Blackstone investment group purchased Hilton Worldwide at the height of the real estate bubble in 2007 for $26.7 billion and took the lodging company private. This week Blackstone made Hilton a publicly traded entity by selling 117.6 million shares around $20 each. Insiders report investor demand exceeded supply.
Hilton raised $2.34 billion on Wednesday in the stock market. Hilton started trading as “HLT” Thursday on the New York Stock Exchange.
Blackstone has invested about $6.4 billion in Hilton and still holding a 76.2% stake in the company, their investment is now worth about $15 billion. Blackstone is on course to gain 2.3 times its investment, making the Hilton buyout in 2007 one of the most successful private equity investments of its size.
Other Blackstone owned hotel chains are Extended Stay America which raised $565 million in a November IPO. La Quinta Inn is also expected to go public in 2014.
What does this mean for hotel guests?
Market Watch of the Wall Street Journal published a piece yesterday, What Hilton’s IPO means for hotel guests – Lobbies and loyalty programs both may get revamped. The article shares analysts views of what the IPO revenue will mean at the hotel level. Basically the piece suggests there may be funding to renovate hotel lobbies and some room updates like carpeting and wallpaper.
Hotel chains require their properties to make property improvements, but waivers are common, usually due to the difficulty of acquiring property financing in a tight lending market. Hilton going public as a company supposedly opens up more sources of funding for property improvements.
Phoenix Marketing International is a market research firm with interesting data on loyalty members. Their findings suggest 73% of loyalty members who redeem a free night award also purchase at least one additional room night. For each room redemption the loyalty member purchases 2.1 nights.
Hilton might boost its current rewards structure or improve or add partnerships with airlines, railways, rental cars and more. But, cautions Meliker [managing director and head of real estate and lodging research at boutique investment bank MLV and Company], these rewards program improvements, if they happen, are likely to be things that don’t cost a lot of money.
After 2013 changes to Hilton HHonors, I don’t look forward to more program enhancements, The addition of Points and Money awards was a good change in a world of loyalty program hurt for HHonors members.
Hopefully, a move to attract new members will mean better loyalty promotions in 2014, but if avoiding changes that cost money, then improved HHonors bonus offers may not be the focal point in the future.
HHonors already has by far the most airline partnerships of any hotel loyalty program, so there seems little room for improvement on that front.
What else can HHonors offer members to improve the program?
According to most hotel guest surveys over the past decade that would seem to be free internet and breakfast.
Sources: Reuters Hilton Worldwide raises over $2.3 billion in biggest-ever hotel IPO (12/11/13)
Wall Street Journal Market Watch What Hilton’s IPO means for hotel guests, Lobbies and loyalty programs both may get revamped (12/12/13).