Dominic Walsh
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Ian Carter, the newly promoted president of global operations for Hilton Hotels Corporation (HHC), confesses to reading e-mails surreptitiously on his BlackBerry under the table at dinner parties. He also admits that, during his inexorable climb up the greasy pole over the past 20 years, his family have often had to play second fiddle to his career.
The 46-year-old's driving ambition is probably one of the reasons that he has emerged as the sole senior-level survivor of Hilton's two changes of ownership in the past two years. First, Hilton International, of which he was chief executive, was sold to its American namesake. Then, little more than 18 months later, the enlarged HHC was swallowed by Blackstone in a $26 billion (£13 billion) deal.
Mr Carter's promotion to No 2 in the company under Christopher Nassetta, the new chief executive, has meant further upheaval, because his new job is based at Hilton's global headquarters in Beverly Hills, California - a long way from his home in St George's Hill, Surrey. However, he is matter-of-fact about the need, once again, to put job ahead of family.
“Ultimately, you define your own flexibility through your personal circumstances,” he says. “Ideally, I'd love to stay in London and carry on as I was doing, but these opportunities are so rare that you need to try to balance it from a personal and business perspective. The centre of power for most hotel corporations is America. It was a decision I was going to have to make at some point. Most of our big assets are in America and we've got 2,500 hotels there, so I've got to be there.”
On past experience, Carla, his long-suffering wife, must have known what to expect. He has worked overseas for close to half his 24-year career, much of it in Belgium, the Netherlands and the United States, and his big break - moving to America to assume the job of running GE Specialty Chemicals - came up when his daughter, Lauren, was three months old.
Mr Carter says: “I was on a one-month course and, after the closing address, Jack Welch grabbed me and said: I want you to run the chemicals business in Virginia. Can you be down there next week?' You don't say no.”
The rugby-mad Briton sees the GE chemicals job as the pivotal point in his career. “I was running a business when I was 35,” he says. “I was running an American corporation within GE. You dream about those sorts of things. If I'd stayed in the UK I'd have never done that. A large part of it is luck - it's timing, where you are, what you're prepared to do. That job was the catalyst to everything else.”
He went on to run the European arm of Black & Decker before being headhunted to run Hilton International, which at the time was part of the same company as Ladbrokes, the bookmaker. The sale of the business to HHC for £3.3billion reunited the Hilton brand for the first time since 1964 and provided a huge fillip to Mr Carter's expansion strategy for Hilton International, because it gave him access for the first time to HHC's other brands, including Hampton Inn, Doubletree and Hilton Garden Inn.
“Suddenly, I was like a kid in a toyshop,” he says. “The landscape changed massively and I could pick from nine brands. Before HHC came along, we were growing at 25 hotels a year and had a pipeline of around 50 hotels. Right now, we have a pipeline, including strategic development agreements, of about 250 additional properties. If we do nothing else, we'll double our international presence in the next three years. That scale of growth would have been almost unthinkable two years ago.”
The growth potential of the reunited Hilton is probably the main reason that Blackstone, the powerful private equity firm, decided to invest $26billion. And despite the subsequent credit crunch, which has all but wiped out the $5.5billion of equity that it injected into the deal, Mr Carter is convinced that Blackstone - and management - will make good money.
“This is the biggest single investment Blackstone have made,” he says. “This is an important vehicle for growth. We've got 3,000 hotels now and we're growing at 250-plus a year, but we'll accelerate that, so however long the investment turns out to be, whether four years, five years or six years, we'll be a lot bigger. The notion of equity value right now is not so crucial, because it'll be the whole period that's important. As long as trading doesn't fall off a cliff, we will undoubtedly grow significantly.”
Mr Carter reckons that, over a five-year timeframe, the group should be able to achieve underlying earnings (ebitda) growth of at least 10 per cent a year.
Expansion will come from management contracts and franchises rather than acquisitions, and one of Mr Carter's priorities is evaluating some of Blackstone's other hotel investments, notably its LXR and Alliance Hospitality businesses, to see how many of their properties would be suitable for conversion to Hilton's brands. “There are hotels within LXR that could potentially sit within Hilton, Waldorf-Astoria and Conrad, but we have to assess whether by reflagging them we can improve their performance.”
Although trading has been resilient this year, with only “odd pockets that are a little soft, like Japan and certain parts of the US”, Mr Carter is convinced that the increasingly global nature of Hilton's expansion will mitigate any decline if the economic picture deteriorates.
“We're cautious,” he says, “but if you look at all the big trends that affect our business in the medium term, like aircraft orders, they've never been fuller. And they're in markets that are growing exponentially anyway, like India, China, Russia and the Middle East.
“We're going to be drilling down on costs over the next year or so because the economic outlook feels that way, but the underlying trends for our industry still look very good, especially now that we are genuinely global.”
The former Unilever management trainee has focused on the rejuvenation of the core Hilton brand. Showing off the foyer of the Hilton London Tower Bridge, he says: “What you see is the vision of what Hilton should look like. As we continue to evolve, more hotels will look like this. When I joined Hilton, it was viewed as the place my parents would stay at. What we've tried to do with hotels like Tower Bridge and Deansgate in Manchester is get a little bit edgier ... We recognised three or four years ago we needed to position the Hilton brand to ensure we don't miss out on the customers of the future.”
One way in which he has tried to pep up the brand is through a marketing tie-up with the McLaren Formula One motor racing team, which has aligned the Hilton brand with McLaren sponsors such as Diageo, Hugo Boss, Tag Heuer and Mercedes. “They're all brilliant brands in their own right, whereas I think in the past maybe we've been seen as a bit fuddy-duddy. We don't want to alienate our current audience but we do want to attract a greater spread of customers.”
CV
Born: September 21, 1961
Education: BA Hons, business management, Ealing College
1984-88: Unilever
1988-99: various, including president, GE Specialty Chemicals
1999-2000: Low & Bonar
2000-05: Black & Decker
2005-2008: Hilton International, chief executive
2008: Hilton Hotels Corp, president, global operations
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