Managing Asia

Hilton Worldwide CEO navigates sharing economy and millennial tastes

The hospitality sector is being shaken up

The tourism and leisure business can get volatile.

Recently, it's been susceptible to soft global conditions, terrorism shocks and sharing-economy disruption. But while businesses have little control over external shocks, they do have the ability to adapt to their competitors, both new and old.

"It would be naive to say that [Airbnb] is not a competitor at some level, but when you really look at it, and we've spent quite a bit of time looking at it, [Airbnb] is serving a different customer need," Christopher Nassetta, president and chief executive of Hilton Worldwide, told CNBC's "Managing Asia".

Christopher Nassetta, CEO of Hilton Worldwide, attends the initial price offering of Hilton Worldwide on the floor of the New York Stock Exchange shortly after the opening bell.
Andrew Burton | Getty Images

A report from EY on the hospitality industry said that even though Airbnb has made inroads in the sector, global hotel brands retain their competitive edge through "intentionally standardized" offerings. Segmented products and loyalty programs were also factors helping global brands continue attracting business travelers, the report stated.

"I think we are coexisting today," Nassetta said in reference to Airbnb, "I think we'll continue to exist."

Under Nassetta's leadership, Hilton Worldwide has made significant progress in its international expansion. The hotel brand now has a presence in 104 countries around the world, but its competitors were also stepping up their game.

Just last month, Marriott International made the news for its $13 billion acquisition of Starwood Hotels & Resorts Worldwide. The deal resulted in Marriott becoming the largest player in the hotel business, with a total of 1.1 million rooms in its stable.

Yet, Nassetta was unfazed by the Hilton's rivals' decision to join forces. "I don't feel threatened at all," Nassetta said about the merger, "Size does matter but we're certainly big enough, and I think size and quality in combination are what really will drive success."

Instead, Nassetta said that he believed organic growth rather than acquisitions was the right path for the Hilton brand. "There are a few opportunities that we have to launch incremental brands … and are very confident in our ability to execute our strategy," he said.

Entrance of the Hilton Hotel opposite the Dalian International Conference Center.
Thierry Falise | LightRocket | Getty Images

China remained a focal point for the business. Hilton has grown its presence in the region by 20 times in the past nine years. However, the mainland's economic slowdown hasn't necessarily hurt the the legacy hotel chain much. Same store growth was between 5 to 6 percent, Nassetta pointed out.

"The Chinese are travelling more and more both inside of China and increasingly outbound," Nassetta said, adding that the strongest growth comes from the mid-market segment.

Despite having a 97-year-old legacy, the Hilton was aiming to be savvy to the needs of millennials too. The company recently launched its Tru by Hilton chain to appeal to a broad range of customers at a more affordable price point. Urban micro hotels are another avenue the company was keen to explore.

"I think millennials more than anything are looking for … base functionality that meets their needs and modern design," Nassetta said.

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