Hilton's Danny Hughes talks...
- faster-than-expected business travel growth
- maintaining travel buyer contacts
- personalized hotel experiences
Hilton Hotels Corp.'s president of the Americas Danny Hughes spoke
with BTN's senior editor Donna M. Airoldi in mid-August about trends including how
the hotel company has seen business travel return faster than expected, an
increase in personalized hotel experiences and maintaining travel buyer
contacts during the pandemic. Edited highlights follow.
BTN: I heard that Hilton has
seen business travel return faster than expected. When did you first start seeing that, and to what
extent has it been faster than expected?
Danny Hughes: It was really March, once the vaccines
started to get rolled out, we started to see more blue blazers coming through the
front doors of hotels and in the airports. It picked up steam over the summer,
and it's continued to accelerate. I'm defining the business traveler into two
segments: the individual business traveler and the group segment. They are still
slightly different, meaning that group activity is now—certainly not at pre-pandemic
levels—but it's accelerating very nicely. Individual business travelers are starting
to get out and about. But I think we will truly see this explode when offices
open. Individual business travel will really hit the gas when you have the
offices open, which we are still confident that after Labor Day that will be
BTN: What percentage is your business
travel back compared with 2019 levels?
Hughes: We're still not even at 20
percent of 2019 levels, pre-pandemic levels. That has been more than
compensated for by leisure travel. But if you look at occupancy in our hotels, a
year ago, business travel was less than 5 percent. Now certainly it's about 20
percent-ish and continuing to grow.
BTN: Has that momentum slowed or
changed in the past few weeks with the spread of the delta variant, increased
cases and some destinations reintroducing indoor masking requirements?
Hughes: Not significantly at the moment.
What we've seen is a little bit more caution in some group attendance. So
rather than any outright cancellations or rush to reschedule, we've seen a bit more
cautiousness and a bit weaker attendance. But we monitor it all the time. Again,
we are very confident on what we are seeing on the group end and the business
travelers starting to pick up. Earlier we were talking about New York, I think we've
got almost all inventory open apart from the New York Hilton in Midtown on Sixth
Avenue, which we are working to reopen. But we are seeing encouraging trends
there. We monitor it carefully, but certainly nothing as devastating as we saw in
the initial phase of the pandemic.
People need to interact.
Business needs to get done. There is so much opportunity now, people feeling good
about the opportunities, a good amount of investment coming from the federal
government that is going to create business travel needs. People are in the
planning stages now and reestablishing relationships. One thing the pandemic
has taught us, as good as modern technology is, you simply cannot replace
genuine, authentic and real face-to-face human interaction. When I talk to business
clients, when they do travel and do see their clients, it's validating their
trip. That is an important factor. When you talk to business travelers venturing
out for the first time, unanimously they tell me, 'Oh my god, it's so good we
did this. It's so valuable. We were able to rebuild that relationship. We were
able to get that signature we needed.' It's validating the desire and the need
BTN: Any challenges about the
faster-than-expected return, and how has Hilton mitigated those?
Hughes: The availability of labor
is the single biggest challenge for our industry right now. You have the
situation where hotels, as an industry, we have tens if not hundreds of
thousands of good paying, great benefit jobs available. Our single biggest challenge
is recruiting enough people. There are a whole bunch of reasons for this. But again,
I feel very confident as we come to the end of the summer, there will be some
form of normality with the schools system, which your working mothers and
fathers have not been able to rely on the last year or so at least. There is
going to be a greater sense of comfort and security that hotels are safe places
to work, again, because of all the precautions we've taken and the growing level
of vaccinations across the industry. Frankly, there has been government assistance
in the form of unemployment insurance that was totally understandable and
required during the heights of the pandemic, where now we're in that transition
stage where we have enough good paying jobs for everybody, and we're kind of
rolling through that. It's a challenge now, but I think we are all working hard
to make sure we're providing a very safe and attractive working environment, and
more and more people will hopefully want to jump back into the workplace.
BTN: Which Hilton brands are
seeing more of a return to business travel?
Hughes: It's incredibly strong
across all the brand segments, again led by leisure. … What differentiates it a
little bit is destinations. The slowest part of the recovery has been urban
city centers. The New Yorks, the San Franciscos, the Chicagos of this world,
that need a strong and solid convention business to support the whole industry.
You can look at contrasting our resorts in Florida, they are booming compared to
our hotels in New York that are in the early stages of recovery. Rather than
brands being differentiated or performance that has been differentiated, it's
been more geographical.
But I will tell you that the level of group inquiries and
the conversion from those inquiries from a meetings and events point of view is
incredibly encouraging. When we look at levels going into 2022, we are seeing
that the rates that people are paying are at or greater than pre-pandemic
levels. Which is a very encouraging sign. The demand is huge because people are
playing catchup. Effectively, by the time we get to the fourth quarter, we will
have had six quarters where people haven't met in any great numbers. While the volume
is still a little off of 2019 levels, it's building. The demand is there, and
rate is very positive.
BTN: How did Hilton keep in
touch with corporate travel managers and meetings clients during the travel
drought, and how has that influenced current relationships?
Hughes: What's most important is
that we maintained relationships. When business travel and group bookings
slowed dramatically at the very beginning of the pandemic, we chose to maintain
the vast majority of our sales force and client relations people employed on
reduced hours and reduced salaries. We were able to maintain over 90 percent of
the direct contacts without having to reallocate accounts. And we talked about
all the initial emergency measures we took, around Hilton Clean Stay and
changing the cleaning protocols and products we used to create a safe working environment
for whoever was traveling. We spoke about enhancements we were making around
technology to allow people to expand hybrid events and investments we made. … How
we were reinventing food and beverage to make sure we were reinventing what
room service looked like. How we reinvented the concept of the buffets to
individually prepared and packaged food to completely eliminate any kind of
open buffet service. And perhaps most importantly, asking them and listening to
them: about what they were thinking, what travel managers were doing, what
their corporate budgets were when they were ready to travel and what they
needed to have delivered when they were ready to travel.
BTN: What is Hilton seeing so
far in the requests-for-proposals process for corporate hotel programs?
Hughes: By maintaining our
relationship with all our corporate clients, I will tell you it is much along
with everything else, more personalized and flexible and not one solution for
everything. The same is true in the RFP season. When we are looking at
destinations that have huge demand drivers, there's going to be rate pressure.
But as other destinations that are going to take a little longer to recover,
they'll be able to be more flexible. We went through in the initial stages
extending the rates and allowing clients—without going through an RFP negotiation—to
keep everything they had in place. Now we are doing a very customized RFP
process, client by client, based on their geographical needs.
BTN: How are companies changing
their hotel programs?
Hughes: There's been a continuing
trend to dynamic rather than fixed rates per destination. I think that trend
has continued. It's fairer for both clients and suppliers. There's a greater
awareness around duty of care for clients. The pandemic has certainly raised
the bar. Providing a clean and safe place to stay is more important than ever.
You are seeing corporations being more selective around having travel partners
that have reacted to that. … We decided right away to partner with an industry
expert which was the Mayo Clinic and to reinvent all our cleaning standards. …
We are cleaning to a level that is almost a healthcare-provider standard. I think
travel managers are waiting to partner with companies that have done that, be
it hotel suppliers or car rental suppliers or any others.
BTN: What changes are hotels making?
Hughes: Things you would expect.
A there's a bit of an acceleration of some trends that were happening anyway.
One was being able to personalize the stay to a far greater degree than
choosing a king bed or two queen beds. People could choose which rooms they
wanted to stay in, where those rooms would be located—closer or not to the elevator.
It also accelerated the ease of contactless hospitality. We were rolling out the
concept of digital key, where you could choose the actual room you wanted, you
were able to go through the check-in process on your mobile device so you didn't
have to go through the front desk and have your credit card swiped and were able
to press a button and your hand-held device became the key to opening the room.
Those were trends accelerated by this pandemic. Same thing for room service. There
is such good quality of food delivery now and every restaurant in the country
that survived has had to adapt to deliver good quality food in good quality sustainable
packaging that is environmentally friendly that keeps the food hot or keeps it cold
and we've evolved ourselves to that as well.
BTN: Is Hilton introducing any new
products for the business travel segment?
Hughes: We're finding ways to make
it much more flexible for these clients. One of the initiatives we've taken
recently is for our higher-tiered Honors members. One perk was complimentary breakfast.
A lot of our clients told us they don’t want breakfast. We moved to an F&B
credit that allows people to get breakfast if they want it. But if not, they
can get a drink in the bar, or can buy something to grab and go. We also
started to respond to some client needs around our capabilities around the
booking process, and one example is confirmable connected rooms. Hotels have always
had a percentage of inventory that connect to other rooms. We're the first hotel
company where you can not only request a connecting room but also confirm it and
get it guaranteed. [That's valuable for] the SME market, where the leisure and business
travel crosses over a bit more. I think that trend will continue, when people see
the value to be together, being able to merge business travel trips and bring
the family and extend it a day. It's important you can confirm connected rooms because
your wife or husband and children will join you. And we are looking at our overall
capability to make sure we can personalize your stay to a far higher degree
than ever before.
BTN: Anything else?
Hughes: The only other thing I
can say that is important to business travel, is that despite the slowdown in
travel growth the last 18 months, we've continued to expand our footprint. If you're
a business traveler and choosing a brand, you want that brand to be where you
need to be. We've continued to see growth and expansion of some of our existing
brands. In particular, we've seen some opportunities to convert some independent
hotels and hotels associated with smaller brands to our portfolio. I think
that's important. … It shows there is still great demand and belief from the investment
community. This is a great industry. There will always be a demand for high-quality
branded products, and we're very happy with our continued net unit growth.