more than 20 hotels for more than $1 billion. In July, Hilton Group moved to sell 18 hotels in Great Britain and Ireland….
[Hilton Hotels CEO]Mr. Bollenbach said in an interview the Hilton Group acquisition remains in line with a focus on management and franchise fees. The company plans to continue selling real-estate assets at a rapid place.
As with other hotel chains, the name is far more valuable than the real estate. The name predicts a certain level of amenities (strictly enforced by the central office) and simplifies the process of choice.
