The Value of the Hilton Brand

John Kay writes

about brands, and manages in his first sentence to get off on two

wrong feet, if such a thing is possible.

With Paris dragged screaming back to jail, and the hotel group the latest

victim of private equity, it has not been a good few weeks for the Hiltons.

While there are celebrities who would be damaged by a jail term, Paris Hilton

is most definitely not one of them. I’m sure that her stint in prison was unpleasant

for her personally, but Kay is writing about brands here, and Paris Hilton remains

one of the strongest and most lucrative individual brands in the US, if not

the world. And her brand value has only gone up in the wake of all the jail-related


But no matter how many times she takes her clothes off or goes to jail, Paris

Hilton will never be worth $20 billion. For that, you need to build a lasting

business. And Hilton co-chairman Barron Hilton has done a magnificent

job of growing his company over the past few years and finally selling it at

an all-time high, netting a cool $1 billion for himself.

What’s more, all that money is going to be donated

to the Conrad N. Hilton Foundation, which is very much a Good Thing:

The foundation supports projects that provide clean water in Africa, education

for blind children, and housing for the mentally ill. Its aims, based on Conrad

Hilton’s will, are "to relieve the suffering, the distressed and the


The Hilton family, in other words, is not a "victim" of private equity;

quite the opposite. Instead, it’s a beneficiary of private equity,

and of the fact that the buyer, Blackstone, is willing to borrow far

more money than the company is realistically able to repay.

Kay is quite right that the Hilton brand is a little tarnished these days.

Which makes it all the more impressive that Barron Hilton managed to squeeze

$20 billion out of Blackstone for a company which had net income in its most

recent quarter of just $95 million, down from $104 million a year ealier.

Last week was one of the best weeks in Hilton family history: it showed that

Barron Hilton, just like his father Conrad, deserves to be remembered as an

excellent creator of value in the hospitality industry. Whether the same will

be able to be said of Steve Schwarzman, only time will tell.

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