The worst-kept secret in the hotel industry was revealed this morning as Hilton Hotels Corp. pulled the triggered on a long-rumored acquisition of Hilton International, thus reuniting a company that never should have been split in the first place. Hilton will pay $5.7 billion in cash for its overseas sister.
From a branding point of view, one of the biggest blunders in the history of the lodging industry was the 1964 break-up of Hilton into a U.S. company and a London-based firm that stewards the brand everywhere else in the world. Physically, today's transaction creates a system of 2,800 hotels and 475,000 rooms in 80 countries and operating under nine brand names. The purchase includes 40 hotels, 200 leases, 160 management contracts, 80 managed health clubs andÃ¢€”probably the key to the dealÃ¢€”the remaining 50-percent ownership of Hilton HHonors and the Hilton reservations system.
In the past few years, the two companies have worked closely to align their interests and to present a worldwide set of physical and service standards for the Hilton name. Yet, it's just common sense to understand that one company, with one world headquarters and one set of leaders will be more effective for Hilton and will enable it to more readily compete with its global adversaries in the business (i.e., Marriott and Starwood).
The tough job, of course, will be integrating the two corporate cultures, a task that will be even more challenging following last week's resignation of top Hilton executive Dieter Huckestein (see The Front Desk, Dec. 22).