Hilton reportedly having breakup talks with Blackstone.
The Blackstone Group will probably not carry out any divestiture until next year or so. Other options may be a public offering of some of the company assets along geographic lines, or sale of some of the company assets to competing companies.
Amazing what 8 months can do in this economy; in January, Hilton Hotels looked to be the next darling of the hotel industry – not only was it owned by a cash rich parent – The Blackstone Group – who seemed to be willing to do whatever it would take to invest in the brand and make it #1, and it was just about to launch two new brands – Home2Suites and Denizen.
Hilton’s re-invigoration was going smoothly, Blackstone really seemed to be making an effort to ensure the viability of the company into a long term asset.
Then suddenly a few months later Hilton was essentially forced to cancel Denizen – due to the lawsuit from Starwood hotels. Putting Hilton even further back on their ability to compete with Starwood’s W Hotels, and now, today, come reports from the Financial Times & the London Independent that Blackstone is looking to divest of the Hilton Corporation. (Interesting to note that two UK based newspapers reported this prior to any US based news outlets).
From those reports any divestiture is in very early stages and will probably not be carried out until next year or so, but the options on the table are a public offering of some of the company assets along geographic lines, or sale of some of the company assets to competing companies.
Details haven’t really been spelled out – but any of those options can be extremely detrimental to the future viability of the Hilton brand. If Blackstone is intending to split the company by geographic lines – that would be the equivalent of putting Hilton into the past when it was two companies Hilton Corporation and Hilton International, which would limit Hilton’s ability to keep the brand experience the same throughout the world. If you recall, the main reason that both companies were merged was to ensure just that. Why would Blackstone want to go back to something that never worked that great in the past even.
The other option of selling assets to competing companies can also spell major trouble for the Hilton brands future if they are referring to selling what is now a Hilton hotel to a company like Starwood or Marriott, but it also could be selling those hotels to hotel management firm – such as Host, or Interstate, etc.
Maybe I’m going about this all wrong, but it sounds like Blackstone is willing to completely destroy the Hilton brand – all in the name of cash; you gotta do what you gotta do, but Blackstone was originally planning on the Hilton purchase to be a long term holding, now it seems as though they may do to Hilton what they’ve done to all the other hotel brands and some private companies they’ve bought – break them up and sell them separately to the highest purchaser.
One thing that makes Hotel brands so valuable is having quantity – quantity in the number of rooms, locations and brands, with the goal of having something for everyone – every price point, ever amenity required at every location that person would want to visit.