Magazine article Management Today

Cyril Stein's Hilton Heist

Magazine article Management Today

Cyril Stein's Hilton Heist

Article excerpt

It's enought to make the greatest of tycoons green with envy. In October 1987, Ladbroke paid 645 million pounds for the Hilton hotels outside America. Today, less than four years later, they are worth 2.5 billion pounds. Admittedly, Ladbroke now runs 150 hotels under the Hilton banner, as opposed to the 93 acquired in 1987. Nevertheless, it almost defies belief: a profit of 2 billion pounds in less than four years. Think about it. Even the man who pulled off this remarkable coup has to pinch himself occasionally to make sure he's not dreaming. Normally, the most reticent of individuals - especially when talking to the press - Cyril Stein, Ladbroke's chairman, can't conceal his delight.

|It's not just the best deal I've made,' he laughs, 'it's the best deal anyone has ever made.'

In the early '70s, with Stein at the helm, Ladbroke decided to move into hotels. 'It was a counter-balance for betting,' he explains. While betting was a highly profitable business, its assets never increased in value. Run successfully, hotels could provide both: profits and appreciating assets.

Ten years later, the 65-strong Ladbroke Hotels was number two in the UK, behind Trusthouse Forte. But it wasn't enough. 'We'd built it up as far as we could,' says Stein. 'While Ladbroke Hotels was a national brand, it wasn't international. If we were going to go international, it was obvious we needed an established brand-name.' And he adds: 'Of those names, one, Hilton, was head and shoulders above the rest.' His break came in 1986, when TWA, Hilton's owner, put Hilton International, the hotels outside America, up for sale. Stein didn't hesitate. Charterhouse, Ladbroke's merchant bankers was ordered to find out what it could from TWA while his staff checked out the hotels.

They liked what they saw. But when it came, Ladbroke's bid of 640 million pounds was too little. In a race dominated by airlines and hotel combines, the British group came nowhere. Subject to the ratification of its board, KLM would walk off with the prize.

Then Stein had his first stroke of luck: the Dutch airline's board refused to approve the deal. His hopes were short-lived, however - Hilton went to the second highest bidder, United Airlines.

The hotel business fitted nicely with the US carrier's plan to form a vertically integrated travel group (it also owned a car hire operation). Then Stein had his second piece of luck: unions and corporate raiders on the share register, who wanted to see the group broken up, opposed the idea. United put Hilton International back on the market. …

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