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Conrad Hilton's Ballsiest Power Move
How to conquer the world, one franchise at a time...
Jordan Belfort
June 19, 2024
If franchising were a drug, Conrad Hilton would be the Pablo Escobar of hotel deals, peddling his addictive brand of luxury to travelers around the globe.
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👇 Today’s Briefing
Story: From Waldorf-Astoria to World Domination 🏢
Insight: The Secret Sauce of Franchising 🍝
Action: The No-Bullshit Franchise Test 🏪
THE STORY
From Waldorf-Astoria to World Domination 🏢
The Waldorf Astoria, old New York.
Let's talk Conrad Hilton, the man who turned a small Texas hotel into a global empire and made the Waldorf-Astoria his crown jewel.
It's 1949, and hotelier Conrad Hilton has his sights set on the most famous hotel in the world: the Waldorf-Astoria in New York City. But there are a few obstacles in his way:
The hotel is owned by a rival company who doesn’t want to sell
Hilton's company is still recovering from the Great Depression
The Waldorf-Astoria is a symbol of Old World luxury, and Hilton is a relative newcomer
Does Conrad back down and settle for second best? Hell no. Conrad realizes that if he wants to make his mark on the hotel industry, he has to think bigger and bolder than ever before.
He launches an audacious plan to acquire the management rights to the Waldorf-Astoria, even though he doesn't own the building. By managing the hotel, Conrad has the power to shape its future and make it a flagship property for the Hilton brand.
He negotiates a deal that gives him control of the hotel's operations, while the rival company retains ownership of the building. It's a win-win situation that allows both parties to benefit from the Waldorf-Astoria's prestige.
But Conrad doesn't just want to manage the Waldorf-Astoria — he wants to make it the best hotel in the world. He sets out to modernize the hotel while preserving its classic elegance and charm.
“Conrad Hilton was the first of Elizabeth Taylor's seven spouses.”
He upgrades the rooms with the latest amenities, like air conditioning and televisions (remember, this is 75 years ago). He expands the hotel's dining options, bringing in world-renowned chefs and creating new restaurants that become destinations in their own right.
As the Waldorf-Astoria thrives under Hilton's management, Conrad looks for new ways to grow his company. He hits upon the idea of franchising, which allows individual hotel owners to operate under the Hilton brand while benefiting from the company's expertise and resources.
Conrad launches the Hilton International Company in 1965, which becomes a model for hotel franchising around the world. Suddenly, the Hilton name is synonymous with quality and consistency, world wide.
The Waldorf-Astoria and the franchise model become the twin pillars of Hilton's success. The hotel is a symbol of Hilton's commitment to excellence, while the franchise model allows the company to expand rapidly and efficiently.
In 2021 alone, here’s what Hilton franchised:
Opened 1+ New Hotel Per Day (414 total in 2021)
Took Over 67,100 Individual Rooms in Total
Overall Company Growth 5.6 Percent New Units
Conrad Hilton's vision and determination transformed the hotel industry and created a legacy that endures to this day. The Waldorf-Astoria and the Hilton brand are a testament to his entrepreneurial spirit and his unwavering commitment to excellence. Hilton currently has over 6,800 hotels across 18 brands in 122 countries and territories.
Key takeaway: Despite being a relative newcomer, Hilton used his expertise and vision to outmaneuver more established rivals.
INSIGHTS
The Secret Sauce of Franchising 🍝
"When you franchise your business, you're not just selling a product or service; you're selling a proven system for success."
Conrad Hilton was the Hugh Hefner of hotels, turning his Waldorf-Astoria into the Playboy Mansion of the East Coast. The man knew how to party and make money doing it, and franchising was his ultimate wingman.
1. Franchising as a shortcut to success: Hilton knew that franchising was the secret sauce to rapid growth without all the hassle of starting from scratch.
Subway, the sandwich giant, used franchising to grow faster than a hormonal teenager (over 40,000 locations).
7-Eleven, the convenience store that's always there when you need a late-night Slurpee fix (over 70,000 locations).
KFC, the chicken joint that has the Colonel's secret recipe, is taking over the world one bucket at a time (over 22,000 locations).
2. Quality control as the key to consistency: But Hilton also knew that franchising was a double-edged sword. If he didn't maintain strict quality control, his brand could quickly become as diluted as a cheap cocktail.
The UPS Store, with more than 5,000 locations worldwide, maintains a rigorous quality control program to ensure that every franchisee meets its high standards for customer service and satisfaction.
Anytime Fitness, the world's fastest-growing fitness club franchise, uses a comprehensive training program and ongoing support to ensure that all of its franchisees deliver a consistent member experience.
Supercuts, one of the largest hair salon chains in the United States, relies on strict brand standards and regular inspections to maintain the quality and consistency of its services across all of its locations.
As Hilton and countless other successful franchisors have shown, the key to success is offering a proven system and maintaining strict quality control.
TAKE ACTION
The No-Bullshit Franchise Test 🏪
Think your business might be ready for the big leagues? Let's put it to the test with this quick and 4-question franchise-worthiness check:
1. Is your business concept as unique as a unicorn in a sea of donkeys? You need a concept that stands out like a stripper at a church picnic.
2. Can your processes be replicated? Your processes need to be so simple that a trained monkey could do it. McDonald's has this down to a science.
3. Is your brand as recognizable as Kim Kardashian's ass? Think Golden Arches or the Playboy Bunny, but for your industry.
4. Are your profit margins fat AF? You need margins that can support both you and your franchisees. Think Subway's $5 footlongs, but with a profit.
If you can answer "hell yes" to at least 3 out of 4 of these questions, then your business might just be franchise-worthy. But if not, there's always the option of selling your soul to the corporate overlords and working for the man.
Memes of the Week 🤣
Bite-Sized Reads 📚
[Read] Conrad Hilton: “Success seems to be connected with action. Successful men keep moving. They make mistakes, but they don’t quit.”
[Read] Subway’s franchise fee is $15,000 while Pizza Hut is $25,000 and McDonald’s is $45,000…
[Read] Chris Nassetta (Hilton CEO): “The desire to travel, experience new cultures and connect with others is core to the human experience.”
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Publisher: Jordan Belfort
Editors in Chief: Brock Swinson and Davis Richardson
DISCLAIMER: None of this is financial advice. This newsletter is strictly for educational purposes and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.