Hilton Brand Strategy, Loyalty & Distribution

Former Global Head of Corporate Strategy at Hilton Worldwide

Why is this interview interesting?

  • How Hilton built a portfolio of brands for all market segments
  • Hotel conversions versus new builds
  • How hotel loyalty schemes are moving from simple frequency plans to full customer experiences
  • Franchisee cost strucutre and financial leverage
  • The long-run positioning of the OTAs and who owns the customer
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Executive Bio

Mark Morrison

Former Global Head of Corporate Strategy at Hilton Worldwide

Mark has over 20 years experience in the hotel industry and joined Hilton in 2008 as Global Head of Corporate Strategy to help Blackstone transform the business. From 2008-16, Mark led the strategic turnaround of Hilton where he was pivotal in constructing the brand portfolio and building the loyalty scheme. He then joined Expedia as VP, Hotel Owner and Services where he rolled out strategies for owners and management companies of the largest hotel chains globally. Read more

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Interview Transcript

Mark, a pleasure to have you with us today. I think a good place to start would be to take a step back and provide some context as to when you first joined Hilton, shortly before the financial crisis and the situation with Blackstone, as owners.

Blackstone bought Hilton, in late 2007. I wasn’t there, but I think they quickly brought on Chris Nassetta, who was an experienced hotelier, who had been running Host, which was a REIT, so a real estate background. Then Chris had started to build up a team and I think they had bought on the CFO, a week or two before I joined. What Chris had been doing, in those first six to nine months is, he had been going around, meeting with different leaders in the company, trying to understand what the opportunities were and, basically, working with Blackstone to agree some high-level directional issues for the company.

I came on board, right as we starting to execute a transformation. It was a very exciting time, because you had a private equity owner, who was motivated to see change. There’s no sacred cows, so we were able to go after whatever we thought was necessary, to make the change. I came in at the moment we were ready to start executing that transformation.

As you stepped into Hilton, what was the strategy?

For me, literally, on day one, I started working on the transformation of the company. What I mean is the execution of an organizational transformation. We spent, probably, four months or so and we went through individual functions, like finance, HR and we looked at each individual function and tried to figure out, what were the changes we could make, to streamline the company? What had happened, going back to Blackstone’s thesis, is that the company was divided between different business units. You had a timeshare unit, you had the international unit, the US domestic unit and these were all run separately. There were different HR departments, different finance groups, different systems. The idea was to combine all that together and drive as much scale as we could.

Even within international US, there was a lot of regional activity going on. To shoot for scale, our idea was, you had the same systems everywhere, the same way of working. The goal at first, was to shoot for scale which is, again, streamlining everything and making it very similar. That was one of the key tenets as we went through and made the changes we made at the company, was to streamline all the business units and the regional ways of doing things, into one business.

What was the biggest challenge?

In any transformation, I think the biggest challenge is to get everybody aligned that a change needs to happen. Separate from Hilton, I’ve also worked with other companies, in an advisory capacity and you often see that the board is not all in on making dramatic changes and/or in the leadership that exists, there are people that don’t want to make that change. Having that mandate to decide what you want to do is the most important thing.

The second thing is, it’s the leadership, such as the senior VPs and above, or whatever you consider to be your senior leadership group, getting them on board. I find it fascinating, because you sometimes have very, very smart people, who really know their space. But for them, change is scary and they see a plan that they want to execute on and they’re like, I don’t need a transformation right now; we need to get going. But what they don’t often realize is that they’re operating within something that’s restrictive, that’s limiting the whole potential. Even if they did execute on, sometimes, a very good plan, you still won’t reach the full potential for the whole company. Trying to get everybody on-board, where you have a leadership group that’s of the same mind, that’s one of the bigger challenges.

Everything is really around alignment. The last thing is just aligning the culture. Once you’re done with the transformation, trying to figure out how you align everybody around the purpose of the company, again. When you do a transformation, it’s very disruptive to people who work at the company. It can be very disruptive to the leadership, too, especially if you are bringing on some new leadership. But trying to figure out how to align the culture, where everyone is motivated and they understand the purpose of the company and they are all swimming in the same direction when they get going, is a challenge. That falls into part culture and part trying to implement some performance-driven metrics, where people are aligned, in terms of what they’re doing.

What will happen is, when you run a transformation, inevitably, some functions or some parts of the company will try to revert back to what they were doing before, because they would say, that’s what we were doing before. Sometimes, you need fundamental change. To press change down into the company is beyond just the nine to 18 months of the transformation process. There’s an ongoing transformation effort, in terms of making sure that whatever you wanted to, sticks.

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Hilton Brand Strategy, Loyalty & Distribution(June 4, 2020)

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