The Value of the Hilton Brand

John Kay writes about brands, and manages in his first sentence to get off on two wrong feet, if such a thing is possible.

With Paris dragged screaming back to jail, and the hotel group the latest victim of private equity, it has not been a good few weeks for the Hiltons.

While there are celebrities who would be damaged by a jail term, Paris Hilton is most definitely not one of them. I'm sure that her stint in prison was unpleasant for her personally, but Kay is writing about brands here, and Paris Hilton remains one of the strongest and most lucrative individual brands in the US, if not the world. And her brand value has only gone up in the wake of all the jail-related publicity.

But no matter how many times she takes her clothes off or goes to jail, Paris Hilton will never be worth $20 billion. For that, you need to build a lasting business. And Hilton co-chairman Barron Hilton has done a magnificent job of growing his company over the past few years and finally selling it at an all-time high, netting a cool $1 billion for himself.

What's more, all that money is going to be donated to the Conrad N. Hilton Foundation, which is very much a Good Thing:

The foundation supports projects that provide clean water in Africa, education for blind children, and housing for the mentally ill. Its aims, based on Conrad Hilton's will, are "to relieve the suffering, the distressed and the destitute."

The Hilton family, in other words, is not a "victim" of private equity; quite the opposite. Instead, it's a beneficiary of private equity, and of the fact that the buyer, Blackstone, is willing to borrow far more money than the company is realistically able to repay.

Kay is quite right that the Hilton brand is a little tarnished these days. Which makes it all the more impressive that Barron Hilton managed to squeeze $20 billion out of Blackstone for a company which had net income in its most recent quarter of just $95 million, down from $104 million a year ealier. Last week was one of the best weeks in Hilton family history: it showed that Barron Hilton, just like his father Conrad, deserves to be remembered as an excellent creator of value in the hospitality industry. Whether the same will be able to be said of Steve Schwarzman, only time will tell.