LEADERS IN MARKETING
By JOHN S. WRIGHT
Conrad N. HUton
Gaergio Statm CelUg*
HE name Conrad N. Hilton means hotels to most
T
people. Hilton and Ellsworth M. Statler before
him have provided most of the innovations in the
autobiography Be My Guest as excellent training
for business decision making.
Had World War I not intervened Conrad Hilton
hotel field. Chairman of two leading organizations—
might well have remained a small-town New Mexico
Hilton Hotel Corporation and Hilton International
merchant. Commissioned as a second lieutenant, he
Company—Hilton has influenced hotel management
was sent to San Francisco, New York, and France;
for 50 years. His career reads like pages from
his horizons were broadened by war duty. The returned
Horatio Alger and provides us
veteran, with a bankroll of
with a classic study of Ameri$5,011, went to Texas in
can entrepreneurship.
search of a bank to buy. FailConrad Hilton was born in
ing in his search, he purchased
1887, not in a log cabin but
the Mobley Hotel located in
in an adobe addition to his
Cisco, Texas. Thus, in 1919
father's general store in San
during his 32nd year, Conrad
Antonio, New Mexico TerriHilton made a belated entry
tory. As a child growing up
into the hotel business.
in a small business family on
The Mobley furnished Hilthe frontier, he learned the
ton with his first opportunity
old-fashioned virtues of hard
to exercise his flair for hotel
work and thrift; he worked
purchase and management.
as a stable boy, janitor, sales
Cisco was an oil boom town,
clerk, and general factotum.
and beds were used in eightBy 1915 Hilton was a partner
hour shifts. The new hotel
in the family firm, A. H.
operator inaugurated a proHilton and Son. Earlier, howgram to convert waste areas
ever, he had founded and maninto income-producing space, a
aged the local bank and served
technique to be followed in fuin New Mexico's first legisture acquisitions. Furtherlature.
more, Hilton strove to instill
Hilton's formal education
Conrad N. Hilton
esprit de corps among his emwas varied. He attended local
ployees. Soon he was buying
public schools and was sent to military and parochial
other "dowdy dowagers" throughout Texas and turninstitutions. Two years at the New Mexico School
ing these rundown hotels into profitable operations.
of Mines brought out his talent for higher matheLater the emphasis shifted to a plan calling for
matics, a subject which Hilton recommends in his
the building of a new hotel every year. Nineteen
days before the 1929 stock market crash the El Paso
Hilton was announced. Hilton proceeded with the
Journal of Marketing. Vol. 33 (October. 1969). pp. 62-63.
62
Leaders in Marketing
venture, but financial survival soon became his sole
goal. The early 1930s were cliff-hangers for most
businessmen, and Hilton economized and borrowed
to hold his Texas hotel empire together. At one
time he was $500,000 in debt. In the end, five of
his eight establishments were retained, not a bad
record at a time when 81% of the nation's hotels fell
into bankruptcy.
Once hotel room occupancy started to pick up
again and funds began to flow back into the Hilton
coffers, he moved on to the third stage of his empire
building. Interest was now directed toward acquisition of great established hotels across the nation.
These hotels were bought cheaply, and Hilton "doctored the financial wounds left on them by the Depression." The first hotel outside of Texa.s—the Sir
Francis Drake of San Francisco—entered the chain
in 1938.1 Other West Coast hotels followed, then
New York properties; in 1945 Chicago's two
most famous hotels—the Stevens (now the Conrad
Hilton) and the Palmer House—were acquired. The
purchase of the Waldorf-Astoria in 1949 brought to
fruition one of Hilton's most cherished personal
dreams. At present the Hilton Hotels Corporation
owns, leases, or operates under management contract
40 hotels in the United States with many more under
construction or in the planning stage. There are
also 25 Statler-Hilton operations under the Hilton
franchise system.
The fourth phase—establishment of international
hotels—commenced following World War II. These
hotels provided stimulus for travel to underdeveloped
countries, thereby aiding in their accumulation of
dollars as well as providing local employment. Hilton
International was separated from Hilton Hotels Corporation in 1964 and purchased by Trans World Airlines, Inc. in 1967. The TWA subsidiary operates
43 hotels outside the continental United States with
ten more under construction.
Whether aware of the fact or not, Hilton has
practiced the "marketing concept" since those early
days in Cisco, Texas. Although Hilton did not move
out of Texas until long after A. H. Statler's death
in 1928, the new innovator saw his predecessor as
a man who wanted to make hotel-keeping a solid
business. Statler's motto was "A room and a bath
for a dollar and a half." The traveling man was
viewed as the hotel market; closets and bathrooms
were small. Hilton believed that people wanted more
No longer in the Hilton system.
63
than a room at a minimal price and tried to provide
that something extra. Hilton hotels, for example,
were the first to be entirely air-conditioned. Hotel
staff must be not only efficient but friendly and courteous. Nevertheless, hospitality is supported by cost
control and efficient behind-the-scenes operations.
This necessitates accurate forecasting of demand in
order to staff adequately for peak occupancy and
not excessively during less popular periods such as
weekends. Mass purchasing for the entire chain is
practiced, and while operating procedures are prescribed every effort is made to establish and maintain an individual personality for each separate
hotel. Credit cards, inter-hotel reservations, and
many other sales tools are used to entice new guests
and retain old friends. Product development is a
byword at Hilton.
The future of the hotel business is intimately connected with air travel. Hotel capacitie.s and airline
seats hold a complementary relationship. As superjets increase air travel supply, hotel rooms must be
available in places the public wishes to visit. Two
frustrations of air travel are airport check-in and
baggage delivery. Increased patronage will pose inten.sified check-in and check-out problems at the hotel
desk. Hilton is experimenting with procedures to
minimize these traveler-patron headaches. Some day
baggage will go directly from airport to the traveler's
hotel room with computer pre-registration completed
when the airline ticket is purchased.
A constant search for ways to remain competitive
permeates the Hilton organization. Disposable linens
and self-making beds are future possibilities in the
drive to lower costs. Hotels possess certain natural
assets which carry opportunities to expand their
services to patrons. For example, Hilton has recently
entered into the car-rental business; its reservation
service, millions of guests and credit service would
appear to make the new business a viable one. Car
rentals may be used as a promotional adjunct leading
to increased occupancy by furnishing the car without
mileage charge.
Now in his eighties, Conrad Hilton still visits the
ofilice daily and scrutinizes incoming financial data
from his far-fiung hotel empire. Fond of parties
and dancing, he officiates at each new Hilton opening. Day-to-day operations are in the hands of others
including his son Barron, but Hilton's philosophy,
spirit and personality still guide the corporations
bearing his name, as well as providing a standard
for the hotel industry.