The First Hilton Renaissance

Financially successful and expanding, in 1949 Hilton Hotels was a company on the rise in an industry still struggling from the bleak days of the Great Depression. Founder Conrad Hilton was on the verge of making his name synonymous with hotels. In September 1949, Hilton had acquired the Waldorf Astoria in New York City, “the greatest of them all,” as he wrote in his memoir. It was a triumph for a man who lost all but one of his hotels 15 years earlier. Hilton clawed his way back by painstakingly rebuilding the company’s portfolio in the years since.

In the mid-1940s, Hilton had transformed the company from a southwestern regional outfit into a national chain through key property acquisitions in New York (the Roosevelt and the Plaza) and Chicago (the Palmer House and the Stevens Hotel, which is now the Chicago Hilton). The coast-to-coast company secured its first international toehold when it acquired the Caribe Hilton in Puerto Rico at the end of 1949. By then, Hilton Hotels had approximately 12,000 rooms under its name, with gross revenue of more than $42 million and profits just shy of $4 million.

Back then, Hilton was more a collection of individual properties and less a chain. It had both luxury and commercial hotels, from the sophisticated Plaza in New York to the 200-room Albuquerque Hilton, not to mention the Caribe. At the time, Hilton advertisements were geared toward acquainting the public with individual hotel names and their location. Hilton wanted the hotels to retain their distinctive style yet connect them to the larger national brand.

Of equal importance to all of these marquee acquisitions were the internal changes Hilton had put in place by 1949, creating a centralized purchasing department and expanding pre-cost accounting to the property level. These changes paid off when, five years later, Hilton made what was then the largest real-estate transaction in the United States, by buying the Statler hotel chain for $111 million. The deal was part of a larger movement within the lodging industry toward mergers and acquisitions, and it would lead to segmentation and the use of cutting-edge technology to book rooms. Hilton led the way through his ability to raise large amounts of money from various sources to fund mergers and acquisitions on a grand scale. When Hilton bought Statler, the New York City-based company had the most advanced telephone reservation system in the industry—a system that would soon extend to every Hilton property.

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Coming out of the deal, Hilton had several properties that today would fill different brands. To fulfill a promise to the widow of Ellsworth Statler—the great founder of the namesake chain—Hilton promised to keep the name on various Statler properties. Hilton Hotels soon would consist of the Statler Hotels, the Waldorf Astoria, the Palmer House, and the Lubbock and El Paso Hiltons. All successful properties are geared for different clientele and tastes.

Photo courtesy of the Massad Family Research Center, Hospitality Industry Archives, Hilton College, University of Houston

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Mark Young, Ph.D., is director of the Hospitality Industry Archives at the Conrad N. Hilton College of Hotel & Restaurant Management, University of Houston.