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🟡 FORMERLY PE OWNED
Hilton Hotels
hotel chain · McLean, VA
PE Firm
Blackstone Group
Year Acquired
2007
“Blackstone's $14 billion payday — after gutting headquarters and replacing 80% of management.”
What Happened
- •Blackstone's 2007 LBO loaded Hilton with $20.5 billion in debt; revenues fell 15% and equity value dropped 70% by 2009
- •Replaced 80% of headquarters staff after relocating from Beverly Hills to Virginia to cut costs
- •Bought back $1.8 billion of its own distressed debt at 54 cents on the dollar, converting another $2B to preferred stock
- •Taken public again in 2013 in largest-ever hotel IPO; Blackstone ultimately made $14 billion profit — a 3x return by 2018
The Damage Done
- ▸Daily housekeeping eliminated as standard service in 2022 — guests now have to specifically request room cleaning or it won't happen
- ▸Mandatory 'resort fees' of $15 to $45 per night added on top of advertised prices at 78+ properties — Nebraska and other states sued over deceptive pricing
- ▸FTC warned Hilton that its resort fee practices may violate federal consumer protection laws; class action lawsuits followed
- ▸Headquarters moved from Beverly Hills to Virginia — only 20% of original staff made the move