Loading summary
Transcript82 lines
- [00:11]
A
Join Willie Walker, Walker and Dunlop's Chairman.
- [00:13]
B
And CEO as we bring you fresh perspectives about leadership, business, the economy and commercial real estate.
- [00:20]
A
Willie hosts a diverse network of leaders.
- [00:22]
B
As they share wisdom that cuts across industry lines. His guests are experts in their fields, from leading economists and CEOs to Harvard and Yale professors and everything in between. Our one goal is simple, providing you.
- [00:37]
A
With unique insights, unparalleled data and real time market analyses.
- [00:44]
B
Welcome to another Walker webcast. This is a really special one because I not only get to talk to someone whom I consider to be one of the very best large company CEOs in the world, but also someone that I know personally quite well and someone who my family has known for for generations. And so, Chris Netta. Chris, I saw you last week at uva and now I get to see you today on the webcast. How are you?
- [01:12]
A
I'm doing great. That, by the way, that was a lot of fun last week being together. What Willie's not saying is Willie didn't go to uva, but his father Mallory went to uva. Mallory Walker and my father, who passed away after a great life of 93 years, three years ago. We're quite good friends and Willie interviewed his father who started his business, you know, many, many years, many decades ago on stage, which was a, a real special thing to see. Willie's obviously pretty good at this. Those of you watch his, his podcast know that. But interviewing your father is never an easy task. The f your father, you know, your friend, the founder of your company, that, you know, that's not easy. But I thought it was a masterclass and it was, you know, it was so enjoyable to be part of and particularly when your father started out with a story and I was in the front row and I just, you know, been on stage. This was a great symposium and I did go to UVA, you know, McIntyre like your father. And the first thing your father talks about is when he and my father were on their way to Nepal to hike the Himalayas to go to Everest base camp and they got redirected to Bangkok and he was telling me, boy, we had such a great time together in Bangkok. And I was like, wow. My father never really told me any of those stories. I still got to get together with your father and sort of see if I can get more information about the Quick Stop in Bangkok.
- [02:55]
B
You may have to, you may have to call up Oliver Carr to get a third party's.
- [02:59]
A
I can do insight on it. Exactly. Kid. I was, you might have been there, I might have missed you. But I was at was it Oliver's 100th birthday just this last summer. Amazing. I started started my career out of McIntyre with the Oliver car company and you know have a, have a lot of respect for him and he's lived you know an incredible life and is you know still doing great at a hundred old. I had a really nice conversation with him.
- [03:29]
B
It's unbelievable. Maybe, maybe hiking in the Himalayas back in the 1980s is part of that that longevity. Chris and I really learned something from let's do it.
- [03:37]
A
When do you want to go?
- [03:38]
B
I love it.
- [03:39]
A
It's a great idea. Someone I'm going to hop off at base camp. You may make summit but you know you look like you're in better shape than me.
- [03:49]
B
As somebody who spends almost as much time on the road as you do. One of the things that I am super conscious of is the discipline that you maintain in your life as on a couple fronts. A waking up every morning really early to read the Wall Street Journal and second of all, when your daughters were significantly younger making the commitment to getting home every weekend given the.
- [04:11]
A
Wasn't easy on the.
- [04:12]
B
I was just gonna say that's where I was gonna go is given the answer to money and, and being in 70 plus countries. How I mean seriously.
- [04:20]
A
I mean at this point, at this point we are 9,004 in 146 countries. So more than double the number that you were talking about. 500,000 plus employees this year alone. So far this year we have opened three hotels a day in the world. So yeah, we're moving. We got a lot going on in a lot of really far flung places and it does require a lot of discipline thankfully. I really love what I do. I feel like in so many ways ways, you know. Well I didn't, I did sort of start in the hotel business in the sense that you know, when I decided I wanted to be in hotels my dad said hey you should you know he got to start at the bottom. So he helped me get a job working at the Capitol Holiday Inn that he was an investor in in the engineering department. Basically plunging, you know, plunging toilets, you know. So I kind of did early in life get started but really, you know, was a finance guy and development at Oliver Carr and private equity in my own firm. And you know I was always in and around hotels to, to a degree even beyond my, you know, flushing toilet or plunging toilets. But I really, you know, the more you know, I sort of kept coming back to it and then obviously when I went to host to run Host permanently got into it. I realized that it was just a great industry and, and you know, I loved it and I loved the places, the people, the intellectual, you know, stimulation, trying to fit all these crazy pieces to, you know, together that, that make it work. And I've been doing it now a long time. I mean, you know, between hosts and here, I'm not going to say how many years, but I, you know, I've been a CEO of a big, big public companies for, for a long time in the industry. And yeah, I travel back to the core. Like, I travel like crazy. I'm on the road 80% of my life. So. And Mo and, and a lot of that is in really. It's not like going to New York or LA or Dallas. It's going to Delhi and Shanghai and Singapore and Riyadh and Abu Dhabi. You know, places that, you know, can be hard on the body. But the reality is back then, when the kids were small and, and now it's just like, I feel like I'm the luckiest guy on earth. I think I said this last week, you might have heard this. Sorry about that. But like, I love what I do. I love the people I do it with. I think it's just an incredibly fascinating industry because it is equal part, you know, it takes a lot of IQ and like a lot of technical elements of technology and marketing and digital and construction, you know, everything to make this happen. But it's a lot of EQ too, in the sense of, like, in the end, we're a business of people serving people, right? We are in the service industry, you know, 500, as I said, 500,000 strong. And so, you know, the idea of how you build culture and motivate and Inspire, you know, 500,000 people, you know, to try and do great things for customers is super stimulating. So I know you're thinking, where the, where the heck is he going? This isn't where we started. But it doesn't go back. It go. It does go back to my kids, which is, you know. Yeah, I, you know, I love what I do, which is why I've done it this long and I, why I plan to do it for a lot longer. And I love my kids, you know, and so, you know, my, you know, like most of us, like the thing most important to me is my wife, my children, my, you know, my broader family, my, my closest friends. And I've always made sure that that's a priority. So whatever it did to my body, you know, I was a dad, I was home at A side, you know, I would go to Singapore on a Sunday afternoon, and I would fly 22 hours and get back to pizza night, you know, Friday night, and do soccer games Saturday and Sunday morning and then fly off somewhere else. And, you know, in some ways, it was hard, but as I said, when you really. When you really love what you do and you get a lot of energy from it, which I do, you know, it works. And it's still, you know, it's. I still do it the same way, and it, you know, and it. And it. And it still works. And while my driving purpose is always gonna and always has been my family, I really, you know, and hopefully it shows up. I really do have Pat. I really do feel like the work that we do that I'm a small part of really matters a lot, too. And it is clearly, if you asked my wife, my children, this is part of my purpose, too. Like, this is part of what I do. And there's a, you know, if I think about, you know, like, in the last 12 months, we've created 25,000 jobs in the last 12 months. So, you know, part of my purpose is contributing to being a great dad and husband and friend and son and, you know, cousin and brother and all of that. But, you know, part of my purpose, I think, is. Is also the work we do here and doing it a way where we change people's lives for the good. And I feel like at the scale we do it, you know, we. We really do make a difference. And I said, I. And I certainly think that our teams around the world feel that way. So that's a very. There's a lot in that. But it does start with the core question is, like, you know, you kind of say, like, how did you do it? Why do you do it? I mean, how you do it. You rag your body a little bit. Why you do it is passion, you know, the passion for what you do.
- [10:10]
B
Your optimism is infectious. It comes through every time I'm ever with you. But in running a global hospitality company.
- [10:21]
A
But I've been called Willie many things. Optimistic a lot also, which you're going to know by the end of our hour as all your viewers. Loquacious. But I love it. And the time somebody called me loquacious, I'm going to be perfectly honest, I didn't even know what it meant. I mean, this was a long time ago. I have since added it, you know, into my vocabulary, but I was like, loquacious. That's interesting. And then I figured out what it meant. I was Like, I'm not sure that's a compliment, but hey, you know, anyway, go ahead. Sorry, I'll help you.
- [10:54]
B
I was going to say in your, in your 2014 interview with David Rubenstein and Arnie Sorensen. I was sitting there listening to David. David was like, trying to, trying to cut in on you. And I was listening to it intently and I was like, just let the guy go. He's got great things to say. Just let him run.
- [11:11]
A
I know, I real orange. It's good and bad. That's why, honestly, you know, I've been dying to do your podcast. You have a great audience and we're great friends. And podcast definitely suits my style. Just hits Jordan. Hits on like, I won't pick on any news network where you get like six minutes and three of them are taken by whoever you know by the person asking you the question, and you got to tell your whole story in three minutes. That's hard for me. You're extremely good at doing that. I'm not extremely good at doing that. I'm not a sound bite guy, so.
- [11:45]
B
But just one thing that I would say is you were talking about family and the importance of family. I will say, as I look back on that interview of you and Arnie, and Arnie was a, was a, a great friend of both of ours, even a dear friend.
- [11:58]
A
Many people don't, you know, like, we were obviously, you know, competitors. I mean, you know, like Hilton and Marriott are. I mean, there we have a lot of people in our space, but we're clearly the core competitors for each other. And so many people that didn't know us would have thought, well, I mean, you know, they're, they're enemies. They're, you know, because they compete. But that couldn't be further from the truth. Arnie was a fabulous human being and a really good friend and we worked very closely together when I ran Host Marriott, you know, all those, many, all those many years ago. And I do, I remember that interview with, with David fondly. It was a long time ago. I mean, you probably.
- [12:38]
B
It was 2014. And what I, what I found to be interesting is you're talking about family and getting home and being there. Was that as David asked the two of you what keeps you up at night? My mind went to. Tragically, Arnie at that point in 2014, wasn't thinking about the fact that he was going to be diagnosed with terminal cancer and die in 2021. And we all miss him. But as I sat there and thought about it, Chris, I was just sort of like, you know, you and I are sitting here thinking about our businesses today and what we're going to do this weekend and all that kind of stuff, and that there are these big things that are happening in the background that we don't, you know, we don't know when we're going to confront them. And we don't get trust. We're not where we want to spend it, with whom we want to spend it as much as we can.
- [13:20]
A
Yeah, we don't control, we don't control most of what happens in our life when you get down to it.
- [13:26]
B
So you have dealt with a couple moments, if you will, whether it be the GFC when you've just stepped into Hilton and you've got $21 billion of debt on it. Thank goodness it was floating rate and rates got cut and you had grand flexibility and, and, and, and, and, and, and that is the benefit of that. I think everybody who listens in here sits there and sort of says, oh, well, you know, Blackstone's big and they've got this great scale. Well, one of the great things that they brought was their scale and structuring capabilities to make it so that you did have a, a debt structure that allowed you to get through.
- [13:59]
A
The, the was unique as, you know, I mean, in the sense that, and it was the only way John would do the deal when he did it to buy Hilton. It was the only way I would have taken the job, which was, you know, obviously floating rate debts. And when things go bad, you know, you know, almost always rates are going to come down, but also no trip wires, no, no covenants other than basically, I mean, it was more complicated than this. But when you, when you simplify it, you basically gotta pay interest. And, you know, when rates came crashing down, even though it was a really tough time in the, in the global financial crisis, it wasn't so bad that we didn't have enough money to pay our interest. And so we were able to make it to the other, other side. The other thing, you know, by having somebody like Blackstone involved is we had the capacity to have, you know, to buy insurance, if you will, which was, you know, we ended up restructuring the debt, which you could argue you, you know, when you look back, maybe you didn't need to. You did. I mean, you know, at the time it felt like a very prudent thing to do and I would, I would do it over again. But you had Blackstone, you know, there to write another billion dollar check on top of 5.6 billion, you know, to Begin with, because they had faith in the strategy. They had faith in the, you know, me and the team, even though it was a, obviously a very concentrated bet. I mean, it was the biggest private equity investment ever made at that time in terms of equity dollars written. And if you think about it, they, at that point, I don't remember the exact timeline, but in and around that point, they had written off 70% of the investment. So it was going to then turn in to the biggest private equity loss in history. And yet they had the confidence to say, even with all that backdrop, we believe in the plan, we believe in you guys. We're going to put another billion dollars in now. Thankfully, it, you know, and I'll stop, you know, patting us on the back, but it's a testament to a lot of people. Blackstone, our management team, you know, our team's on the front line. Everybody put their heart and soul into it. And it ended up being the largest private equity profit in history. And I think it stands to this day as the largest private equity profit in history. I was on stage with John and he talked about that they had their CEO event just this week, Monday night at the wall of Astoria, N.Y. spectacular Hotel. If you haven't seen it as reimagined, reopened just a few months ago, everybody should go see it. And John introduced me as. John is, you know, typically unbelievably kind. I know, you know, he's an, you know, a dear friend. He's our chairman. You know, he's been on your podcast, he described, you know, that this is the most profitable private equity deal ever done. He said. But, but the story since, I think this was John's words that, you know, it's been 7x since it went public. So, you know, the. The truth of the matter is having Blackstone as a partner was great for them, but it was great for everybody. Meaning it allowed us to really change the trajectory of this company in a way that just did. That wasn't just about making them and their investors a lot of money, but really putting us, you know, Hilton, in a position as a business to be successful for another, you know, for generations. And so, you know, that was, you know, that was 10, 12 years ago. And, you know, we keep chugging along, but the story, you know, it is one of you know, building resilience, like you think about, like I think about everything I've lived through and in the hotel space, you know, 9, 11 SARS, the, you know, the Great Recession, the pandemic, you know, and lots of little, you Know, micro things. But I mean, the two, the two big. Well, the three biggest. I wasn't here from the 9 11, I was in host. But the two biggest while I'd been here and had to live through were the TFC and the pandemic, which was the mother of all down semi UE. And we went from 55, 60 billion in revenue to basically zero overnight. That's, you know, nobody does a downside model like that, as I explained to our board in that moment. But we survived and we ended up, I would say, both in the gfc. Definitely in the gfc and even more so coming out of COVID better. And you'd say like, well, you know how. And that was resilience. And resilience comes in lots of different forms. And this is sort of just my underlying philosophical view of, you know, how, you know, what you have to do, you know, to run businesses in a complex environment where things are going to happen, where, you know, the Mike Tyson, you know, comment about, you know, everybody has a plan until you get punched in the face. And, you know, like, particularly in our business, which is a business where you sell your product, you know, all of it every night when things happen, you know, you can have a, you can have a high beta experience. And so you have to build resilience. And the way you build resilience at the highest levels, you know, I know everybody knows this, but it, you know, it's worth stating sometimes. The obvious is you build, yeah. Financial resilience, of course, right. You have like, why did we make it through? Well, because in the great financial crisis, you talked about it, Willie. We had, you know, low rates, but we had a very good, we had a lot of leverage, but it was super intelligently structured. And so we had financial resilience in the pandemic. We had much, much lower leverage. Right. And we had made sure that we had no maturities. Not because I knew the pandemic was coming, just because I thought we were at the end of a business cycle and we shouldn't have. And rates were low. We shouldn't have maturities hang out. We had abundant access to liquidity, right? We had lots, you know, billions and billions of dollars of access to liquidity. Again, not by mistake, because I, you know, I felt like, you know, you're in a place in the business cycle where you just need to be ready for anything. So we, you know, I could keep going up. We built a lot of resilience financially for pretty much, you know, any eventuality. And then more importantly, in all of those, it's building cultural resiliency. You know, the thing I'm most proud of that this team has done, I haven't done, but they've done, is, you know, we're the number one great place to work in the United States. We're the number one great place to work in the world, by the way, two of the last three years. It's unheard of, particularly for a business that is so large. And in the service industry, you know, we compete against all the tech companies and everybody else and what. And I'm not just like, you know, yes, I'm very proud of our team for that. But it relates to resilience. Like, you build a great culture in our business because the alpha is in a service business, delivering a better experience. And if you have a better culture, it is the only real way to translate it, you know, translate into a better customer experience. You also build, you know, a great culture because when you get punched in the face when things happen, you need the tank full, you need your people to be resilient. You're going to have to do things and, you know, impact your organization in ways that if it's not resilient and everybody like, runs for the hills, it doesn't matter that you have financial resilience. You're not going to get to the other side in this. You may make it financially, but you're certainly not going to set yourself up to be stronger. And so good example in the pandemic. I mean, I'm not proud of this. It was the right thing to do. I would do it over again because there was no choice, but we had to impact two thirds of our workforce. We are a very large workforce, either through reductions in force or furloughs. And there was no choice other otherwise the whole business, everybody would have been impacted. Okay. You know, yet we were able to do that because we had such a strong culture. Of course, by the way, now we have those people plus a lot more back. Cause we're better, we're faster, we're stronger. But in that moment, it was really hard, but people understood it. They realized that if we don't do these things, we won't make it to the other side. And so back to the great place to work. Within two years of the ending of the pandemic, we were the number one great place to work in the world, having impacted two thirds of our workforce. Resilience, right? Cultural resilience, where the system can take body blows. Now, you can't. You can't take any of that for granted, you got to be working, you know, on those things all the time. But if you say to me, like, how do you survive those things? I'm never, you know, thinking about a crisis in how do I survive? I mean, I, you know, I. Because I'm very, you know, focused on making sure that you've got the resilience where that. Where you're, you don't have to be thinking that way. I'm thinking in a crisis always, how do you prepare for the future and how do you take advantage of the opportunity? Because it's funny, competitively, when everything's good, everybody does pretty good, right? I mean, let's be honest. Like, when the, you know, when the, when the tide's up, the boats are floating in the harbor, they all look pretty good. Tide goes out and everybody hits the, hits the mud and the harbor, you see some unseemly things. And so my experience has been it's during tough times where you can really either do bad things happen or really good things happen because you can really deliver alpha. You can really distinguish yourself from the competition because everybody reacts differently and people freak out and they do some good things, some bad. And so I've been trained for. I started out in the workout business very quickly after I got, you know, at a. Out of. Out of McIntyre. And so I've always been trained to, like, you know, think, think. How do you take advantage, you know, like, not, you know, not freak out and, but, but really, how do you take advantage of it? And, and the way you do it is you prepare for it for years and years ahead by building, you know, incredible resilience. And then when you get punched in the face, the bat back to Mike Tyson, you know, you, you don't fall down. You take the punch and you figure out, all right, that didn't feel good. What are we going to do?
- [25:00]
B
So you talk about the culture and the resilience. Chris, one of the biggest decisions you made was to move the Hilton headquarters from LA back to Tysons, back to Virginia. And as I think back on that, and I think about the, all the things you just talked about, the culture you built, the great places to work two years after you've had to impact two thirds of your workforce. Talk for a moment about why that. Ay, that was such a tough decision because you moved your family to California. You were committed to going and working out there. You told Blackstone you were going to work out there, but you saw something going on, whether it was due to the long commutes, the Cost of living or just the core culture where you said, hold it, we got to, we got to end this and we got to start fresh somewhere else. Talk about that decision. And you made that decision having been in the seat for two years and being really in the depths of the great financial crisis where you've just gone to Blackstone and asked them for another $800 million to invest more in the business after they'd put 5.6 billion to begin with.
- [26:05]
A
I mean, you're quite hearing the question if I'm swaying, you know, yeah, that's my issue.
- [26:12]
B
I'm thinking of that.
- [26:14]
A
I appeased. You're bringing it back.
- [26:17]
B
But you weren't sitting on, I mean, look, you're totally sitting on terra firma.
- [26:23]
A
Yeah, but that's tough to say, hold.
- [26:25]
B
It, we're going to go make your spends to move.
- [26:27]
A
No, we weren't, no, we were not. I mean we, we were, we were confident, we had a good plan and we thought we had the resilience to make it through. But it, no, it was a, it was a very challenging time, I have to say. Like, on a personal note, I still have, my wife is from, from a small town in our outside of Little Rock, Arkansas. Her father, she came here because her father was elected to Congress and we met in high school. She moved here in 1978. And so she was, you know, Southern girl from a little town. And it's like I tell her we're moving, you know, do you want to move to Beverly Hills? And she's like, I think we're going to she with her Southern. I think we're going to end up like the Beverly Hillbillies, you know, I mean the Nessetta with his six, six little girl. I have six girls all little at that time. I mean they were, oh my gosh, they were 2 to 12, maybe they were 4 to 14 or something. I mean their 10 year spark. In any event, that's the, you know, that makes me smile thinking about when she said that. But, but I would say, you know, moving there was challenging with, you know, on a personal level, but exhilarating and you know, I think my whole family would say it was one of the more interesting, exciting times in our family life for lots of different reasons in terms of the decision to come back. I mean we got out there, a lot of people think, oh, Chris just went out there. He always had the plan to move it and he was going back to Washington. That really wasn't what the plan was. I went out there, my, you know, my deal With Blacksmith is, you know, if you can run the company, you got to be there where everybody is. Like, you can't figure it out. And we don't want to step you. We know you're, you know, very committed to your family. We don't want to be part. To their credit. We don't want to be part of like, breaking your family up. So you need to like, decide if you want to do it and go and bring them. And my wife, it was a great partner in life, wanted to take it, you know, thought we should take, take the chance. It was well worth it. She knew the BX guys, you know, and, and so we, you know, we, we jumped off and did it, but we went there with the intention, like, we're going to be here for a while. I don't, you know, how long. And then I got into figuring out the company. You know, I was traveling a lot, going around the world and what, you know, listen, Hilton, you know, for those old enough would, would know, like, Hilton invented the hotel business. I mean, it's stuff that every 1919, but I mean, a long time ago, think about like airport hotels. You think about like, you know, who did the first full service hotel, who took a hotel and put meeting space and restaurant. I mean, stuff that is like, you'd laugh about today. Reservation systems, Loya programs, you know, TVs, air conditioning in rooms, you know, you know, the eggs Benedict, the brownie, the peanut colada. You know, like, in a lot of ways we, you know, we, we really invented the business. But. But the reality is, you know, our founder passed away. Business was run, you know, got into the gaming business and a lot of different, you know, things. And I think there were a lot of distractions. And let's just say, you know, we were not like, hitting on all, you know, on all cylinders. And thus why Blackstone? And I thought, even though everybody else thought we were paying this huge price, we thought, you know, no, I mean, we think this thing is like a coiled spring. We just have to release the spring. It turns out we were right. But when I got out there to figure it out, I realized that it, you know, like, I think we were right. And I remember saying to John Gray and Steve Schwarzman in one of my first meetings, you know, one of those sort of didn't go exactly. Good news, bad news, you know, what do you want first? You know, you know, bad news is there's a lot more to do than I ever would have guessed. You know, good news. The opportunity is much bigger than I think Any of us thought. And so we went about figuring that out. You know, we could talk for hours and hours about, you know, the. The underpinnings of the strategy to, you know, to rebuild culture and, you know, and sort of, you know, restart growth and all of those fun, fun things. But a core element of it, to answer your question, was where, you know, like, how, you know, how. How do we sort of inject a, you know, billion volts of. Of life and energy and, like, shift, you know, the, you know, the sort of mindset to get people focused on the core things we wanted them focused on. And it was my belief, with their support after a couple years, that I could not do it there. I mean, it was, by the way, a very expensive place that we were in Beverly Hills, like the middle of one block off Rodeo Drive here. You know, Beverly Hillbilly nesettas are like, I'm on Rodeo Drive. Not. Not really my thing, but it didn't really matter what was my thing. We were quite comfortable and enjoying the weather and, you know, the life of la. My view was the things that we needed to do to redirect and rebuild our culture could not be done in the timeframes that we wanted to do them without doing something radical. And so, yeah, in the middle of the Great Recession, I went to John Gray, and to his credit, it wasn't, you know, we didn't labor over the discussion very long and said, I want to spend hundreds of millions of dollars at a time where we're on our heels at a minimum, not on our rear end, but on our heels. And I think we need to do it because we have a great strategy. But in order to do it, I really need to evolve the culture. And the best way to do it is, to a degree, to blow it up a little bit and rebuild the biggest part of it from scratch. And even though as a percentage of our overall workforce, I think in Beverly Hills, it was our world headquarters, Maybe we had 1200 people, something like that. You would say at that time, we didn't have 500,000 people, we made 200,000, but still, it was a very small percentage. But like any big global company, it's sort of like the culture emanates, even though it may be only 1200 people from where your world headquarters is and the culture there. And my view was we. I mean, maybe over a very long period of time, grinding and grinding, you get there, but it was going to be really hard. And so what we needed to do was sort of blow it up. And I would Say I remember it was the hardest decision I've ever made. Toughest call I've ever made, Toughest meeting I've ever had because I remember it vividly. I went like, my then head of HR said write a memo to the, you know, to, to the team and like tell them why you're doing it and then run for the hills. And I said, nope, I'm gonna, I'm gonna do it live. I'm gonna stand up, get everybody in the cafeteria and I'll stand there. As long as they want to ask the questions, I'll answer them, which I did. It was really hard, but is who I am and the way I do things, I'm gonna look them in the eye and tell them what we're doing and why we're doing it. But it was really hard. Oh, I can't imagine having a tougher, you know, tougher decision or you know, sort of presentation to make, if you will. Having said that, like all of that wind up. It was, it was the most impactful thing I've ever done in my career. In a positive sense. Like we wouldn't. This company is, was big when, when I got. We're three times the size. I told you. We opened three hotels a day this year. Like we're, we're leading the industry in performance. We're leading the industry in growth. Like we took what had unfortunately been a company that invented the business but had gotten a bit sleepy and we got it moving. You know, we got it moving at a really nice pace. And we were able to rebuild a culture where the people feel inspired and empowered by the work that they're doing. And they tell great place to work in Fortune. They think we're the best in the world. Best place in the world to work for. So yep, it wasn't easy, but I would do it all over again. I mean, think of like, I give you one stat that I still think is mind bogging because it happened right over here. We, we didn't even have an office here. We, we rented temporary space from USA Today in the Gannett, you know, then Gannett building.
- [35:00]
B
I remember when you opened up your site. Game over.
- [35:02]
A
You see, add to rehire, only 20% of our workforce was invited to come. By the way, to their credit, 90 plus percent accepted. We had to rehire 80% of our global headquarters workforce when we came here. 80%. So like think about, was that part.
- [35:23]
B
Of the decision though? Chris? Chris, is it part of the decision that you were. That was it part of the decision you were moving Somewhere that had such a great resource base to poach from.
- [35:32]
A
Yeah, I mean, a lot of people have kidded me and still do frequently. Like, oh, of course you ended up in dc. You're a DC guy, you know, but.
- [35:39]
B
You had Marriott there and you had, you had.
- [35:41]
A
Yeah, but it was really, we actually did hire. Because I needed arms and legs because I was rebuilding the whole team. I hired McKenzie, they were doing a bunch of work for us and they, and, and I said, listen, I want to do an objective analysis. Well, you know, I want, I mean, I want you to look at LA too, but I think, I don't think we're going to be able to do what we need to do here. But I want you to look at all the options to merge. So we looked at Dallas, Chicago, Atlanta, Louisiana and D.C. i think those, those were the markets and we did like, we created a grid, we ranked them and I said, score it objectively. Like, you know, I may put my thumb on this guy, I don't know. But yeah, but DC won for a lot of, you know, for a bunch of reasons. You know, reasonable cost to access the government, great, great schools, air, you know, great quality of life air. The airports, you know, the Dallas. We're a big global business. People are flying, you know, all over the world all the time. Talent base, as you point out, educational system, you know, academics around here that give you, you know, tremendous pipeline of entry level talent, et cetera, et cetera. So DC won hands down. I mean, it wasn't, you know, it wasn't that close for us and was sort of nice that I got, you know, got to come home. The stupid part of that is, you know, on a personal level, and my family probably will hate, but make sure they don't watch this. But when we went out to la, it was obviously really disruptive, you know, to my children. You know, I said they were 4 to 14, like preschool through early high school. And like, it was hard. We moved mid year and like, they're all athletes and they weren't on teams and I was running around the world. It was really hard. But they adapted and they, you know, within, you know, a year or two, everything was going well and I thought I was going to be like the hero when we made hero, saying, we're going back home.
- [37:39]
B
They're like, no, we want to stay. We got a lot of friends.
- [37:40]
A
Exactly. We made this decision and I remember going home that night telling my wife and she's like ashen and she's like, oh no. I'm like, what do you mean? No, like, we made this decision, we're going to go back home. And she's like, it was so hard and everybody's doing so well. And like, so it really, you know, they got there, but it was, it was much harder than. Not an easy one. I was not a hero, let's just put it that way.
- [38:09]
B
So, Chris, as I, I think about where we are today and where we're going, and I think about a lot of the conversations are going on around AI and how AI is going to change our world. And I, I found it to be really interesting when I, when I, when I listened to you and Arnie talking about where you all were in 2014 from a technology standpoint. And what I think is you prob.
- [38:31]
A
Probably have the advantage of having watched that recently. No, it's all good. But the point, 11 years ago, I don't remember what I said.
- [38:38]
B
Well, my point on it is twofold.
- [38:41]
A
And by the way, AI back then was all inclusive. You know, it was like a hotel type. Exactly.
- [38:49]
B
But there were two things. One was both of you talked about, you know, if you will, the airlines having ticket lists. You could walk into the airport, just scan your boarding pass and off you go. And that both of you talked about how you wanted to make the experience in a hotel seamless so you could show up and not have to check in and you could go into your room. And as someone who spends 200 plus days a year on the road, I don't do that today. You know, it's like one of those things that we all thought that that's where the future was going to be of just walking in.
- [39:19]
A
Why aren't you, by the way, with us? You can with us. I know you can.
- [39:23]
B
I know you can.
- [39:23]
A
I think there's just, just like an airline. You cannot, you can pick. Just like you pick your seat with Hilton. Are you going ramp. You can pick your exact room. You never wait.
- [39:33]
B
I guess the question that I have to you is what percentage of people actually do that? Because I'm a total road warrior and I still go and check in on.
- [39:40]
A
Tell me it's like, it's not enough. I would say it's like a third. Probably a bit better than a third.
- [39:45]
B
Right. So I, I just found it to be interesting.
- [39:47]
A
Well, here's what the airlines did and you should tell me. We should do a poll. You can like get your, get your viewers to answer. If you look, if you think about how the airlines did it, they forced it. You know, basically it's a Little bit like how, how did the, you know, how did we all get accustomed to pumping our own gas and not having, you know, service at a gas station is because we had no option. So what the airlines did is they weaned you of the option. I mean you, in the beginning they had the, you know, the system and the, and the, you know, and the, and the, whatever you call them, the machines. And then they'd have people helping you. And then all of a sudden the people disappeared and you had no choice if you wanted to fly but to play by the rules. We have not done that because there are still customers, a lot of them. You're a good example where they want to check in the old fashioned way. But that is a way, if anybody wants to tell me what they think, I might be happy here. That is a way you could do it, which we've talked about, which is you could force it. You could basically say the tech is great and it is, and you can use it for anything. The gym, the elevator, parking, you know, and it's hyper fast because it's all cloud based, fully integrated into all of our internal systems. And that's what we really, we're gonna, we're gonna force you to do. We have chosen not to. And I don't, you know, I don't think we will anytime soon. But it's migrating. I mean if you asked me three or four years ago, it was probably a third of what we have now. So it's probably tripled in the last few years. But that is, Listen, I think, I think the world, I stand by everything I said, you know, then I don't remember it all. But based on what you're saying, I think the theme then and now would be. And then there's a lot of nuance, indifference. I think the theme then and now would be the winner. I think in our industry, in a lot of industries, but certainly ours is the groups that figure out how to customize experiences at all price points. Obviously the higher ones will have more, lower, less at massive scale. So that you feel like the way we serve you up products, the way you buy the products, the way we bundle the products, the way you're on property experience is handled, the way your post day is handled, how you interact with us, us, you know, in between stays, that, that is all that, that feels like it is customized to, to all the facts and all the information we have about you and what you want and what makes you happy. And, and the reality is we've been doing that since whatever we've been doing that for as long as I've been here and before. But what's changed is the obvious thing is tech and cloud computing and the ability to have real speed AI, the ability to really take data and have artificial intelligence help us figure out what the data means and to feed into our systems so that you can do things digitally at scale and you can give team members in the palm of their hands information and enable them with a tool that can tell them exactly what to do to make you happy and to customize your experience when you're, when you're on property and before you get there, we know what you buy, what you like, what you don't like. We can package the things in a way that is going to be much more relevant to you. That was the future 11 years ago, that's the future now. The difference is computing power and AI, like everything else, allows us to accelerate that process exponentially. And so we're already, we have a very modern tech stack. We a decade ago decided we were going to get out of monolithic legacy systems and have repurposed. So we have a fully modern tech stack in the core infrastructure. And so we have massive agility with a modern tech stack to be able to customize in these ways. And I would say we're doing digital key and all that and offering add ons and things, but I would say it's tip of the iceberg in term, like a lot of businesses and being able to really harness information, artificial intelligence in ways that you will be able to feel and you know, that will result in a dramatically better experience. And so back 11 years ago it was like we were like in the stone Ages, you know, like digital key. Now we're saying like, listen, we're screwed. We have the ability to, you can message us, we have social media scraping. We had massive amount of structured, unstructured data that now is being managed by AI to tell us exactly what's wrong, what you need, what would make you happier, if you have a pain point and we can actually tell somebody through our systems to go to room 323 because the H Vac isn't working or the lights out or they need more pillows, you know, without anybody having to really, you know, go out of their way to call the front desk and scream at them or you know, like go downstairs to get things solved. So I, I, I, you know, to me it's all about mass customization. We serve 250, 300 million people a year and we have great teams and general managers and Listen, all. All of them are, you know, we're number one great place to work, if I didn't say it three times now. So they're all great. They're all great, but let me finish. But at that scale, that's not enough. You've got to have technology that backs it up so that almost, really all the time, the different things that you want to do to make it a better experience are happening. Because humans, we don't get it right all the time.
- [46:22]
B
No doubt. So one of the other things. And this is back to sort of AI and where we're going with AI, because I think there are a lot of. I think there are a lot of question marks in the world where there are a lot of kind of doomsdayers who are sort of like, AI is going to do away with everyone's job. And, and it's a zero sum game. And so everyone's going to be unemployed. They're not going to have anything else to do. And as I think about you sitting in, the hospitality scares me.
- [46:43]
A
Just because I like working.
- [46:45]
B
Yeah, it was same here. But one of the things that was brought up then was this small little company that was just emerging called Airbnb. And I think that at that time, everyone was like, if Airbnb wins, Hilton loses. And what's been so evident over the last 11 years is that as Airbnb has come in and provided a product to the. To the. To the. To the market that is a distinct product, you've been able to continue to grow at even a faster pace. Talk about that for a second. Because just looping it back to AI, I think everyone thinks that sort of this zero sum game, that if AI takes a job, it's not going to go anywhere else. And as the Airbnb example shows, a lot of people thought that that was going to be positive. Them, negative.
- [47:26]
A
You.
- [47:26]
B
And it's only really popular for.
- [47:28]
A
But I don't know what I. I don't know what I said 11 years ago. I guess I'll have to go watch it. But I know what I would have said if. If David had asked me, because I said it from the very beginning. Days of Airbnb. Airbnb is not a threat to our business. It is something different. It is about travel and it is about accommodations, but there are lots of forms of accommodation. It is different than what we do. What we do is we take products at different price points and with different sort of amenity packages, and we deliver those very consistently with service from people that are really Trained, we connect it together with technology, with loyalty, and we give people, hopefully all the time, a very consistent, high quality, friendly experience. Right? And what happens, they pay us a premium. I mean, we get the highest premiums in the business. On average, we get a 16% premium to our comp set because I think we do it better than most. What? Airbnb is a very good business, and to a sense, it's democratizing travel. It's a value proposition, a good one. I mean, my kids use it. I'm not sure I've ever used it, but I know the guys. I know Navarati said the guys, but it's very different. It's much more oriented towards leisure, extend more, extended stay, you know, higher occupancy, meaning numbers of people, the need to have, like, a real kitchen. And most importantly, it's a value prop. It's where, you know, where people are looking for, you know, a good value, and they're willing to not have the things that we offer because of the value prop. And so I've said to people for time and eternity, I don't think that, you know, that they are cannibalizing. And I think we've proven it over the last 10 or 15 years. I don't think they're cannibalizing our business. They're democratizing travel. They are, I would say, making the pool, making the pie bigger, because people that wouldn't have been traveling are now traveling. When I do, like, I bring all age groups, young people, I do focus groups. I love doing focus groups, groups. And you ask them the, you know, like, what do you think the difference is? And like, if you were doing, you know, you know, a business trip or whatever, or business end leisure, and you could stay in hotel and have all these things almost all the time, they want what we do. If they have the capacity, you know, to pay the premium to do it. And so it, you know, to me, I mean, I think it's a great business. The business of Airbnb has been around a long time. They have, you know, they have been able to, you know, create efficiencies in the use of, you know, apartments and rooms and all that in a way, you know, with technology that nobody else has. So I think it's a spectacular business. I just think they're in the business of providing a sort of different level, a different kind of accommodation than we are. And I don't worry. I never worried about it. I answered it a lot. Every shareholder on earth asked me every single time for years, by the way, Nobody asked me anymore. For the reason that you said, because we've proven that we can coexist and actually in a reasonably harmonious way in terms of the doomsday. Listen, in our business, we're fundamentally a business of people serving people. We're always going to need people. I mean, will there be more efficiencies as more people do digital key and other things, you know, technologically happen? Yes, but you know, when we grow, we're adding three hotels a day. I said we added 25,000 people in the last 12 months. We will, we will always need people in our kind of industry. So I'm not, you know, I'm not worried about that. You know, societally there are, listen, I don't know, have all the answers. There are, you know, or the, you know, intermediate to longer term, you know, there, you know, there are issues, by the way, there were issues when we went from an agrarian, agrarian to a manufacturing, manufacturing to services. They're all, they're all hard transitions and there are a lot smarter people on this topic than me. But we, we do tend to make them, you know, over a period of time. I think, and this is, you know, an opinion, I think, you know, the risk here is of course this is moving a lot faster then those things move because AI, which has the ability to displace a big chunk of our white collar workforce which in a unique way is moving at the speed of light, almost literally. My own view is it is and I think the development of the technology will move faster than the people will move. I think by the very nature of it, the tech, the bots, the agents can replicate a trillion times over. And humans are humans, we still have limitations to how quickly we adapt and change. And so while the tech is going to move at light speed, I do think there'll be, I do think it'll take more time than some think for the people side of it to trans. I mean you run a big company, I run a big company. We're doing all sorts of things with AI, but you know, you're talking about massive people. It's not like you just stick an agent on top of anything. It's, it's total transformation process change. It does take really years to, you know, to sort of, you know, particularly with bigger, even mid sized companies, to embed that, you know, and make those kinds of changes and get their organizations and cultures to accept it. And so yeah, it's gonna, there's gonna be a lot of, a lot of change. There's gonna be displacement. We need to work on it. We need to think about training and vocational and educational programs to support it. But I think we'll have some time to do it because I think it, you know, the people side of it will take a little longer than I.
- [53:43]
B
Think some think going from the, if you will, the market segment that Airbnb is focused on. As you look at Hilton and I mean you're up and down the spectrum as it relates to what I would call entry level hospitality middle and then the high end luxury wherever.
- [54:00]
A
You're everywhere and you, it's an important note. The whole, the reason we're everywhere, I'm sorry I'm being loquacious, but the reason we're everywhere is an important, you know, comment point to underscore, which is the whole success that we've had starts from my philosophical belief from the day I got here that we need to build a network effect. And that is we need to be able to serve any customer for any need they have anywhere in the world they want to be. And if we do it with good product, good service, good technology, loyalty that's relevant, they will consolidate more and more spend with us because we have dots on the map where they want to be and we have the different price points and the different functionality that they need within our products. And I could prove to you scientifically, as we've grown and as we've added these different segments, I mean, we had eight brands when I got here, we have 25 brands today, right? And some of you say, wow, 25 brands. We believe they all have swim lanes, they have different purposes, different price point. But that network effect, if you look at the whole, okay, as we've tripled the size of the company, we have moved our market share, meaning rate and occupancy, performance advantage versus our competitors up every step of the way every single year as we built that network effect. And so the adding of brands is very purposeful at all segments. You know, luxury to create halo spark, premium economy as a feeder system, right? We're getting, you're trying to get people early in their travel lives, that's all they can afford. And then they grow up and they can, you know, afford more. And they stay at a Hampton and then a Garden Inn and then a Doubletree and a Hilton. You know, ultimately they're at the Waldorf Astoria in New York. And so, you know, that's all about customer acquisition and then retention with some of the brands.
- [56:05]
B
And as you first of all, just a real quick one on those 25 distinct brands, does each One of them have a, if you will, an owner of the brand. Is there someone who runs each one of those or is there anyone who has a multiple brands underneath Everybody?
- [56:20]
A
Everybody? Well, we have people that run categories, but every brand has a CEO.
- [56:26]
B
Okay. Have you ever thought about getting into the cruise business, Chris? I watched Disney's earnings and like one of the bright spots on Disney was their cruise business. And I sort of said to myself, why, why wouldn't we help them go into the cruise business?
- [56:40]
A
Yeah, I'll be. Not directly, no. And the reason, you know, people like to cruise, it's a, it's a relatively small industry. The last number I saw, and I may be a couple years out of date, the entire cruise industry is like 30 million people a year. I mean we're 250, 300 million our company alone. So people that love the cruise, love the cruise. By the way, I've done some Disney with my kids and they love with my father, he took his grandchildren and they loved it. And so it's a great experience. It's a relatively small business. The other thing, and I'll get to the. There is a way that we're thinking about it. It's a very capital intensive business. The value, you know, our company, we, you know, we perform well. We traded at a great multiple. We're a capital a business. I mean those that don't know our. But we don't own anything. Right. You know, we do everything through either managing or franchising and you know, we used to own a lot of real estate. We used to own a big timeshare business. I broke the company, we went public 11 years ago in 2000, 13, 11, 12. And then in 16 we broke the company into three pieces. The remaining piece that I run is totally capitalite. So building ships, expensive, you know, like we like capitalite. But we have talked to our, you know, like done the work with our customers to say, is that something you want from us? Because we're doing other things. We're, you know, we're getting ready to launch in the furnished apartment space which I've talked about publicly. We're looking at some other adjacencies when we talk to our customers in terms of like core, like cruising, you know, large scale, large format cruising. I think they're fine getting it where they get it. I don't think they feel like they need it from us. What we are thinking about is more smaller format, you know, like as a. We have an adventures category that we started a couple of years ago, auto camp. You Know, glamping was our first foray. You will likely see us do something in like safaris, riverboat, you know, maybe, you know, high end luxury, you know, smaller format on the water. Our customers tell us those are things that aspirational ways that they might think about you, you know, translating their loyalty through the collection of honors points and that they would view as, as very valuable. So we are looking at, you know, cruising to an extent, but really working with third party partners. We don't, we don't want to be building boats, ships, safari camps. Yeah, we want to work with others that do those things.
- [59:25]
B
So my hour has evaporated as I assumed it was going to. I could keep talking to you for several more and continue to learn from you. I guess the final question I'd have now before we have a follow up to this at some point, Chris, is I believe that Bill Marriott stepped down as CEO of Marriott when he was 80 years old. Are you sticking around Hilton until you're 80?
- [59:45]
A
I don't think anybody needs me to be here when I'm 80 years old. I'm 63. I still have a lot of energy. I think I'm young, I don't know. I guess I'm not technically as young as I used to be. And as I said at the beginning of the time together, I love what I do. I mean I have a lot of energy, a lot of passion. You know, I'm not slowing down. So I want to do this for a lot longer. You know, 80. I don't know that that pro. I would say, I would say I better find somebody younger, faster, smarter before I turn 80. And that would be my intention. But I'm not going anywhere anytime soon, bro.
- [60:20]
B
I've got one final story, which I was going to say at the top of the, of the webcast, but it's a, it's, it's fitting to end with which is that in the summer of 1986, ooh, my summer job was working at car park for Phil Carr.
- [60:38]
A
I love Phil. I keep up with.
- [60:40]
B
The reason I remember this and the reason I bring this up is the following. Yesterday in Atlanta, here in Austin, what.
- [60:46]
A
Building were you at?
- [60:48]
B
I. Well, I was in your. In the same building that you were in.
- [60:51]
A
1700 17, right next to the White House.
- [60:54]
B
And so the reason I remember this story, Chris, is the following. Yesterday morning I woke up here in Austin. I went to the gym, I worked out, I had to run to get out the door. And as I'm heading off to this meeting was a very Human. Morning. Morning. And I get to the meeting, and I'm just dripping sweat. And I like, I'm apologizing profusely to everyone for coming in, still sweating. My first day at car park. My first day, my dad drives me to the Walker NOP offices on 15th and Elle in D.C. and I had to walk. And I was late. And I was late for my first day of work at car. And I go flying into the lobby, and I'm sitting in the lobby in the summer of 1986, June, whatever, 10th. And I'm sitting there, and who walks through but this young whippersnapper UVA graduate Chris Nassetta, running off to some meeting. And someone says to me, oh, that's Chris Edda. He's one of the great new guys that's running around here. I'm super. Go ahead. I can't believe that. So literally, that's the first time Chris Nassetta ever came onto Willie Walker's radar screen. As I was sweating this, you never gone. I got Chris on tomorrow, and I just did the exact Same thing at 58 years old @ Austin, Texas. So I guess I haven't really grown up that.
- [61:58]
A
You say you worked with Wiley. Oh, yeah, yeah. He was famous. I love that guy. I love that guy. He worked. He worked. He ran that joint.
- [62:08]
B
Chris, it's great to see you. Thank you for your time. I love the time. Again soon. Have a great weekend, and thank you everyone for joining us today.
- [62:16]
A
Yep. Thanks, Willie. Have a great Thanksgiving, everybody.
- [62:19]
B
Thanks. You too, bud.
- [62:20]
A
All right, take care.
- [62:21]
B
See ya. It.