♪ david: this is, uh, my kitchen table and it is also my filing system. over much of the past three decades, i've been an investor. the highest calling of mankind, i've often thought, was private equity. [laughter] and then i started interviewing. i watched your interviews, so i know how to do some interviewing. [laughter] i've learned from doing my interviews how leaders make it to the top. >> i asked him how much he wanted. he said $250,000. i said fine. i did not negotiate with him and i did no due diligence. david: i have something i would like to sell. [laughter] and how they stay there. you don't feel inadequate now because being only the second wealthiest man in the world, is

that right? [laughter] ♪ before covid, i traveled 200 days a year and stayed in hotels. i am beginning to travel again. i had a chance to talk to the head of hilton hotels, chris nassetta, about how the industry is coming back and changing itself to accommodate new demands from its customers. so, that all of the u.s., probably the lodging industry has been the most heavily impacted by covid. do you think that is a fair statement, you and the airline industry probably? chris: yeah, probably the cruise industry would top the list. we would be near the top of the list. it has been a difficult couple of years, but things have improved by a significant margin from where we were. we started out in the first quarter of 2020 at 8% or 10% occupancy, which we have never experienced that kind of downdraft, certainly in the 40

years i have been doing this, but at this point, we are not through covid and where we were at the peak of 2019. we are still 15% to 20% down, generally trending in a positive direction. my guess is that when we get the second quarter, third quarter next year, we will be back to peak levels of demand, similar to 2019. what has been interesting is it has been well documented at this point, the leisure business has been off the charts. if you look at demand for leisure probably, the rates on leisure, they are already higher than the peaks of 2019. the business segment in the group, the meetings and events segment, it is on a slower recovery, which you would expect, but, but, you know, building, building up momentum.

david: you think the worst is behind us? chris: i think the worst is definitely behind us, not a straight line up, but it is behind us. david: you had to close hotels and laypeople office covid was hitting the industry. i assume that was difficult. chris: it was. having done this for almost 40 years, we open hotels all the time. at this point, we are opening more than one hotel a day in the world, still with covid, we are opening one hotel per day. we have barely closed hotels. when a hotel opens, it is open, most of them forever. you open, open the doors, open 24 hours a day, seven days a week. it is an epicenter of activity. you close them when you're going to tear them down for another user built another hotel, so we are not experienced a closing hotels, but we gained the experience. david: did you close hotels? chris: we closed a significant percentage.

at some point in time, we had probably 1500 hotels that were closed. the difficult part was the people. hotels were closing. it had a huge impact on our frontline teams, necessitating furloughs, reductions in force, both in the field and at the corporate level. as hard as it is to close hotels, because the people side of it in the early stages of covid that were heart wrenching. david: you are coming back and have the opposite challenge to open hotels and bring employees back. it is reported that it's hard to bring employees back or to hire new people and you have to pay more, so is that a big challenge for you reopening hotels? chris: it is. at this point, almost all our hotels are open. the single biggest issue we have

is getting labor back into the hotels broadly, but particularly certain roles like housekeeping in the culinary areas. while we have seen some easing about over the last few months, we still have a ways to go, so it is something we are working very hard on. it is a complicated issue. it is hard throughout. there have been health concerns. people don't want to go to places where other people are congregating. there have been significant issues on childcare, particularly when schools were not open. they had nobody to take care of their children. there have been government policies that compensated people that were unemployed in ways that provided some incentives, and then, to be honest, some people have been reevaluating life and what they want to do, and some of those folks have said, you know, i would rather go work in a warehouse rather

than clean rooms and other things, so it is a complex equation that would take a significant amount of time to work through. we are a lot better off than we were three months ago, and when we wake up over the next year, we will be able to get, i'm hopeful, labor back to do what we do. david: one of the biggest concerns i assume the industry has is people like me have gotten used to using zoom, and therefore instead of traveling across the country or around the world, i can zoom. is that a trouble when people say that zoom expenses pretty good and i don't need to travel? chris: it is not a big concern for me. i think the world is figuring this out. a year ago, you know, i think people were saying, gosh, this is so efficient may be i don't need to do the things i was doing. i think a year later, at least everybody i am talking to, they have realized there are limits to it. we use it. it has facilitated our ability

to continue to communicate during this crisis, but there is an unstoppable force that exists with humans which is humans want to interact with humans. that is not just for a vacation. humans need and want to interact on business to build partnerships innovate, build , culture, and they want to congregate at meetings and events, network, to grow their business, build relationships, and so, i have no real worries. every time as we have been recovering, if you look at the minute people start to feel like we are through the crisis, the demand for meetings and events, which is the longest lead, skyrockets. people are dying to meet. ♪ ♪

♪ david: let's talk about your own background, how you came to be president and ceo. where did you grow up? chris: arlington, virginia. david: you went to school? chris: public high school in arlington, then uva, mcintire school of commerce, undergraduate business school, got out, and decided i wanted to follow in my father's footsteps and uncles footsteps to be in the real estate developing business, and ended up working for one of the biggest developers and still a good friend today, and my first job was in a hotel, the willard hotel and office complex. david: he was an individual who built a big real estate company in washington, d.c.

the company is still around. you were recruited to go to marriott? chris: no, in between, i created an equity business, a tiny one, compared to the one you are part of. this was 1991, the early days of private equity, certainly real estate private equity. our view was that there was going to be a massive opportunity as a result of the displacement going on, so much inadvertent ownership of real estate, on the wrong people's balance sheets. we wanted to take advantage of that, so we did. for five years, my partner and i went out and had a fabulous private equity business. we did a lot of deals, probably it seems like small numbers today, but 500 million dollars worth of deals across hotels, offices, tax-exempt multifamily in our fund, and header a lot of great partners. one of them was blackstone.

then got recruited, my partner and i, to go to marriott after doing that for five years. david: that was the real estate arm of marriott. they had split the company into parts. when was the brand that operates and manages the hotels, the other part owned the real estate. chris: i came in as the coo and i became the ceo. the ceo retired and i took over. david: you are running it. you did a good job. how did you come to hilton? chris: i had gotten into the blackstone guys, gotten to know in really well i'm a one guy who has tired, john gray, steve schwarzman, and was i got the post as a result of that relationship and their interest in the hotel space, we did a bunch of transactions with them.

i got to know them really well, and as a result of that relationship, i guess when they decided in july, june, july 2007, that they were going to buy hilton, john gray called and said we have the perfect job for you. we know you. we like you. we trust you. we think you have trained your whole career to run a company like this with a huge amount of upside potential. this company has been grossly under managed. you should come do it. i said, what you crazy? i'm going to pick up my wife and my little daughters and moved to beverly hills, california? i don't see us on rodeo drive.

i said we are going to be the beverly hillbillies. john gray is very persuasive. the truth is as i step back from it and talk to my wife is an equal partner in the decision, we realize how many chances in your life will you have where it is a counterparty like blackstone that you know really well for you trust, business you know, but with massive opportunity, and without skill set, and those things don't come together that often, so eventually i decided we would cap be the beverly hillbillies and move. david: blackstone bought the publicly traded company for $29 billion. some people thought it was a high price. you come into manage the debt and so forth. you moved your six young daughters to california? and then the great recession comes and all of a sudden the debt from the leveraged buyout seem to be burdensome.

were you worried the deal was not going to work and you might go bankrupt? chris: i slept like a baby. i slept for two hours, woke up crying, look for another two hours, woke up crying. kidding. the truth is there were some tense moments at the beginning of the great recession, but we never lost faith. john and i particular where the two that put our heart and soul into making this thing work, john gray and i. we knew we had a really good strategy and we were building a world-class team, you know, and i am a big believer on a steady hand on the wheel. what goes down will come up. don't panic. if you have the strategy, work the strategy, adapted to the times, and you will get to the other side, and we did. david: you don't have as much gray hair as i do. chris: i might question that. david: did you get gray hairs from this? chris: definitely.

i definitely have more gray hairs. i will not say it did not stress me out on occasion, but i love a challenge. the truth is i had a great job and i love the company, the people, the board was incredible to me, so why did i leave? i wanted a bigger challenge and something that was more global and needed fixing, so the reality is, the great recession, while it was hard and stressful, it was also an opportunity to stretch myself and fix it and to really push myself to get to the other side. david: so blackstone ultimately ejected more money into the deal and bought some debt at a discount. the bottom line was they ultimately took a public or you took at public and it turned out to be one of the most successful if not the most successful buyout in history. i think blackstone made a $14 billion or $15 billion profit. chris: that is what i am told. david: when you took the company public, it was at a certain price, but the stock is up 600%, so you must be pretty happy, right? chris: i think so. luckily we did our job for

blackstone and their investors and they made a great practice out of what look like a difficult set up in the great recession. anybody who bought the stock and it was public and held it has done exceptionally well. ♪ david: are you happy doing this and will you do it for the foreseeable future? chris: it is like a coiled spring coming out of covid. i feel like we have more to do. ♪

♪ david: your company was started 100 years ago by conrad hilton. i was told he made a famous statement about the most important thing in the hotel business. can you tell what that was? chris: he was famous and ended

up on the johnny carson show on more than one occasion. at one point, i have seen the clip, so it is not legend, johnny carson said, all right, connie, he went by connie, you are the biggest hotel man on earth. could you just give it everybody in the audience one piece of advice. he said if i can give you one piece of advice, i would say, please, keep your shower curtain inside the shower. david: otherwise it would leak out in the water would damage the hotel? chris: correct. david: do you ever communicate with him or get messages from him, saying you did a good job protecting my name. chris: i haven't, but i have is blessed in my office. we have all sorts of paraphernalia related to the history of the company, most of which i sent to the conrad hilton museum at the university of houston, because i thought it would be great to catalogue it and have it. the one thing i did keep his his bust, which i keep close to my office. i did not know conrad personally.

i did know his son. talking to his son, he was quite proud of what we had done with the company and suggested conrad would have been as well. david: conrad hilton and barron hilton were famous, but the most famous is paris hilton. is she involved in the company? chris: more recently, we have been working with paris on the marketing side of it. we're working with her. just got married and she is on her honeymoon and we are helping sponsor the honeymoon. we have been doing some work more recently. david: when i grew up in a blue-collar family, we could not afford the hilton. hilton was the ultimate brand and we were lucky to go to a holiday inn or something like that. over the years, the hilton name has not been seen as ultimately

elite as ritz-carlton or four seasons. is that a fair statement? chris: it is. and by choice. if you go back 50 years, hilton was the leading pioneering luxury brand on earth, but as time went on and we learned that segmentation mattered in the business, and customers had these different needs, we really tried purposefully to make hilton a four-star brand to allow for other things above it. david: your ultimate luxury ran, waldorf-astoria? chris: waldorf-astoria. our luxury brands are waldorf-astoria, conrad, but the very highest and is that, conrad, and the other is a collection of historic luxury hotels. david: new york city, the initial waldorf-astoria has been under construction and rehabilitation for a few years. you don't own it, but you will manage it, i presume.

well it open in my lifetime? chris: let me correct one thing. that is not the original. the original waldorf-astoria was put together as a consequence of two members of the astor family feuding that had two hotels that were on the site of what is today the empire state building. the way they settled the feud was one was the waldorf, the other was the astoria, and they settled the feud by connecting them with peacock alley and it became the waldorf-astoria of new york, in the late 1800s. they ultimately sold it and it got redeveloped as the empire state building. where the current waldorf-astoria is was built during the great depression in 1931, and is under massive redevelopment, and should reopen as what i think will be the best luxury hotel in new york in 2023 with 400 rooms in the same amount of high-end luxury

apartments. david: there is another rumor going around about another waldorf-astoria, and washington, d.c., where we are now, the trump hotel, which has had its challenges and has reportedly been sold to somebody, and you, hilton, will manage it as a waldorf-astoria. can you comment on that? chris: i read that same rumor, but i can't comment on it. i have a strict rule. i will comment when something is done. the rumors are justified in the since there is a lot of work and discussion going on, but nothing is done. david: there is a new phenomenon that's not that new, airbnb. chris: what is that? david: when it came along, the industry shrugged it off, but is it a real competitor and will you be in that business? chris: i do not think it is a real competitor to us. what we do is something different than what they do. i think we coexist with them well. we deliver a high quality,

consistent product with the amenities wrapped in service with all the technology, loyalty, and people pay as generally a big premium for that, because they want that level of consistent high-quality experience. what they do is something different. what they are doing is by definition can't have the consistency and the product and the amenities that are tailored fit, because it is different. it does not mean it is bad, but it is satisfying something different. if you look at the numbers pre-covid, we were coexisting quite well. we were at the peak levels of performance at a time where they were growing by leaps and bounds, and we were not really seeing significant competitive threat as a result. david: as an investor, should i be looking at the hotel lodging industry is a good area to invest in? your stock has reason he gone to

near all-time highs from a load during the covid time. do you think there is a lot of growth left in lodging and hotel stocks? chris: you are one of the smartest investors, so i will not give you, i am a lowly hotel guy. i think why the stocks have performed well is really quite simple, i think, it is an underlying belief that the business broadly will, of demand in all segments will come back, and will ultimately over time growth rater than it was before, which i believe, and i think in our case why we have performed well, i think investors believe the decisions we made that we had a capital light business that was growing faster than anybody in the industry before, the decisions we made during covid put us in a better position when we get to the other side of it. we are a higher market share, higher growth, higher margin business. in the market as you and i both

know as a result of a whole bunch of things in terms of fiscal policy and the like is it is looking further forward. i think that when people look forward to years in three years, they like what they see in the industry and i like to believe they really like what they see. david: you have been doing this 14 years the right, and you are 59 years old? chris: i am. david: have you thought you should do something else? i've made a lot of money for investors. are you happy and will you do this for the foreseeable future? chris: i am. we made blackstone a lot of money. we made shareholders money. we have grown the business and have been a huge engine of opportunity. if you think about the jobs we have created, all the communities we have made better places, all the owners who we have helped to grow the business, and having built a

world-class culture, the opportunities we have created for upper mobility for people, in this business, i would still say it's like a coiled spring coming out of covid, so i feel like we have more to do. my job is far from done. ♪

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