BEVERLY HILLS, Calif. -- Hilton Hotels Corp.'s $4 billion
acquisition of Promus received shareholder approval from both
companies on Nov. 30, and the result is a 1,700-property company
that, according to Hilton president and chief executive officer
Stephen Bollenbach, has "the size and scale to match any company in
the world."
The deal, announced in September, gives Hilton a stable of
brands and lodging products. Formerly, Hilton's portfolio consisted
of about 300 properties in two areas: its upscale hotel and resort
properties and its Hilton Garden Inn brand, a midprice product.
With the closing of the deal, Hilton will add the Promus brands,
and the 1,400 properties they represent, to its portfolio. The
brands include Doubletree, Embassy Suites, Hampton Inn, Homewood
Suites and Red Lion.
"The thing we're most proud of is that we've integrated these
companies. Everyone knows what his job is, and we're off and
running," said Stephen Bollenbach, president and chief executive
officer of Hilton.
The company's headquarters will remain in Beverly Hills, with a
presence maintained in Memphis, Promus' home.
The deal positions Hilton "as one of the big three domestic
publicly traded [hotel] companies," according to Joyce Minor, a
senior analyst at Lehman Brothers.
Franchising will play a larger part in the new Hilton, according
to Bollenbach. Most of the Promus properties are franchises, and
Hilton plans to use franchising as a primary meth-od of growth.
Thomas Keltner, executive vice president of the franchise hotel
group (and a holdover from Promus), said the company will be
reorganizing its franchise group into four regions later this
month. This group will be headed by Jim Abrahamson, senior vice
president of franchising. Abrahamson will report to Keltner, who
will remain in Memphis.
Keltner said the company has more than 50,000 hotel rooms in the
franchise-development pipeline.
From Hilton's perspective, Bollenbach said, the company's newly
acquired franchise operations will provide a substantially larger
percentage of fee revenue. He said 30% of Hilton's revenues now
will come from fees from franchise and management operations.
He said the company's HHonors loyalty program would be extended
to the new brands, though the details of implementation are being
worked out.
Hilton failed in two earlier attempts to acquire other
companies, first losing out to then-newcomer Starwood in a bidding
war for ITT (owners of Sheraton) in 1997, then, earlier this year,
being beaten to the punch by a private investment group for an
equity stake in Wyndham International.