British Centennial Hotel

Hilton, with a history of 100 years, is one of the largest hotel chains in the world. It was founded by Conrad Hilton in 19 19. However, the family suffered heavy losses in the inheritance lawsuit, and the descendants were unable to take over, but the three generations were not rich. Finally, they sold the company to a private equity fund in 2007.

Conrad, who established his family business, was born in 1887. He had hoped to be a banker, but failed several times. 19 19, there was a hotel owner in Texas who wanted to cash out his assets and transfer them to the oil field. Conray saw the opportunity and raised $35,000 with his friends to buy it and opened the first Hilton Hotel. 1925, Kangrui opened the first hotel named after his surname in Dallas. Since then, more and more hotels have opened, so in 1929, he further renamed all hotels and became a chain hotel system.

The road to early entrepreneurship is bumpy. Although Kangrui owns eight hotels, the expansion of its territory comes from a large amount of debt, and its career seems to be bright, but in fact it is heavily in debt; 1929 At the beginning of the Great Depression in the United States, he was immediately on the verge of bankruptcy. During this period, he experienced many commercial lawsuits and capital reorganization. The lawsuit was not settled until 1934. At this time, the company's equity is extremely dispersed and there are many external shareholders.

After World War II, the economy recovered and the speed of M&A accelerated. In view of the large number of hotels, Kangrui integrated all its hotels and established the Hilton Company. 1945, Hilton bought the Stevens Hotel, the largest hotel in the world, after many negotiations. 1947, Hilton is listed on the new york Stock Exchange. At this time, overseas business opportunities are growing rapidly, and Kangrui also wants to expand overseas. In order to avoid the constraints of the company's board members, 1948 established Hilton International to develop the international market. Hilton International was split into an independent company every other year, concentrated on developing overseas business, and successfully bought waldorf, which is known as the "Queen of World Hotels" in new york.

1954, Conley initiated the largest M&A transaction in American hotel industry: the acquisition of Statler Hotel Company for 1. 1 billion dollars. This successful merger made Hilton's earnings per share more than triple that of 1953 in the following year, and put the whole group first in the United States. By 1964, Hilton International was also listed on the new york Stock Exchange.

Kang Rui * * * has been married three times, with three men and one woman. His first marriage was at the age of 38, and he gave birth to three sons: Nicholson (1926- 1969), Barron (1927-) and Eric (1933-20 1968). At the age of 55, Conway married for the second time and gave birth to her daughter Francesca. At the age of 89, he got married for the third time, and this time he died without children.

Nicholson, the second-generation eldest son, had been gambling, drinking and violent abuse for a long time, and died of heart disease due to drinking at the age of 42. Eric, the youngest son, is very docile. Joined Hilton at the age of 65,438+06, starting as a bellboy, chef and telephone operator. As for Byron, the second son, he showed distinctive characteristics from an early age and was full of interest in aviation flight. He began to learn to fly at the age of 17. In addition, Byron started his own business in his early years, including a joint venture with others to establish McDonald Oil Company, which was one of the earliest aviation leasing companies in the United States.

1954, Byron quickly showed his father his talents in cost control and real estate planning after he entered the family business. At that time, he was the vice president of Hilton Hotels and ran a "discretionary credit card" company. The company was acquired by Citibank six years later, and Citibank incorporated the Hilton Hotel credit card into the global authorized credit card system.

Kang Rui, 79, abdicated on 1966. Byron, 39, is also the chairman of the group at the invitation of the company's directors. One year after Byron officially took over, based on his enthusiasm for the aviation industry and the prosperity of international tourism after the war, he persuaded his father to hold shares in Hilton International Company and exchange shares with TWA.

However, after the completion of this transaction, the first oil crisis followed, and the oil price soared several times, which led to a sharp drop in TWA's share price, from $83 to $5, and TWA also fell into financial crisis. From 1967 to 1987, Hilton International was acquired three times, and the equity finally fell to the British gambling group Ladbroke. Hilton Group not only failed to obtain the valuable comprehensive effect of "machine plus wine", but also lost the control right of Hilton International, unable to reach out in the international market, which was not worth the loss.

First of all, the Group started to operate casino hotels, hoping to make up for the lost overseas business opportunities through its high-profit business in China. 1970, the group bought international and flamingos; The gambling hotel in Las Vegas is 1. 1 billion dollars. Two years later, the profits earned by these two Boyi hotels totaled as high as 45% of the group's, and their contribution was almost the same as that of other 160 hotels, while still growing at a high speed of 20% every year. Therefore, by 1982, Hilton Group has become the largest hotel chain in the world.

However, gambling business is mostly related to triads. 1985, the group spent $320 million to build a casino in Atlanta. Because it offended the local powerful people, it was too late to get the operating license. After several mediations, the entire property right can only be sold to real estate tycoon Trump, the current president of the United States, at the cost price.

Byron's second move is to accelerate the innovation of business model and complete the brand map. Since 1973, Hilton Group has made great efforts in franchise development business and hotel property management business. They are in the leading position in the industry, and have introduced a computer reservation system (Hiltron) for all their brand hotels. After losing the right to operate Hilton International, the group learned a lesson and merged other hotel brands to meet different customer groups. At the same time, it has also established a sub-brand of Kanglai Germany, and has not given up the possibility of overseas development.

Byron's third move is to use capital operation to greatly enhance shareholder value. Due to his personal experience, Byron is very familiar with the operation mode of the leasing industry. Therefore, in 1975, Hilton sold 50% of the property rights of six large hotels to Prudential Insurance Group of Britain for $83 million. At the same time, they are sold and leased back, and the property is managed by capital lease, which can collect rich management fees and a certain proportion of profits.

This transaction greatly activated its assets, and more importantly, let everyone see that the value of the Group's land assets far exceeds twice the total market value of the shares, thus giving stock market investors more confidence. Byron used the cash to repay the earlier loan with higher interest rate, and then bought back 20% of the circulating shares. This complex comprehensive reorganization of assets, liabilities and shares has caused the overall market value to climb and the stock price to skyrocket by about 7 times.

Kang Rui began to think about successors very early. Based on the estate planning and pre-listing equity planning, before the listing of 1944, Kangrui established Conrad N. foundation in the name of charity, which mainly supported the disadvantaged groups and transferred 99% of its estate to the family foundation. Most board members are descendants of this family.

However, Byron disagreed with this arrangement. He believes that individuals should have the right to buy 27% equity donated by their father to the foundation, because he believes that the world was shot down by himself and his father just "laid some foundations"; Therefore, Byron claimed that what his father said in his will was to give himself the option to buy all 27% shares. Only in this way can the decision-making operation and family control of Hilton Group be maintained.

However, the directors of the foundation expressed doubts about the expression of this will, believing that Byron's excessive expansion explained his father's will. At that time, Byron personally held only 3.6% of the shares of listed companies. The foundation and Byron went to court for ten years, and the ownership of the heritage equity evolved into a struggle between the second generation of the family chairman and the first generation of the construction foundation.

In 1988, the court ruled that Byron could get 4 million shares out of13.5 million shares, and the foundation could get 3.5 million shares. The remaining 6 million shares must be managed by the trust, but Byron is the executor of the trust and can get 60% of the dividend income allocated to these 6 million shares, and the rest of the dividend income belongs to the foundation. This decision enables Byron to own more than 25% of the voting rights and dividend income of Hilton before 2008. This judgment also affects the choice of future successors and the final sale decision.

Byron is different from his father. He has only 1 wives in his life. They gave birth to eight children, 15 grandchildren. However, only David is in charge of the operation, and the rest of his descendants are not interested in the family business. Byron once thought about letting David take over, or handing over the class to his brother Eric. However, their management ability and age are making him uneasy; Many Hilton family members are frequent visitors to the media entertainment edition: nicky hilton, the fourth generation, has been in the entertainment circle for many years, and Conrad Hilton III is famous for his dissolute life and violent personality, frequently causing troubles in public places, and even being photographed by the media smoking marijuana in public places. As for her granddaughter paris hilton, she is notorious for her disorderly private life.

In the end, Byron arranged for his son Steven to be the chairman of the foundation, although he would not let his descendants take over the family hotel business. In 2005, the Hilton Foundation decided that family members would always occupy the majority of the board of directors of the Foundation.

Byron, in his heart, was disappointed that the possibility of family members inheriting was getting lower and lower. Faced with the reality that dividend income and voting rights will expire in 2008, Byron drew up a long-term strategy in his mind. 1996, when Byron was 70 years old, he chose professional manager Stephen F. Bollenbach as the CEO's successor. Stephen was the chief financial officer of Disney. He was responsible for the debt restructuring of Trump Group, and acquired other large-scale transactions of ABC and Disney for $654.38+0.9 billion, specializing in strategic transactions and capital restructuring. After he took office, the group began a series of transactions, which laid the groundwork for the overall sale of Hill Group ten years later.

First of all, Stephen set a goal, claiming to be the biggest gamer in the world. In fact, the purpose is to make the most profitable game business bigger, so as to boost the valuation. Less than five months after Stephen took office, he exchanged $2 billion in equity for the acquisition of Bally Entertainment, which achieved this goal in one fell swoop. Then, at 1997, it launched a hostile merger with ITT. After the failure of the raid, it bought Promus Hotel Corporation, and included six mid-level hotel brands at a price of $3.7 billion, becoming a giant with 1, 800 hotels in the United States.

At the same time, Stephen also began to cooperate with the lost brand. From 65438 to 0997, Stephen began to cooperate with Radbrock, a British shareholder who ate Hilton International that year. By investing 3% of the shares, the two sides started two major cooperation, * * * marketing and * * * hotel development, and tested the water temperature first. In view of the complex business relationship of the game business, Hilton Group split the hotel business and the game business by itself, and the latter was renamed as Park Place Entertainment, and successfully acquired peers such as Grand Casino and Caesars World. In 2003, Park Place Entertainment was renamed Caesars Entertainment and sold to Harrah's Entertainment in 2005 for more than 5 billion dollars.

After pocketing a large amount of cash, on February 29th, 2005, 65438, Hilton Group acquired the overseas business of its Hilton Hotel from Ladbroke for about $6.2 billion. This transaction reunited two "brothers" who were forced to separate in 1964. Hilton focuses on American business, while Hilton International mainly deals with international market. The name Hilton has once again become a complete brand.

At this time, it is very close to the time limit when Byron was sentenced to receive voting rights and dividends. In 2007, 80-year-old Byron said that after his death, 97% of his property would be transferred to his father's Conrad H Foundation. In fact, most of the funds originally came from the foundation's legacy litigation.

On July 3, 2007, Blackstone, a private equity fund, announced that it had acquired Hilton Group and listed it at a premium of about $26 billion. According to the scale after the transaction, Hilton Group owns 10 hotel brands, 2,800 hotels worldwide and nearly 500,000 rooms, which is the largest M&A transaction in the global hotel industry this year.

After the sale of Hilton Group, Byron continued to be the chairman of the Foundation until 20 12. In 20 10, he also signed the "giving pledge" initiated by Warren Buffett and Microsoft founder Bill Gates, acknowledging that he would donate most of his property to charity. Byron died in 20 19 at the age of 92. The foundation said that Byron's charitable donation commitment actually donated about $3.4 billion, which will increase the foundation's assets to $6.3 billion.

The Hilton family is a typical case of not being rich for three generations. The first generation of entrepreneurial foundation, the second generation expanded its scale, but after all, because the descendants of the family could not succeed, they changed hands with private equity funds during the third generation, which made the enterprise enter another development era.

What is particularly interesting is that the vague will of the first generation resulted in the second generation of foundations, mainly family members and outsiders. Although they are all family interests, they have different positions. The result of this lawsuit, to some extent, led to the subsequent sale decision.

Decisively created the second generation, early experience abroad, cultivated self-confidence, meritorious military service and vision, and later created the ability of macro-trading. It also allows him to use cross-industry knowledge, innovate business models to enhance enterprise growth, and make good use of major transactions to reorganize capital structure and enhance shareholder value when he takes over major transactions in Waterloo for the first time.

Most importantly, in the face of irreversible judgment, he set a blueprint and long-term plan in his mind, selected suitable professional managers and authorized them to implement them. From beginning to end, he made up for the shortcomings one by one, continued to advance according to the strategic script, and finally saw the sale.

In the face of the family's inability to take over, selling it to private equity funds as a whole may also be an option. In addition to maintaining the integrity of the enterprise, it also retains the family name and relieves the burden of the enterprise. No matter what decision is made in the end, the person in charge of the enterprise should be brave in making decisions and plan as soon as possible in the face of major decisions.

Foundations are also an important tool for wealth planning, which not only greatly improves the efficiency of tax payment, but also effectively enhances the family image. But the key point is how to master the arrangement of directors' seats and decision-making operation of the foundation and the board of directors, which is an important key to maintain the original intention of the founders. This case tells us that the operation of the foundation needs to be carefully arranged, and we should not let our own people become outsiders, or even become foreign enemies who eat inside and pick outside.