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.