The hotel industry owes a lot of its current landscape to Steve Bollenbach.
Bollenbach, a financial whiz and hotelier at heart, died 8 October at age 74. He was a true pioneer and dealmaker who directly shaped the lineup of companies and brands that populate the global hotel business.
Perhaps it was because there were certain financial advantages to such practices, but Bollenbach’s biggest deals always seemed to occur at the end of a calendar year.
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Steve Bollenbach |
It was his acquisition of Promus Hotel Corporation on the last day of 1999 that served as the first volley in a mostly friendly battle to create the world’s largest hotel company. At the time, Hilton Hotels Corporation was a quaint, 275-property hotel company with grand visions. The $4-billion deal for Promus—which had been nothing but a clash of cultures since it acquired Doubletree Corporation in 1997—gave Hilton instant critical mass as it added a number of brands that had once been in the Holiday Inn family, including Hampton Inn, Embassy Suites and Homewood Suites.
But it wasn’t until Bollenbach realized his long-time dream of reuniting what was then Hilton International and Hilton Hotels Corporation in the waning days of 2005 that the true race for one million rooms was on.
With that deal, Hilton built the foundation to be able to grow all of its brands internationally—until then those brands were confined to North America and the Caribbean.
During an interview at Hilton’s Beverly Hills, California, offices in 2006, Bollenbach told me that ending the 35-year split between the North American and the international Hilton entities was his crowning achievement. As the years passed, I never got the chance to ask him if his 2007 deal to sell Hilton to Blackstone for a staggering $26 billion surpassed the reunification as his biggest achievement, but I suspect it didn’t.
While he was known as a fierce negotiator with an astounding knowledge of financing, that day in the 90210 gave me the impression that nothing would ever surpass the reuniting of one of the most iconic names in the hotel industry through a series of complicated deals and financing. Because Bollenbach was the first person outside of the Hilton family to hold the chief executive title at the company, I believe he felt a need to get the deal done and rewrite the family’s hotel legacy.
He also talked about his affinity for sports cars and his long history in the hotel industry—he was one of the architects of Marriott spinning off its real estate to form Host Marriott Corporation (now Host Hotels & Resorts) in 1993. He also held executive positions at Holiday Corp and the Trump organization.
I would have loved to have heard Bollenbach’s thoughts on Marriott’s recent acquisition of Starwood Hotels & Resorts Worldwide.
In 1997, the Bollenbach-led Hilton launched a $6.5-billion hostile takeover of ITT Sheraton Corporation, which in the ensuing months took as many twists, turns and full circles as the Marriott-Starwood deal. There was mudslinging and innuendo. ITT actually split into three companies to maximize its value during the nine-month soap opera. It ended in October 1997 when a small Scottsdale, Arizona-based paired-share real-estate investment trust called Starwood Lodging, led by brash real-estate upstart Barry Sternlicht, won the bidding with a $9.8-billion offer.
Bollenbach was diplomatic during the ensuing months, but I believe it was largely because of the lobbying efforts of him and Marriott leader Bill Marriott that the paired-share REIT structure was rendered obsolete. That’s because in 1998 a law was put into place that barred paired-share REITs from putting future acquisitions within their tax-advantaged structure—which is what Sternlicht did with Starwood. Starwood quickly converted from a REIT to a C-Corporation after the new law was passed.
Steve Bollenbach’s contributions to the hotel industry run deep. He was a chief architect of the industry during the go-go late 1990s and during the aftermath of 9/11. His ability to shape deals opened the doors for many of the deals going on during today’s massive consolidation of the industry. He was an industry pioneer who will be missed.
Care to share your thoughts? Comment below, email me at jhigley@hotelnewsnow.com or find me on Twitter @jeffhigley1.
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