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Fastcoworks Created for and commissioned by Hilton & Visa
Fastcoworks Created for and commissioned by Hilton & Visa

long read

Hotel Revolution

The Hotel Revolution

How Hilton stays ahead in a disruptive world to remain a true innovator in
the hospitality industry

The Hotel Revolution

Did you hear the story of the banker who grew so tired of waiting for a room at a Texas hotel that he simply decided to buy the place?

That’s not a joke. It’s how Conrad Hilton started his hotel business during the remarkably inventive 40-year period of American history (1880–1920) that included world-changing innovations such as Thomas Edison pioneering the distribution of electric power to cities and Henry Ford devising a radical system to mass-produce cars. But Hilton’s contribution to shaping the modern world wasn’t an invention. It was, as he called it, a vision: "To fill the earth with the light and warmth of hospitality."

Hilton’s 1919 version of a beta test—the Mobley in Cisco, Texas; the very hotel that kept him waiting—was guided by his vision of upending widely accepted practices so that travelers had a consistent, welcoming environment in which to rest and relax. As a proving ground for Conrad Hilton’s breakthrough ideas, the Mobley was an unequivocal success. And by 1923, Hilton was running five hotels in Texas.

Today the company that bears his name has grown to oversee 13 brands, which include 4,660 hotels and timeshare properties representing a jaw-dropping 765,000 rooms in 102 countries and territories. And Hilton is still driven by the very modern belief that dawned on its founder during that frustrating wait in Cisco: There must be a better way.

Brave in the new world


Living in an era or tech-driven disruption, there are those who look at today’s hotel industry and see areas ripe for improvement. Hilton couldn’t agree more. The rapid technological advancements emerging or coming of age every day—mobile, cloud computing, virtual reality, and personalization, to name a few—are affecting every traditional business, often in ways that cause deer-in-the-headlights discomfort. But in this landscape, Hilton sees only opportunities. If you think that’s overly optimistic, consider that through the Great Depression, World War II, and the Great Recession of 2007–09, the company didn’t merely survive—it flourished. While that seems to confound the trends affecting most other sectors, keep in mind that the biggest piece of tech to impact hospitality in the 20th century wasn’t computers or the Internet—it was the jet plane. And the opportunity for most people to affordably fly around the world for business or pleasure is still a fairly young development.

Geraldine Calpin Chief Marketing Officer, Hilton Worldwide

Which makes Hilton perfectly positioned to experiment. "We have the resources and we’re not afraid to use them," says Geraldine Calpin, Hilton’s chief marketing officer. "We also have a healthy degree of impatience. That helps." So when Hilton execs see technological advances bubbling up or feel the winds of paradigm shifts blowing, they grow...excited.

Mobile? "It’s a great convenience that improves what we do," says Jim Holthouser, executive vice president of global brands.
Smart sensors on doors and thermostats? "Makes our guests’ lives easier," says Calpin.
Virtual reality? "A way to inspire curiosity," says Mark Weinstein, Hilton’s senior vice president and global head of loyalty and partnerships.

What Hilton executives think about is not a strategy for warding off the innovations they didn’t create, but rather how to put these advancements to work for their customers in thoughtful and valuable ways. In fact, just about every major digital achievement of the past 10 years is now available to Hilton guests—and most of them can be accessed through its award-winning Hilton HHonors app. With a few smartphone swipes, a guest can book the guaranteed best rates, check in, choose her room, and even request amenities to be in her room upon arrival. These aren’t perks only available at select locations but rather to everyone who stays at a Hilton anywhere around the world.

Calpin says the key to Hilton’s success has been keeping the guest at the heart of every decision. "Innovation is in our DNA. It’s a cultural belief in our company, a belief driven by curiosity," she explains. "But you can’t go after everything. You must use filters." For Hilton, the first filter is what will benefit the greatest number of guests. "Check-in affects 100% of our guests," says Calpin, "which made implementing digital check-in an easy decision; it erased a friction point." Hilton didn’t stop there: It knew many of its guests were already selecting their seat on an airplane, so, Calpin says, "We asked, ‘Why can’t they have that same level of personalization at our hotels?’ "

That one question led Hilton to embark on a massive project: creating digital floor plans for more than 4,500 hotels. "You look at which ideas will drive value for the customer because those are the ideas that will be adopted," Calpin says. "To this day, we’re still the only hotelier that lets guests choose their exact room from a digital floor plan. More than 13 million rooms have been selected to date. Adoption is off the charts."

That same sense of curiosity led Hilton to turn guests’ smartphones into a "remote control" throughout their stay. The Hilton HHonors app allows members to skip the front-desk check-in and head straight to their room, and then to seamlessly use the smartphone app as their door key.

Perfecting Innovation


How does Hilton evaluate new ideas? The process starts with practical questions. Which inconveniences can be eased or eliminated? Can the company unlock an opportunity to surprise and delight? And which ideas work for business travelers and vacationing families? To find out, Hilton places many small bets, testing ideas at its hotels around the world. Many of the best concepts are brought to the hotel right next door to its corporate headquarters in McLean, Virginia—today’s version of the Mobley beta hotel.

From the outside, the nine-story Hilton McLean Tyson’s Corner, not far from downtown Washington, D.C., may look like a hotel you’ve stayed in before: modern, clean, conveniently located. But this Hilton property is far from ordinary. On any given day, up to 30 new ideas built with partners like IBM, Intel, LG, and Amazon are being test-driven by real guests in real time—a clear-eyed look into the ever-nearing future of hospitality.

"This is where we’re able to make bets on the future, which is critical to the spirit of entrepreneurialism," says Mark Weinstein. "If we’re not taking some risks, we’re probably not innovating hard enough."

Jim Holthouser EVP of Global Brands, Hilton Worldwide

The McLean hotel is where Hilton goes to learn—and often the lessons are surprising. One of the most interesting case studies took place in the lobby with the introduction of the Amazon Locker. The idea was to provide an easy location for guests to receive packages, but in the hotel industry, every square foot of unoptimized space is considered a wasted resource. Jim Holthouser, EVP of global brands, admits he was skeptical of how much the lockers would be used. "I’ve been in this business a long time," says Holthouser, who started his career with Hilton in 1979, "but some things still surprise me." To his amazement and delight, customers were soon sending 150 Amazon shipments to themselves a week. The boxes contained everything from items that guests had forgotten to pack to favorite treats that were easier to order online than search for in an unfamiliar town.

"The guests went nuts for it. The hotel staff didn’t have to process the packages. It just worked on so many levels," says Holthouser. "Now we’re looking at rolling it out to more brands and more hotels."

Want a sneak peek at the other advancements awaiting you on a future Hilton stay? The company is currently testing noise-canceling technology to eliminate the unwanted sounds that seep in from hallways as well as teleconferencing via the room’s TV so you won’t miss reading your kids a bedtime story while traveling for work. These innovations, as well as other singular features, like the ability to make special requests of the front desk and control the TV with your phone, are all accessible through membership in the Hilton HHonors program. Members are also eligible for exclusive opportunities like dinner before a concert sound check with the Barenaked Ladies or private drumming lessons with the legendary Mick Fleetwood of Fleetwood Mac. The innovations are consistent for a company that has a rich history of being the first to try bold ideas (see sidebar at right).

Speed Matters


Testing fast and deciding faster is a common theme for Hilton—which makes perfect sense in the hospitality business. After all, when a guest asks for a power adapter, she wants it now. The same thinking applies to every service that improves the quality of a client’s stay and experience.

"We started digital check-in on one platform for two of our 13 brands," says Calpin. "Within four weeks of launch, we had so much exceptional customer feedback that we changed our minds: We decided it needed to be available for every brand, on every platform, for every hotel." In a remarkable feat of scalability, that implementation was complete within six months.

Hilton is able to execute so aggressively because it nurtures a corporate culture that marries adaptability with urgency. As part of Hilton’s annual leadership meeting, the company holds a session for senior executives on innovation with the agenda of assessing the present, dreaming about the future, and asking "what if." Says Holthouser: "There’s never a shortage of ideas to improve what we do. You just test and perfect until you get it right."

The Benefits of Sharing


It's one thing to embrace a VR headset or a new app, but what about a paradigm-bending idea—like, say, the sharing economy—that seems to have grabbed the hospitality industry by the lapels and given it a hard shake? In tourist-destination cities like Paris, New York, and San Francisco, sharing-economy lodgings are proving popular, especially among young travelers seeking to meet new people and experience places like a local.

Hilton takes the long view, seeing the rise of sharing-economy options less as a threat and more as a feeder. If new travelers grow to love exploring new places, that’s positive for the entire industry. And how does Hilton plan to lure those explorers to stay at one of its hotels? By continuing to hone the offering that’s always distinguished it from the competition: superior service.

"The sharing economy offers a nontraditional form of lodging and it’s not going away," says Holthouser. "But that’s the lodging business. We’re in the hospitality business. We build brick-and-mortar hotels and wrap them in service. Lodging and hospitality can coexist in the market."

In 2014, Hilton launched two new brands to appeal to the widening tastes of travelers: Curio–A Collection by Hilton, boutique hotels for the curious luxury traveler that are now in 15 states as well as Argentina, Jamaica, and Germany. The second is a lifestyle brand called Canopy by Hilton that offers local flavor, with no two hotels exactly alike: Stay in Chicago and you’ll be greeted with Garrett’s Popcorn; in Denver it’s treats from the Rocky Mountain Chocolate Factory.

In March of this year, Hilton created another tier of options when it broke ground in McDonough, Georgia, for the first Tru by Hilton hotel. The Tru brand is designed to fill a void: budget-conscious hotels that don’t feel like compromises. "We wanted to present customers with a cool option that has big windows, big TVs, and appealing social spaces, even if you’re not paying luxury prices," says Holthouser. More than 130 Tru by Hilton properties are in various stages of development.

Getting Personal


Like everything Hilton implements, these new hotel brands reflect a commitment to customer loyalty. Not in the traditional sense of building customer loyalty to Hilton—but in reflecting the company’s loyalty to its customers.

Mark Weinstein SVP and Global Head of Loyalty and Partnerships, Hilton Worldwide

"Our customers are smart," says SVP Mark Weinstein. "They know that thanks to digital data analytics, we know more about them and their preferences than ever before. But that just means that the game has been upped in terms of their expectations," he says. "They’re challenging us to use what we know about them and offer it back to them in the form of service."

Geraldine Calpin, Hilton’s CMO, knows what the future of hospitality looks like—not only as a hotel executive but as a frequent traveler and guest. "You know what would make me happy?" she dreams aloud. "When the hotel I stay at—even if it’s my first time staying with the brand—knows that I would really love a diet soda waiting for me when I walk into my room. And that I like the temperature set at 67 degrees. If that happened for me, it would be a ‘wow’ moment."

That level of personalization—a phenomenon we’ve seen realized in just about every technology that touches our lives—is not only increasingly possible, it’s become an expectation. According to a "Hotels 2020" report created by Amadeus and Fast Future, 92% of the 610 hotel guests surveyed expected their stay to be personalized based on a set of choices they’d made at the time of booking or prior to arrival. And 96% expected hotels to monitor social media and build "listening skills" to understand their needs.

If the bar is high, it’s no higher than the standard Conrad Hilton set for his new business venture back in 1919. Shortly after taking control of the Mobley, he decided to sell frequently needed items like newspapers and shaving kits in the lobby. Of course, these practices are common today, but in 1919 they were unheard of—personalized touches born out of Hilton’s insistence that his hotel employees observe the customers, anticipate their needs, and fulfill them.

"Conrad Hilton was a true visionary," says Weinstein. "He really wanted to understand each of his guests and make their stay as satisfying as possible." If Conrad Hilton were around today? He’d likely be amazed at all the different tools that Hilton has implemented to bring his vision to life.


This article was created and commissioned by Hilton and Visa, and the views expressed are their own.

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