News profile: Hilton's Sir David Michels

12 April 2007 by
News profile: Hilton's Sir David Michels

Hotelier Sir David Michels oversaw the reunification of the US and UK Hilton brands last year. While the hospitality world waits to find out his next move - currently a closely guarded secret - he took time out to talk to Emily Manson about his achievements so far

What was biggest challenge of the Hilton reunification?

Sir David Michels The economic climate helped but, like any marriage, there have to be two willing partners. We had an extremely strong duty to shareholders, staff and customers, and we didn't want any casualties. The deal involved tens of thousands of lives both monetarily and practically. It's rare in these deals that everyone walks away smiling. With hindsight, we achieved that - out of 110,000 employees only 10 were made redundant, and those were well looked after - but it wasn't easy.

How does it feel to have led one of the world's biggest hotel brands?

It's an enormous privilege to work for a worldwide brand, because these companies take decades to build. When you're in charge, however temporarily, you've got an enormous responsibility. It's like being in a relay race and holding the baton: you know you've got this valuable thing and you've got to try and ensure that, at the very least, it leaves your hands in as good condition as when you received it. You can't ruin it completely, but you can hurt it - a lot of damage can be done in three or four years.

People still talk about how you turned Stakis around. What was the key?

We inherited a regime of 16,000 employees that we cut to 11,000 in three weeks (in 1991), but still retained the loyalty of those left by giving them shares in the company. Nine years later, when it was sold (to Hilton for £1.2b), the chambermaids did as well as their bosses and their faith was genuinely restored. It made me realise that if you get shares in the hands of the workers, they have a vested interest in helping that company succeed.

What's the most interesting role you've held?

It's always the climax or end of something. The most satisfying was helping rescue Stakis from bankruptcy, while the most exciting was selling Stakis to Hilton and then Hilton to Hilton. These kind of deals are so on-the-edge, because you honestly don't know the ending. It's like being pregnant for 20 years and no one knows how or when it will happen.

What are the biggest challenges facing the hotel industry today?

There's no single challenge there never has been. It's a business of a hundred small details. Forget about war and pestilence, because they're boring. The industry runs scared of a million things, but it doesn't need to, as no one, particularly women, has ever taken enough holidays. We're in the most amazing position of having a customer base that can never have enough of our product, because when they go travelling, whether they want to or not, they have to stay somewhere.

How do you think Hilton's international brands will develop?

Hilton, like other international groups, has the master brand and is developing sub-brands. However, they all have yet to prove that it is possible to multi-brand internationally. No one has really done it yet, and it's there to be done. There's no established and meaningful franchising brand in Europe yet, and scepticism exists about when it will happen. I don't know who will be the first to do it successfully, but when Hilton first came over in the 1950s critics thought it wouldn't work. It's a process of evolution - and hard work.

How has technology helped the industry?

The single biggest help was the advent of low-cost travel, but the industry generally is still old-fashioned. Forty years ago, when I started out, chambermaids cleaned 14 rooms. They still do. I adore the industry, but it's not one that is aided that much by technology. People want a clean room, a warm welcome, a comfy bed and an alarm clock to wake them up on time. It's not rocket science.

Where's the best place to invest in at the moment?

Honestly, I wouldn't tell you even if I could, as people might actually take my advice. But if I really knew how to invest, I wouldn't have had to work for a living - which I have done.

What's your advice for staying on top of the market?

You've got to understand that everything changes. You don't know when or how, but you simply need to realise that just when things get comfy, it's too late. Life has a nasty habit of changing, and you have to keep moving to keep ahead of it or even keep up.

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