Hilton CEO Chris Nassetta is a busy man. Between launching new brands like Undergraduate by Hilton and overseeing a hospitality company opening “two to three hotels a day,” per his estimate, there’s a lot he wants travelers and Hilton loyalists to know, in terms of what’s happening behind the scenes.
In an exclusive sit-down interview with TPG, Nassetta spoke about the economics of points and how Hilton Honors is handling rising prices, as well as the value proposition of the program for the most loyal guest and those who just stay a few nights a year. Plus, he even hinted at the potential for a new elite status tier higher than the new Diamond Reserve tier.
Nassetta was on site with TPG at the grand opening of the Westerly, a highend addition to the Hilton Aruba Caribbean Resort & Casino — one of the most popular hotels in the entire Hilton portfolio.
Here are five key takeaways from our conversation.
There’s a Hilton brand for everyone
The first thing Nassetta wants folks to know is that Hilton is operating in an industry that “just has extraordinary potential,” as he said, and that he believes Hilton has “done a reasonably good job of differentiating” itself from its competitor set.
To do that, Nassetta explained, the company has leaned into the “experience economy” and continued to meet its loyal customers — and those joining the Hilton Honors ecosystem for the first time — where they’re at, and where they’re going.
“What we’ve done is we’ve built a really cool network effect where we’re now able to serve every customer for any need they have anywhere in the world they want to be, and we do it across a broad spectrum of price points and product types,” Nassetta said.
When Nassetta joined Hilton back in 2007, the company’s portfolio consisted of just eight brands. Now, nearly two decades later, that portfolio has more than tripled in the number of brands guests can book through Hilton Honors. And those brands really do touch every type of traveler, from introducing new luxury products like LXR to strategic partnerships with brands like Small Luxury Hotels (which it managed to grab from Hyatt) to a new series of lifestyle hotels focused around college-themed stays at Graduate, wellness-oriented experiences with Tempo and an entire collection of stays and experiences centered around nature.
“We stop adding brands when customers stop telling us they want new brands, right? So that probably is never,” Nassetta said.
Award pricing is in line with rising luxury hotel rates
TPG frequently hears from readers that award pricing, especially dynamic pricing, has made many top-tier stays inaccessible. For Hilton, it sometimes costs hundreds of thousands of points for a Premium Award Night — and over 150,000 for a Standard Night. But behind the scenes, Nassetta explained, it’s important to remember that points equate to real money flowing between Hilton Honors and hotel owners, to the tune of billions of dollars.
“The high-end luxury [market] has gotten a lot more expensive and the system has to pay for it,” he explained. “If [owners] are giving up the rooms, particularly in times where they otherwise could sell them, then they have to be paid for it.”
But it’s a balancing act, he explained. “Think of it like ‘Chris, I’m going to give you a hundred bucks, and you only have a hundred bucks to go give all these hotels that are redemption hotels.’ I could say, ‘You guys [in] premium, you take it all,’ and then the guys that have all the Hamptons get screwed, or vice versa. We have to balance it out. It’s basically a relative rate structure and demand issue,” he said.
Diamond Reserve was a much-needed elite status tier
It’s a fact that the loyalty space has become crowded as more and more consumers find ways to leverage points and miles in their travels and everyday lives. “Diamond members have become in the millions,” he said, explaining that at some point, quantity really does start to hurt quality.
“We’re pretty good at what we do, but if you’re going to create a truly bespoke experience where you can [offer] 100% of the time true concierge-level service, you can’t have millions of people,” Nassetta said.
Enter Diamond Reserve, Hilton Honor’s new top-tier elite status level that requires 80 nights or 40 stays and $18,000 in annual spend. While it’s not the easiest level to reach, many honors loyalists fear it will devalue the other tiers.
Nassetta advises not to fret, though. “We didn’t take anything away [from Diamond]. We made it easier to get to Gold because we realized we were sort of out of sync with some of our competitors, and those benefits are things people really care about. And then we created this upper tier that’s more aspirational, and so far, so good.”
But there will be some more net-positive changes. “What will change is we’re going to keep figuring out what we can do for the most elite travelers and what experiences we can connect to it.”
Related: Elite status battle: What happened when we tested Hilton’s new Diamond Reserve versus Diamond status
You don’t have to be a frequent traveler to benefit
Don’t think Hilton is forgetting the other end of the spectrum: the more casual travelers who might hit the road once or twice a year.
“Ten years ago, we kind of revolutionized the space, saying, ‘All right, we want to do really good things for the most frequent travelers, but if you’re not that frequent a traveler, we love you, too.'”
But what does that mean? “That means [immediate] discounts, that means Amazon deals, Lyft deals and other things. I think we’ll continue to do things in that arena because we want all travelers to feel special.”
A new tier might just be in the works
Over the last few months, rumors have swirled online about a new invite-only elite status level above Diamond Reserve called “The Honors Society.” Though Nassetta did not confirm its existence, he did say that “maybe there’ll be something beyond [Diamond Reserve]. Maybe some day there’ll be something that we don’t really publicize.”
Even without Nassetta’s confirmation, a recent Paris Hilton Instagram campaign, where her phone shows “The Honors Society” emblazoned on the Hilton Honors app, has fueled a lot of speculation.
“While there’s nothing to confirm at this time, our Hilton Honors team is always focused on creating special ways to celebrate and reward our most loyal members,” a Hilton spokesperson told TPG, when we inquired.
Or, as Nassetta cheekily put it: “Nothing to talk about.”
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