Hilton, with a history of more than 1 years, is one of the largest hotel chains in the world. It was founded by Conrad Hilton in 1919. However, the family suffered heavy losses due to the inheritance lawsuit, and the descendants were unable to take over, but they were not rich for three generations. In 27, they finally sold their business to private equity funds.
Conrad, who established his family business, was born in 1887. He had hoped to become a banker, but failed to start his own business several times. In 1919, a hotel owner in Texas wanted to cash out his assets and turn them into an oil field business. Seeing the opportunity, Conrad raised $35, with his friends to buy it and opened the first Hilton Hotel. In 1925, Conray opened the first hotel named after his surname in Dallas, and since then more and more hotels have been opened, so in 1929, he further renamed all hotels and became a chain hotel system.
the road to early entrepreneurship is rugged. Although Kangrui owns eight hotels, the expansion of its territory comes from large debts, and its career looks bright, but in fact it is heavily in debt; At the beginning of the Great Depression in 1929, he was immediately on the verge of bankruptcy. During this period, he experienced many business lawsuits and capital reorganization. It was not until 1934 that the lawsuit was settled. At this time, the company's equity was extremely scattered and there were many external shareholders.
After World War II, the economy recovered, and the speed of mergers and acquisitions accelerated. In view of the large number of hotels, Kangrui consolidated all its hotels and established Hilton Corporation. In 1945, after many negotiations, Hilton bought the world's largest hotel-the Stevens Hotel, and in 1947, Hilton was listed on the new york Stock Exchange. At this time, overseas business opportunities are growing rapidly, and Kangrui also wants to expand overseas. In order to avoid the constraints of the company's board members, Hilton international was established in 1948 in order to develop the international market. In the following year, Hilton International was split into an independent company to concentrate on developing overseas business, and successfully bought the Waldorf Astoria Hotel, which is known as the "Queen of World Hotels" in new york.
in 1954, Conray launched the biggest merger and acquisition in American hotel industry: buying Statler Hotel Company for $11 million. This successful merger made Hilton's earnings per share more than triple that of 1953 in the following year, and promoted the whole group to the leading position in the United States. By 1964, Hilton International was listed on the new york Stock Exchange.
kangrui * * * has been married three times and has three boys and one girl. His first marriage was at the age of 38, and he gave birth to three sons: Nicholson (1926-1969), Barron (1927-) and Eric (1933-216). At the age of 55, Kangrui got married for the second time and gave birth to a daughter Francesca. At the age of 89, he got married for the third time, and this time he died without children.
Nicholson, the second-generation eldest son, had been gambling, drinking and violent abuse for a long time, and died of heart disease due to drinking at the age of 42. Eric, the youngest son, is docile. He joined Hilton at the age of 16, starting as a bellboy, chef and telephone operator. As for Byron, the second son, he showed different characteristics since he was a child, and he was full of interest in aviation flight. He began to learn to fly at the age of 17. In addition, Byron also started his own business in the early years, including establishing MacDonald Oil company as a joint venture with others and one of the earliest aviation leasing companies in the United States.
In 1954, after Byron entered the family business, he quickly showed his father his talents in cost control and real estate planning. At that time, he was the vice president of Hilton Hotel Company, running a discretionary credit card company. This company was acquired by Citibank six years later, which merged the Hilton Hotel credit card into the global authorized credit card system.
At the age of 79, Kang Rui abdicated in 1966. Byron, 39, also served as the chairman of the group at the invitation of the company's directors. One year after Byron officially took over, based on his enthusiasm for the aviation industry and the international tourism boom after the war, he persuaded his father to hold shares in Hilton International and exchange shares with TWA.
however, after the completion of this transaction, the first oil crisis followed, and the oil price soared several times, which led to a sharp drop in TWA's share price, from $83 to $5 per share, and TWA also fell into financial crisis. From 1967 to mid-1987, Hilton International was acquired for three times, and finally its equity fell to the British gambling group Ladbroke. Hilton Group not only failed to obtain the valuable comprehensive effect of "machine plus wine", but also lost control of Hilton International, unable to reach out in the international market, which was not worth the candle.
first of all, the group began to operate casino hotels, hoping to make up for the lost overseas business opportunities through high-profit business in China. In 197, the group bought the game hotels the International and the Flamingo； in Las Vegas for $11 million. Two years later, the profits earned by these two Boyi hotels totaled as much as 45% of the group, and their contribution was almost the same as that of other 16 hotels, while still growing at a high speed of 2% every year. So in 1982, Hilton Group became the largest hotel chain in the world.
However, the gambling business is mostly related to the underworld. In 1985, the casino built by the Group with a huge sum of US$ 32 million in Atlanta was delayed in obtaining the operating license because of offending local powerful people. After several mediations, the entire property right was finally sold to Trump, a real estate tycoon, who is now the president of the United States.
Byron's second move is to accelerate the innovation of business model and make up the brand map. Since 1973, Hilton Group has made great efforts to develop franchise business and hotel property management business. They have taken the lead in the industry and introduced a computer reservation system (Hiltron) for all its brand hotels. After losing the right to operate Hilton International, the Group learned the lesson and merged other hotel brands to meet different customer groups. At the same time, it also established sub-brands such as Conrad International and did not give up the possibility of overseas development.
Byron's third move is to use capital operation to greatly enhance shareholder value. Byron was very familiar with the operation mode of leasing industry because of his personal experience. Therefore, in 1975, Hilton sold 5% of the property rights of six large hotels to Prudential Insurance Group at a cost of $83 million. At the same time, he sold them and leased them back, and managed the property by capital leasing, which allowed him to collect generous management fees and a certain percentage of profits.
this transaction greatly activates its assets, and more importantly, it shows that the value of the Group's land assets is far more than twice the total market value of the shares, which in turn gives stock market investors more confidence. Byron used this cash to repay the loan with higher interest rate in the early days, and then bought back 2% of the shares in circulation. This complex comprehensive reorganization of assets, liabilities and shares made the overall market value climb and the stock price soar by about 7 times.
kangrui began to think about succession very early. Based on estate planning and pre-listing equity planning, Kangrui established Conrad N. foundation in the name of charity in 1944, before the stock went public, mainly supporting the disadvantaged groups, and transferred 99% of his estate to the family foundation. Most of the board members were descendants of the family.
Byron, however, disagrees with this arrangement. He thinks that individuals should have the right to buy the 27% equity donated by their father to the foundation, because he thinks that the world was laid by himself and his father just "laid some foundations". Therefore, Byron claimed that what his father said in his will was to give himself the option to buy all 27% of the shares. Only in this way can the decision-making operation of Hilton Group and the family's control over the group be maintained.
however, the directors of the foundation are all doubtful about the expression of the will, and think that Byron's excessive expansion explains Dad's will. At that time, Byron personally held only 3.6% of the shares of listed companies. The foundation and Byron have been in court for ten years, and the ownership of the heritage equity has evolved into a battle between the second generation of the family chairman and the first generation of the construction foundation.
in 1988, the court ruled that Byron could get 4 million shares out of 13.5 million shares, the foundation could get 3.5 million shares, and the remaining 6 million shares should be managed by the trust, but Byron was the executor of the trust and could get 6% of the dividend income distributed to the 6 million shares, and the rest of the dividend income was owned by the foundation. This decision gives Byron more than 25% of the voting rights and dividend income of Hilton Company until 28. This judgment also affects the choice of future successors and the final sale decision.
Byron was different from his father. He only had one wife in his life. They gave birth to 8 children and 15 grandchildren. However, only one of them, David, was in charge of the operation, and the rest of his descendants were not interested in the family business. Byron once thought about letting David take over, or handing over the shift to his brother Eric. However, their management ability and age problems are making him uneasy; Many people in the Hilton family are frequent visitors to the media entertainment edition: Nicky Hilton, the fourth generation, has been in the entertainment circle for many years, Conrad Hilton III is famous for her dissolute life and violent personality, frequently causing troubles in public, and even being photographed by the media smoking marijuana in public. As for her granddaughter Paris Hilton, her private life is disorderly, which is even more notorious.
In the end, Byron appointed his son Steven as the chairman of the foundation, although he wouldn't let his descendants take over the family hotel business. In 25, the Hilton Foundation decided that family members would always occupy the majority of the board seats of the Foundation.
in Byron's heart, he was disappointed that the possibility of family members' succession was getting lower and lower. Faced with the reality that dividend income and voting rights will expire in 28, Byron has drawn up a long-term strategy in his mind. In 1996, when Byron was 7 years old, he chose a professional manager, Stephen F. Bollenbach, as the CEO's successor. Previously, Stephen was the chief financial officer of Disney. He was in charge of the debt restructuring of Trump Group and acquired large-scale transactions such as ABC with Disney for $19 billion, specializing in strategic trading and capital restructuring. After he took office, the group began a series of transactions, laying the groundwork for the overall sale of Hill Group ten years later.
First of all, Stephen set a goal and declared that he would become the largest gaming player in the world. In fact, the purpose is to enlarge the scale of the most profitable gaming business in order to boost its valuation. Within five months of taking office, Stephen bought Bally Entertainment in exchange for $2 billion in equity, thus achieving this goal in one fell swoop. Then, in 1997, it launched a hostile merger and acquisition of ITT corporation. After the raid failed, it turned to buy Promus Hotel Corporation, which was included in six mid-level hotel brands for $3.7 billion and became a giant with 1,8 hotels in the United States.
At the same time, Steven also started to cooperate with the lost brands. In 1997, Stephen began to cooperate with Ladbroke, a British shareholder who ate Hilton International that year. By investing 3% of the shares, the two sides started two major cooperations: * * * with marketing and * * * with hotel development, and tested the water temperature first. In view of the complicated business relationship of the game business, Hilton Group split the hotel business and the game business by itself, and the latter was renamed Park Place Entertainment, and successfully acquired the peers such as Grand Casino and Caesars World. In 23, Park Place Entertainment was renamed Caesars Entertainment, and it was sold to Harrah's Entertainment for more than 5 billion dollars in 25.
after a large amount of cash was pocketed, on December 29th, 25 of the same year, Hilton Group acquired its overseas business of Hilton Hotel from Ladbroke for about US$ 6.2 billion. This transaction reunites the two "brothers" who were forced to separate in 1964. Hilton focuses on its business in the United States, while Hilton International mainly deals in the international market. The name Hilton has once again become a complete brand.
At this time, it is very close to the time limit when Byron was sentenced to receive voting rights and dividends. In 27, Byron, who was 8 years old, said that after his death, 97% of his property would be transferred to his father's Conrad H. Foundation. In fact, most of the money was originally from the foundation's legacy lawsuit.
on July 3, 27, Blackstone, a private equity fund, announced that it had acquired Hilton Group for about US$ 26 billion at a premium of 37% and listed its shares. According to the scale after the transaction, Hilton Group owns 1 hotel brands, 2,8 hotels all over the world and nearly 5, rooms, which is the largest M&A transaction in the global hotel industry this year.
After the sale of Hilton Group, Byron continued to be the chairman of the Foundation until 212. In 21, he also signed the "The Giving Pledge" initiated by Warren Buffett and Microsoft founder Bill Gates, and admitted that he would donate most of his fortune to charity. In 219, Byron passed away at the age of 92. The foundation said that Byron's charitable donation commitment actually donated about 3.4 billion US dollars, which will increase the foundation's assets to 6.3 billion US dollars.
The Hilton family is a typical case of not being rich for three generations. The first generation of entrepreneurial foundation, the second generation enlarged the scale, but after all, because the family descendants were unable to succeed, they changed hands with private equity funds during the third generation, allowing enterprises to enter another development era.
What is particularly interesting is that the will of the first generation is vague, resulting in the second generation of foundations that are mainly operated by family members and outsiders. Although they are all family interests, they have different positions. The result of this lawsuit, to some extent, led to the decision to sell later.
Decisively creating the second generation, early experience abroad, cultivated self-confidence, meritorious military service and vision, and created the macro-trading ability later. It also allows him to use cross-industry knowledge, innovate business models to enhance enterprise growth, and make good use of major transactions to restructure capital structure to enhance shareholder value when he takes over major transactions in Waterloo for the first time.
The most important thing is that in the face of irreversible judgment, he sets blueprints and long-term plans in his mind, selects suitable professional managers and authorizes them to implement them, from the beginning to the end, makes up the insufficient sections one by one, and continues to advance according to the strategy script, and finally sees a good sale.
In the face of the family's inability to take over, selling it to private equity funds as a whole may also be an option. In addition to maintaining the integrity of the enterprise, it also retains the family name and unloads the business burden. No matter what decision is made in the end, the head of the company should make a bold decision and make it as soon as possible in the face of major decisions.