The Business Wars podcast, produced by Wondery, recently released a five-episode series called “Hilton vs. Marriott,” which delves into the histories of these hospitality titans. With well-researched scripts and high production values, the series offers valuable lessons from past crises that shed light on current industry dynamics. The podcast won the “best business podcast” award at this year’s Ambies, further showcasing its quality and significance in understanding the hotel sector’s history.
In the first episode, the podcast introduces the origin stories of Hilton and Marriott. Interestingly, neither founder initially intended to enter the hotel business. Marriott’s founder, J. Willard Marriott, was suggested by a colleague to expand beyond fast-food restaurants, leading to the company’s first hotel opening in 1957. Similarly, Conrad Hilton stumbled upon the hotel industry when his attempt to buy a bank fell through, and he ended up purchasing a popular hotel instead. These humble beginnings demonstrate the industry’s welcoming nature to innovators, inspiring today’s disruptors.
The second episode explores how Conrad Hilton overcame the capital-intensive nature of the hotel sector by creatively financing his first new hotel. By taking a 99-year lease on the land instead of purchasing it outright and using the land as collateral for a loan, Hilton established a template for future growth. Additionally, the episode delves into Bill Marriott’s innovative asset-light business model, in which major hotel brands run hotels through management or franchise contracts instead of owning the buildings and land directly. This model has since been adopted by other major hotel players, allowing for faster scaling.
While these financial engineering strategies facilitated rapid growth, they also exposed companies to economic volatility. The podcast highlights how Hilton faced near bankruptcy during the Great Depression but managed to regain control through sheer determination. It serves as a reminder that even though innovative capital structures accelerate growth, they can become problematic in the wrong hands, especially when revenue is used to secure substantial loans.
The third episode delves into Marriott’s financial struggles in the 1980s, leading the company to seek a loan from Coca-Cola. However, Coca-Cola declined, and Pepsi stepped in to provide the much-needed funds. As a result, Marriott properties have since exclusively served Pepsi beverages. This episode highlights how internal conflicts and decisions within companies often lead to their own problems, overshadowing external competition.
The fourth episode explores the rivalry between Hilton and Marriott from 2001 onwards. It includes a homage to a Washington Post profile of Hilton’s current CEO Christopher Nassetta, illustrating how Nassetta’s tough decisions and cultural resets turned the company around. The episode emphasizes the importance of corporate culture in the success of strategic plans and highlights Nassetta’s approach in reshaping Hilton’s team dynamics and guest treatment.
Lastly, the podcast acknowledges Airbnb as one of its advertisers, coinciding with Airbnb’s entry into the S&P 500 stock index. This highlights the potential for disruptors in the travel industry, despite the apparent dominance of established giants like Hilton and Marriott.
Overall, “Hilton vs. Marriott” provides valuable insights into the history and dynamics of the hotel sector. By examining the successes and challenges faced by these hospitality giants, listeners gain a deeper understanding of the industry’s past and present.