We're not here to talk about the past.

So Blackstone owns Hilton and Magic Johnson owns a major Hilton property, hmmm. . . . .

You're telling me the Hiltons don't own the Hiltons?

I slept on a Hilton once. Paris, I think.

You're telling me the Hiltons don't own the Hiltons?

No. It's actually exceptionally rare for a hotel management company (like Hilton, Marriott, Four Seasons, etc.) to own the physical property (with certain large exceptions, mostly in Asia). The individual hotel owners contract with the property owner to run the hotel.

Hilton/Marriott/Whoever prefer this arrangement to owning the properties because it's harder for them to be experts in the local real estate market in several hundred localities. The property owners prefer the arrangement because it's difficult to run independent hotels.

Actually it isn't exceptionally rare, it is exceptionally rare for a hotel chain to build and own a new property (though it still happens) but they all still own plenty of properties. What is becoming all the rage is franchising where the hotel company doesn't even have to manage the property. They simply sit back and collect franchise fees.


But the Hiltons cashed out to Blackstone at the very end of the boom just months before the crash. Blackstone has taken a bath on the acquisition so far.

Actually it isn't exceptionally rare, it is exceptionally rare for a hotel chain to build and own a new property (though it still happens) but they all still own plenty of properties.

I guess I shouldn't have said exceptionally rare. I should just say, "rare."

Most hotels have been built in the last 20 years or so. Legacy properties are pretty uncommon at this point, even in the luxury market.

As far as the luxury properties go we are seeing hotel companies building and or owning the property. For instance I believe Hilton owns all 17 of the Conrad Hotels with more in the pipeline and they own some of their Waldorf Astoria properties. The one in Chicago which is owned by Sam Zell who found his hotel struggling without a corporate partner. Hilton also I believe built and own Waldorf Astoria Orlando and Hilton Bonnett Creek.

But yeah the Hampton Inns and such which is the market segment that is greatly expanding are rarely owned or even managed by the hotel company.

As far as the luxury properties go we are seeing hotel companies building and or owning the property. For instance I believe Hilton owns all 17 of the Conrad Hotels with more in the pipeline and they own some of their Waldorf Astoria properties. The one in Chicago which is owned by Sam Zell who found his hotel struggling without a corporate partner. Hilton also I believe built and own Waldorf Astoria Orlando and Hilton Bonnett Creek.

I guess we have different ideas of what the luxury market is. To my mind, Conrads aren't luxury.

The Conrads compete with Fairmonts, Intercontis and such. There's a Conrad in Indianapolis, ffs. The new Bali property is USD290 per night ... with rooms as low as USD230. For Bali?
Double Edit: The Maldives property looks pretty nice, but it's hard to tell in the Maldives.

Shangri-La is a counter-example. I think the new one in Paris and the one in Vancouver are both owned by the company. It's still pretty rare.

Edit: I don't think literally anyone else cares about this.

If Conrad isn't a luxury chain then that is news to the industry.

The Conrad Indianapolis has won several awards and been rated one of the top hotels of the world by Conde Nast. Hell, they even have a JW in Indianapolis.

It's still pretty rare

Like I said earlier I agree that a lot of if not all of the low end stuff is being franchised out and privately owned but a good deal of the higher end market is owned by the hotel companies.

Edit: I don't think literally anyone else cares about this.

I won't say I care about this, but I learned something I had no idea about. So thank you both.

Blackstone Advisory Partners

This sounds like a corporate front for a Bond villain.

The one in Chicago which is owned by Sam Zell who found his hotel struggling without a corporate partner.

Which one is this?

Which one is this?

The former Elysian. I think they're turning into a Waldorf-Astoria. IMO, a mistake for them, but I don't really like the direction that Hilton has been headed.

Zell has a 5% stake in Starwood, I think running it under their Luxury Collection brand, or maybe looking at an international player (Taj would make sense) would have been a better move.

Admittedly, I don't know a ton about their business. I just don't really like Hilton.

Man. You guys know a lot about hotels.

Most hotels have been built in the last 20 years or so. Legacy properties are pretty uncommon at this point, even in the luxury market.

Really? Most of the major high-end hotels in big cities are quite old. Especially in Europe. I'm sure they've been gut renovated at some point, but they are usually at least 50 years old.

Most of the major high-end hotels in big cities are quite old. Especially in Europe. I'm sure they've been gut renovated at some point, but they are usually at least 50 years old.

Can't speak for Europe but for the US it depends on region. For obvious reasons the further west you go the newer the hotels. The East Coast and Chicago have a ton old flagships but newer metro areas have newer hotels. But that isn't to say that new ones are not being built on the East Coast. Marriott is building a monster of a hotel in DC right now. Gaylord built a behemoth on the outskirts of DC. The Elysian (now Waldorf Astoria) was completed in 2009 or 2006 I think. The 17 Conrads are all new. Marriott's Ritz and the Four Seasons as well have a bunch of new hotels and JWs are popping up as well.

The older properties are kind of screwed in that what a hotel needs to look like has changed radically since they were built and they come off as dinosaurs that need costly renovations to modernize. Which is a big reason why the Hiltons cashed out many of their flagship properties before selling the corporation to Blackstone. They sold Palmer House, Washington Hilton, Capitol Hilton and various other flagship properties for hundreds of millions of dollars and the new owners had to plow hundreds of millions of more dollars renovating them.

To my mind, Conrads aren't luxury

The Conrads compete with Fairmonts, Intercontis and such.

Haven't stayed in a Conrad but I've stayed in Intercontinentals all over the world and they'd have to have a new category if those aren't luxury hotels.

don, when i ask for the moon, by golly i want the moon.