Hilton vs. Marriott: Things We Learned From the Business Wars Podcast

08.09.2023 - 17:23 / skift.com / Conrad Hilton / Sean Oneill

We learned a lot about hotel sector history by listening to Hilton vs. Marriott — the latest season from , a show from Wondery, Amazon’s podcast studio.

The five-episode series dramatizes pivotal moments in the companies’ trajectories. The scripts are well-researched, and the production values are high. Perhaps that shouldn’t have been a surprise, considering that Business Wars won the “best business podcast” award in this year’s Ambies.

Host David Brown uses the opening episode to lay out the origin stories of the Hilton and Marriott empires.

It turns out that J. Willard (“JW”) Marriott, founder of the world’s largest hotel company, didn’t have his sights set on the hotel business. A colleague suggested the idea of entering the hotel sector as a way to expand beyond the company’s core of fast-food restaurants and catering. In 1957, Marriott opened its first hotel, three decades after the company’s founding.

Similarly, Conrad Hilton also entered the sector somewhat by chance. In 1919, he wanted to buy a bank in a Texas oil town, but the deal fell through, and he was amazed by the popularity of the town’s hotel. After checking the hotel’s books, he bought it essentially on the spot.

Skift Take: One of the most appealing things about the travel sector is that it has long welcomed innovators. Many of today’s disruptors should take heart from the humble beginnings of Marriott, whose company now has more than 1.5 million rooms, and Conrad Hilton, creator of Marriott’s closest U.S. competitor.

Conrad Hilton became more ambitious with time, but he faced a problem plaguing the whole sector in the mid-1920s. New construction is capital-intensive, and it’s difficult to get loans. To build his first truly new hotel, Hilton needed $1 million but only had about a tenth of that. So he asked to take a 99-year lease on the land — instead of buying the land outright — and then took a loan against the land to underwrite construction costs. Clever! The deal became a template for growth.

In episode two, the show covers how JW Marriott’s son, Bill, expanded the business. Bill hired financial wizards, and in the late 1960s, they invented the asset-light business model.

Under the asset-light model, big brands mostly run hotels through management or franchise contracts. Once they become hotel management companies, they can avoid the need for holding lots of capital to own buildings and land. The model enables the brands to scale up more quickly.

Since then, Marriott’s success in moving asset-light has been copied by Hilton and nearly all the other major hotel players.

Yet debt-based businesses are prone to getting caught off guard by changes in macro-economic fortunes. The Great Depression essentially bankrupted Hilton,