Hilton Stock Soars After Bollenbach Hire
Investors sent Hilton Hotels Corp. shares soaring nearly 13% on Monday in the wake of the news that the firm had hired Disney executive Stephen F. Bollenbach as president and chief executive.
Hilton stock closed up $9.50 a share at $83.375 in trading on the New York Stock Exchange, reflecting Wall Street’s high regard for Bollenbach, 53, and his experience at lodging companies such as Host Marriott Corp. and Holiday Corp. He joined Disney in April as chief financial officer.
Hilton “has a good brand, good assets and they’re a company in search of a real growth strategy,” said Neil Barsky, an industry analyst with Morgan Stanley & Co. in New York. “Bollenbach is an excellent strategist.”
The appointment was announced late Friday and Monday was the first day traders had a chance to react. In one development, Morgan Stanley initiated coverage of Hilton stock with a “buy” recommendation, saying the stock could reach $100 a share within 12 months.
Meanwhile, Bollenbach said at a news conference Monday in Beverly Hills that he will continue the company’s strategy of growing its profitable lodging operations, and downplayed speculation that his appointment signaled a new effort by Hilton to spin off its gaming business.
Bollenbach, in the first public statement since his appointment was announced, acknowledged that Hilton’s gaming business has faced stiff competition. Hilton owns the Las Vegas Hilton and the Flamingo Hilton, among other properties.
“In gaming, the challenges are, frankly, a little greater,” he said at the company’s flagship Beverly Hilton hotel. “But we will grow. . . . We will expand in the United States on a selective basis, as with our new casino in Kansas City.”
Barron Hilton said Monday that he will cede most management responsibilities to Bollenbach. However, he will remain chairman of the firm founded by his father, Conrad Hilton. He had been its chief executive for 30 years.
“I told him when he came in: ‘Steve, you’re calling the shots from now on. I’m not,’ ” Hilton said at the news conference. “I foresee that I’m going to be playing a little more golf, doing a little more hunting and fishing, and spending a little more time at my ranch” in northern Nevada.
Because Bollenbach presided over Marriott Corp.’s division into two separate companies in 1992, some analysts believed his appointment might foreshadow a new push at Hilton to separate its lodging and gaming units.
Earlier this month, the company abandoned plans to spin off the gaming operations. Before that, the company had tried unsuccessfully to find a buyer for the entire company.
Bollenbach refuted the suggestion that his appointment sets the stage for a split, but Barron Hilton, the firm’s controlling shareholder, left the door open.
“It’s something perhaps Mr. Bollenbach might consider doing in the future,” Hilton said. “But when I engaged him to take on this responsibility, I said to him that I have never seen the hotel business better than I have at this time, and I think growing the hotel business and the gaming business [together] is certainly a way to enhance shareholder value.”
Bollenbach said his abrupt departure from Disney had nothing to do with the naming of superagent Michael Ovitz to fill the president’s job at Disney last year.
Hollywood insiders had speculated that Bollenbach left because he no longer thought he had a shot at the Disney chief executive job, held by Michael Eisner.
“Michael Ovitz is a great guy to work for--to work with,” Bollenbach said. “This isn’t a question of leaving a place, it’s a question of going someplace that I really wanted to go once Barron offered me this opportunity.”
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Hilton’s Ride
Hilton Hotels stock has gyrated over the last two years as the company explored, then dropped, the idea of splitting in two. The stock soared Monday in the wake of the appointment of Stephen Bollenbach as chief executive. Monthly highs and Monday’s close for the stock.
Monday: $83.375, up $9.50
