Hilton to Open 100 Hotels in China by 2014 Despite Slowdown: CEO
Despite a global economic slowdown and uncertainty going into 2012, Hilton Worldwide is expanding as it expects healthy growth next year. The hotel giant, which was bought over by U.S. private equity firm Blackstone in 2007, has launched nearly 1,000 hotels since 2008. CNBC's Christine Tan spoke to CEO Christopher J. Nassetta to find out how he is opening doors for the 92-year-old company.
Q: Where are you allocating most of your resource investments? Where are you giving most priority?
Asia Pacific, which is why I'm here. This is probably number one. But we're investing in resources in Europe, particularly Eastern Europe, in the Middle East, and in Latin America. Though I would say, disproportionately in maybe the effort in Asia Pacific, because (of) the opportunity given the population base and the lack of hotel rooms in the major markets here.
Q: You are on an expansion spree over in China, targeting 100 hotels by 2014, four times the properties you manage today. You don't think you're too aggressive?
I don't think it's too aggressive at all. When I got here we had 5 hotels in China. Today, I think as of yesterday we have 23 opened. We have about another 90 in the pipeline, deals that are already done so I think getting to 100 hotels by 2014 is very reasonable with what's already there and under construction.
Q: You are expanding in China at a time when there's so much talk of a slowdown in the country. Do you have a contingency plan in place if you see China heading into a sharp downturn?
Well I don't know about a sharp downturn, but I think there's clearly a desire on the Chinese government's part to slow growth down a little bit to make sure that there's no real estate bubble. So I think as a result of that you will inevitably see some slowdown in the development of new hotels. So I think for us that could impact our growth. Fortunately, we have as I described 23 hotels and 90 in the pipeline. Many of those are under construction. So I don't think it's going to affect our ability to have 100 hotels by 2014.
It may mean we're going to have fewer (new hotels) in the next few years than we've added in the last few years but I think the fundamental underpinning of the supply-demand dynamic in China is such that we're going to have a very big business, and we're going to have very significant growth there for decades and decades to come.
Q: India is a key growth market for you but development is more difficult given the lack of infrastructure. Not to mention bureaucracy, which can make things a little bit more difficult to operate over in India. How do you deal with these obstacles when it comes to expanding in that country?
No question, India is critical for our growth. I think critical for everybody in the industry. There is a massive opportunity in terms of population base, middle class; demand is huge against very little existing supply. But it is more difficult and everything does move a little bit slower vis-à-vis a market like China.
We've had good success. We had zero hotels when I got to the company in India. None. With 1.3 billion people. We have seven today. We have another 32 roughly in our pipeline, so we're growing at a very rapid pace. We'll probably have triple what we have today in two years: 20 or 30 hotels. But (it's) a far cry from what we have in other destinations around the world.
Q: Do you think that will change?
I think it'll change over time. But I don't think it's going to speed up materially in the short term.
This is an excerpt taken from CNBC’s longest-running feature program Managing Asia. Catch the show with anchor Christine Tan on 9 December 1830 (SIN/HK) and repeats over the weekend on CNBC.