Transcript: Forward Path: Travel & Tourism | Instant News



SIR. NASSETTA: Michael, nice to be with you. Thank you for helping me. DUFFY: This is the right time to visit. Your company was one hundred years old last year. It oversees about 1,600 properties, several million hotel rooms, and I am sure that the last three months have been like anything you can imagine. Talk to us a little about your business and how it has been developed since it began. Mr. NASSETTA: Yes, alright, let me go back because last year was a big year. First, we have 6,100 properties worldwide, 119 countries. But, you know, giving it a bit of juxtaposition, so last year, 2019, was Hilton’s hundredth birthday, which was amazing. Not that many people live to be one hundred, let alone companies live to one hundred. And we celebrate serving 3 billion customers, having 10 million team members, and one trillion dollars of economic impact over those 100 years. In 2019, pre-COVID was one of the best years in the company’s history. We open more than one hotel a day. We innovate like crazy. We are named for the second year of the number one places that are good for work, one of the number-two best places in the United States, the number two best place to work in the world. And the truth is, you know, companies, you know, we have an amazing culture. We performed at the highest level in a hundred years of history. And many things change, as you imagine. That was then and now. And, you know, really, when we get to the end of the year, we don’t really feel what’s in front of us. I was kind of joking with my wife. We, you know, during a vacation with our six children in a warm place to talk about a busy year and how successful that year was for our family, how successful a year was for Hilton, a hundred years old-business that performed at the highest level. And while I’ve seen a little – have a little bit of thread of what’s going on because we run a large global business, we have, you know, hundreds of hotels in China and we started at the end of December and of course in January to see, you know, clear signs of impact on the market, you know, entering first and increasing, it’s very hard to see, you know, really in January and February until you get to the end of February what really happened to us. And, you know, when you sit here today, you know, we are in the middle, as everyone knows, one of the biggest crises since the Great Depression. You have seen the dramatic impact on businesses that started in China, which have swept the world. And while it is very challenging here and in Europe and in most of the world, you begin to see the early stages of recovery, which, you know, start in China and very slowly begin to creep throughout the world when the economy begins to open again. DUFFY: Of your 6,100 properties – and forgive me for their mistakes – how many are open today, and where, in general, are you open and seeing that growth? MR. NASSETTA: At this point, all our properties in China are open, so we have, you know, 250-300 of our hotels open in China. And then throughout the world, in Europe around 40 percent of our property is still closed. You know, we have suspended the operation. Only about 11-12 percent are delaying operations here in America. Overall, in the world, I think last night I saw the number. We own 14 or 15 percent of our hotels. So, you know, and 850-900 hotels around the world have suspended operations. And at this point, as I said, China is quite open. You know, all our hotels in that market. And, you know, and in the U.S. we now even get requests to reopen more hotels than we have to close. Europe is moving – we have more hotels closed – moving a little slower, but we’re starting to see it. You know, and you’ve seen, you know, the second quarter numbers that we just reported dropped significantly, but, I mean, the first quarter numbers dropped significantly. The second quarter will be more than that because the center of the crisis really from the point of view of the impact began in April and continued until May.MR. DUFFY: What do you project for the second half, as far as you can project at all? MR. NASSETTA: I think it’s very difficult to project. So we don’t – I mean, we are historically very willing to provide guidance because, you know, my view is who knows better than the Management team what we think will happen in business over time, so it’s kind of our obligation to help Our shareholders in the broader market understand what we think will happen. The problem in this environment is that it’s impossible to know. This really has to do with the re-opening trajectory of the world and America. And while I have this view, I mean, I don’t have much visibility. I think at this point very few people have visibility. So, I don’t think it’s wise for us, you know, to talk about what will be seen in the second half of this year. What I will say broadly is – and this is the kind of pattern that you have seen developing in China when it reopens safely and people are starting to have more mobility and can travel and visit friends and do business open again and gathered in a safe way again – you have seen a kind of gradual change in occupancy rates. So, you know, China is basically almost everything has been closed. I think we hit a low of 9 percent. Right now, we are in our 40s, something like that. Here at U.S., we may be in our mid-20s. I suspect that as more states and cities operate, even in a limited and safe way, you will see a gradual change in performance similar to what you see in China. And then I thought it would be – and then I thought it would, you know, something good, you know, a step forward and then something relatively slow. I think for us to return to the level of demand that we have in our hundred years, I think it takes three or four years. I mean, I just thought, you know, what happened was happening to you, you know, a health crisis – and we didn’t go through that in any way, but, I mean, we might be able to say through the epicenter. that – and you will come out of it into an economic crisis. Now a lot has been done, you know, to help reduce it both by the Fed and Congress and the government, and I think they have all done Yeoman Work in a kind of response. But I think, you know, there is so much damage done to so many businesses out there that I think when you get to the other side of this, you are clear – you are in now and you will be in some form of recession for a period of time which will take some time to sort of pass through and get to the other side. And, when I think about our business, the long-term prospects for our business are spectacular. Everything that is true when we celebrate our hundred years of progress that we make is true today. You know, we have an amazing business model. We have an amazing partner. We have – amazingly, more than one hundred million loyal members who ultimately want to travel again and see their friends and see the world and do business. But it will take time for them to feel safe and secure to want to do it, one. And second, it will take time for businesses to get back on their feet and, you know, start recruiting and investing and spend more on travel. So, you know, I’m very optimistic. I’m no less optimistic, as funny as it sounds, about our business today as I was 90 days ago. It will only take time. It’s just, you know, time and place. I think it would only be a period of years to sort of get back on the right track. DUFFY: Talk to us a little about how you decide when to open and where. And setting aside what you have to do, is this a decision made by you at the headquarters in McLean, or is the local partner making the decision? You have many different stakeholders and who own all the properties. Who decides when a hotel opens? MR. NASSETTA: This works with our ownership community. So, you know, our model is that we – about 30 percent of the business, we manage it for third party owners, and about 70 percent of the businesses we franchise with third party owners who actually own and operate or, you know, maybe have and someone, third parties besides us will operate for them. So, there is always discussion with the community of owners who must bear the costs of operating the hotel whether it makes sense to open it or whether it makes sense to close it. I mean, what’s interesting is that we get rid of these concepts, like, yeah, this old hat. I said this to the President of the United States on my first visit to the White House of my three during the crisis. I say I’ve done this for 37 years, something like that. We have been in business for a hundred years. Other than closing the hotel for the purpose of tearing it down to rebuild it or for other uses, we have never closed the hotel. That did not happen. So, it’s really amazing that we really did it. But we must in the sense that there is literally no mobility everywhere in the world. There is – there is no request. So it was a decision we made in collaboration with our owner. And on the other hand, the same thing. So, we will open when we believe, working with our partners is very important for our success and future, that there is enough demand to justify opening hotels in a way that can generate revenue and ultimately profitability to help cover their expenses. And that’s kind of– you know, that’s what happened. Mr. DUFFY: When you open yourself up in partnership, how do you and people who own property keep staff? MR. NASSETTA: Yes, I think we have two jobs, right? You know, if you think about recovery, you know, generally protecting people, keeping business and preparing for recovery. When we think about protecting people, it is the second of our team members who work at the first hotel – because if we don’t take care of them, what’s their point for our customers – and then ultimately our customers. So, we have worked very hard in partnership with Lysol and the Mayo Clinic. We went out, I don’t know, six weeks ago and said, you know, the reality is, we have exceptional hygiene standards, right? We’ve been dealing with cleaning rooms and public spaces and kitchen cleaning, you know, for a hundred years. But the level, needs in the world today, in the world of COVID-19, we think is much higher. And we really want to have some kind of hospital level hygiene and hygiene protocol. So, we went out and said let’s work with Lysol, let’s work with Mayo Clinic so that they help us take solid standards and make them better. And that includes how we care for our team members. So that means making sure that we understand if they are sick, either through a temperature check or possibly a number of tests. That means providing them PPE. That means making sure that, you know, that they are protected and that they keep their distance. And then from the point of view of our customers, a number of protocols if you want me to guide you through the vision – MR. DUFFY: We will get there. Mr. NASSETTA: – yeah, from the short term we will do to look after our customers. Because this is the problem. One thing I know, whether it’s COVID or not, people don’t go to unsafe places. So, whether it is terrorism, pandemics, you know, all kinds of disputes, if you don’t feel safe, you don’t travel, you don’t go to that destination. And now people really don’t feel safe anywhere. So, we can’t solve all problems, but we can definitely make them feel – we can solve those problems when they are in our ecosystem, if they succeed to that extent, we will help ensure that they are safe. DUFFY: Great. And we will get to the guest soon. I just want to think more about the staff because they are – for the staff. What can Hilton, or any company at this time, do to test all its employees? Is that still a logistical challenge? MR. NASSETTA: I think this is still a challenge. I thought, yes, that must be challenging. We do not do that. I mean, we have other protocols, namely people who report for themselves whether they feel sick or have temperature, etc. We will likely begin a temperature check. And as I said, we will definitely give them and make a requirement that they wear masks in certain parts of the hotel, that they wear gloves. And we think through this mosaic of things, we can keep them safe and we can keep our customers safe if, God forbid, one of our team members is infected and is on location. DUFFY: But you feel that in the end you have to test your employees regularly and continuously for – MR. NASSETTA: I’m not sure – I’m not sure that’s the problem. I think we might do a temperature check and self-report, and as I said, you know, a lot of PPE. I don’t think, you know, just based on at least the way the tests exist today that we will certainly test. And then the question is, how often do you test? Every day? Every time someone leaves the property? Because they can get out and get infected. So, I think, you know, once again, we’re still working with the Mayo Clinic about the right protocol. But I think between APD and temperature checks and other distance methods, we feel we will be able to guard our team from danger. DUFFY: Do you have problems with access to PPE as well? MR. NASSETTA: We haven’t, no. We haven’t. We have a lot of access to PPE at the moment. I would say almost unlimited access to PPE. I have to get a hundred emails a day from someone trying to sell me something that I give to our inventory management team. So, speaking with our head of inventory management, I think we have unlimited access to what we need. DUFFY: Now if I travel and I will go to a hotel, what should I look for in terms of protocol and protection as a guest? MR. NASSETTA: Yes. Well, close your eyes. I will take you to a hotel for an upcoming tour. NASSETTA: So, I mean, the first is some of the things we’ve done, we’re just going to lean in and I think they will be adopted sooner. So, the first step is we already have a digital check-in, digital room selection for every hotel in the United States, and a digital key. So, you don’t need to go to the front desk. You don’t need to do anything. You get an email or you can enter the Hilton Honors app, you can choose your room on the map, you can check in, and you get your digital key and yourself. So, I think the reality is, contact without contact will be a very big thing. It has already gotten good adoption. I think it will be adopted massively at this time. So, the way to think about it now is, you travel that day, you will check in, you will get – you will choose your room, you you will have your digital key. You will come to the hotel. You will see, you know, PPE stations, where you have cleaners, masks if you need them, other things. You will see, you know, many signs about distance in public spaces. You will see furniture arrangements, including in restaurants, to make it possible, but you will see different arrangements in restaurants, you know, in terms of, you know, a normal buffet, maybe more than one serving, take-and-go, at least in the run medium-short. The elevator will need a distance. When you go to your room, when you have your digital key and you open the door, you will open the seal. That will tell you that this room has been cleaned to the highest standard using the Lysol product which is the Mayo Clinic protocol. Our team has been trained for that. So you really will break the seal and know that your room is clean. The chaos of the room will disappear. If you want to watch TV or change in temperature or lighting, you can run it all from the connected rooms of your Hilton Hilton application. You can order room service, which we drop – you know, tap and drop, you know, so it’s contactless. So, you can run everything in your room without touching anything. And of course, the rooms will be cleaned to the highest standard. And when you want to leave, you check with the Hilton application. You order the elevator if you want to go through the Hilton Honors app. You leave, you go on for your next experience. So, some of the things that I just explained are new. Mr. NASSETTA: You know, some of the protocols with Lysol and Mayo Clinic are new. You know, getting rid of clutter from the room, some things in food and drinks and keeping a distance are new things. And some of it – some of it is what we do. We will now lean on the heavier one. What I will say – you can disagree about this, and you might – some of which will be permanent and some of which are temporary. So, things that will happen from improved hygiene and better protocols, we are already good at it. But I do not see us retreat. Why not have the absolute highest protocol in terms of cleanliness? Some things like connecting rooms and digital keys and check-in, we do it anyway. And that will become a permanent part of your future because you want it. You know, as a customer you still want those things, digital checkout. You know, everything that runs your world when you are with us digitally will still be there. Some things in PPE and, you know, our team members wear masks, customers wear masks, keep their distance, you know, people can disagree. I think when you wake up in three years, it will be like what happened 90 days ago and not what you will see in the short and medium term, because we will – you know, we will pass this element of health and I think people will once again, you know, begin to feel safe and return to a more normal life. MR. DUFFY: That might change the way people think about hotels, huh? MR. NASSETTA: I think so, yes. I think so, to some degree. M. DUFFY: I mean, and is that experience likely to change permanently for many guests? MR. NASSETTA: Yes, as I said, the elements will change permanently. I think, you know, there will be more digital interaction. But there is one thing, okay? The magic of our business is hospitality, right? I say in our team all the time, we are a business person who serves people. And the real miracle, when I get customer feedback, of course they want life to be simple and digital check-in and it all makes life easy. Need friction out. But the notes I get from people when they have great experiences have to do with the hearts and souls of those who serve them. And I don’t think that – excuse me – will change. I think people want human interaction. They want – you know, they want to go out and they want to see friends, family, travel, have experience with other cultures around the world. They want the extraordinary service delivered by our team. So I think the core element of our business that I’m going to explain is hospitality, you know, people who serve people – I think in the long run nothing will change, you know, more than ever before, meaning certain mechanical elements from experience will be digitized. But it still happens. It will happen faster, but it still happens. And that allows our team to be freed to reduce the experience for our customers from a human perspective. Mr. DUFFY: Talk to me a little about teams, especially because you have to train or train so many of them. How many people are working at Hilton today and how does that compare to, say, at the beginning of the year when you were at the top? MR. NASSETTA: Yes, in all ecosystems there are around 430,000 people in 119 countries around the world. We have to take time off, you know, and that’s the company team and front line. We have lost control, along with most in the industry, maybe a little more than 60 percent of our workforce at this time, and obviously, as we begin to recover, are at work and hope that we will be able to bring most of them behind. And I am very sure that we will do it. The question of when to do with this recovery trajectory, because, again, most of the more than 400 people at our hotel, which in the end, from a cost standpoint, are the responsibility of our ownership community, and we have to really think they are has no income. So, just as painful for our front-line team members – and believe me, I feel sick as a number – a great place to work in the United States – there’s really no alternative. What we are working very hard on is doing it the right way. You know, we work – one of the first things I did, you know, when I was asked to go to the White House and, you know, was talking to people on the Hill when people thought about how to respond to this, really- properly working on behalf of our frontline team members to ensure that we create a safety net with unemployment – I call it unemployment insurance that is not used with steroids, but the federal top-up above the state unemployment insurance, and also works very hard on behalf of our ownership community – You know, to ensure that we provide a bridge of liquidity for businesses, most of which are small and medium-sized businesses whose income comes in but still have to pay debts and services and all that fun stuff. But the first goal is to really make sure we look after our team. And to the credit of Congress, administration, you know, while nothing is perfect, I think they have tried and done an excellent job of trying to take care of the large swath of people who have been severely affected, and those who are least able to be affected MR. DUFFY: Travel has many different sectors. There is a business trip. There is a private trip. There is a group meeting. Which of these do you want to visit first? MR. NASSETTA: Yes, traditionally what you will see is as follows: The three large segments are transient leisure, as we call them, business transients, and then group businesses, most of which are businesses and associations, as well as other types of groups. You will usually see the rhythm of free time going back first, then business, then group. And I think that’s what you will see now. I mean, this is interesting. Even this weekend, you know, one of the things we do, I just talk to our operations chief for America. We have many hotels this holiday weekend that have very high occupancy rates. So we try to make sure we have all the right protocols to make sure we can keep our distance, that we don’t take too much shelter so people, you know, we make sure we are in a safe and protected environment. And it’s already an example. You’ve started to see people want to get out of the perspective of free time – it’s summer, they’re locked up. So, I think it’s free time, then business, then group business. DUFFY: Right. Chris, regionally, where are those places? What – there is a pattern where it happens? MR. NASSETTA: Warm and beach. Mr. NASSETTA: The two areas that have done their best recently are hotels with long stays – so think about it, like for us, that’s Home2 Suites by Hilton, Homewood Suites. They have a kitchen. They are like small mini apartments. And that’s because many of the first respondents did a lot of things. And then the beach and holiday markets. So, Florida, I suspect, will have a very nice Anniversary weekend, lots of requests. DUFFY: Warm and gritty. Mr. NASSETTA: Even though there are no open parks, there is no Disney, people want to get out, and they will come out. Mr. DUFFY: And this weekend – this weekend shows a change from the previous weekend. NASSETTA: Right, yes, very dramatic. By the way, not in the whole system. MR. DUFFY: Yes, I understand. M. NASSETTA: I’m talking about confined spaces. DUFFY: Yes, I’m sure. Does Hilton receive direct federal assistance? MR. NASSETTA: No, we haven’t, and we don’t want to. We have not asked. As I said, the only thing we had – the only thing we pushed for from the start – and we were pleased with what the administration and Congress and the Fed had done – was, you know, caring for the front-line team and help our ownership community with a liquidity bridge. We don’t need it. We are in a very good position. I mean, this is difficult for everyone, but, you know, we know we’re at the end of the business cycle, so we have extended all our maturities, we have built-in opportunities for additional liquidity. MR. NASSETTA: We really pressed the bond market very interestingly during the crisis. So, you know, we have enough liquidity to go through. So, this is not about us. Mr. DUFFY: Do you think public companies should receive federal assistance in general? Do you have a position for that? MR. NASSETTA: I think my position is very simple. I think if they can get access to the public market, whether debt or equity, that’s what they have to rely on. NASSETTA: And I think if they can’t, I think the government should consider, depending on the circumstances that help them, and that might be negotiations. But this is what I say, you know, to people all the time. Like, a housemaid who loses a job doesn’t know if she works for a big, medium or small company, right? MR. NASSETTA: I mean, so what you want is – what we’re trying to do, it’s all about work, right? We are at the highest unemployment rate since the Great Depression. So, for me, this is all about work. The only way to get the economy started again is to get people rehired, okay? Whether you are big, small or medium, if you go bankrupt because you do not have access to liquidity and that is a problem of solvency – which will happen – you will not be in a position to re-employ large numbers of people. So, for me, I think that’s very clear. If you have access to the public market, you must utilize that access. That’s what we do. We have not asked for government assistance. We will not ask for government assistance. But if you don’t have access to the public market, you can’t raise capital, but you have a business that used to be a well-functioning business that employs lots of people, you want to make sure that all businesses of all sizes get to the other side and not through bankruptcy and the consequence is not being able to re-hire people quickly – because if you don’t get people rehired, economic damage will last longer than others want. DUFFY: I know it’s laying off people or persecuting them. Tell us a little about your plan – a little more about your plan to reuse if you can. We only have one or two minutes left. Can you say – MR. NASSETTA: Yes, we work – yes, we – I mean, we do it in stages. When the hotel opened, people were rehired. From a company perspective, we’re trying to find out, looking at the contours of recovery to try and make judgments about how we will move from leave to calling people back. I know you want more and I want to give you more, but we are right in the middle, in the throes of some kind of figuring out – with a clear goal of getting as many of our hearts and souls back on the board as we can. You know, we – as I said, we are the best place to work for two years, number two two years in the world. Our culture and our people mean a lot to us. They are the heart and soul of the company. Nothing is more painful for me than the impact they see. Jadi, semakin cepat kita dapat membuat ekonomi dinyatakan kembali dengan cara yang aman dan membuat hotel dibuka kembali dan membuat orang dipekerjakan kembali, saya pikir akan lebih baik bagi semua orang, termasuk kita. DUFFY: Baiklah, terima kasih, Chris. Kami berterima kasih atas waktu dan perspektif Anda dan pikiran Anda karena kami semua merenungkan kembali jalannya. Jadi, sangat menyenangkan memiliki Anda hari ini. Saya harap kami bisa melakukannya lagi. NASSETTA: Saya ingin sekali. Mr. DUFFY: Saya akan mengingatkan semua orang bahwa ketika kita terus membahas semua aspek dari cerita ini di sini di Post, kita akan mendengar besok dari Gubernur Pete Ricketts dari Nebraska dan Francis Suarez walikota Miami. Itu hari Rabu jam 11:00 pagi. Dan kemudian pada hari Jumat, kolega saya Bob Costa akan mewawancarai Larry Kudlow, kepala penasihat ekonomi Presiden, dan Ray Dalio, yang merupakan wakil ketua Bridgewater Associates. Itu hari Jumat jam 1:00 malam Anda dapat menuju ke WashingtonPostLive.com untuk mendaftar untuk kedua percakapan ini. Terima kasih banyak. Saya Michael Duffy. Semoga hari mu menyenangkan.



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