In this interview with Chris Nassetta, the Hilton CEO talks asset strategy, the potential for acquisitions and the company s big move into Europe.

　　With every hotel IPO comes immediate and additional scrutiny. In the case of Hilton Worldwide, analysts started asking when it would start selling owned real estate, reward shareholders with dividend increases and jumpstart growth via brand acquisition or increased development.

　　The scrutiny will especially be directed at Hilton CEO Chris Nassetta. In this interview with Nassetta, he talks asset strategy, the potential for acquisitions and the company's big move into Europe.

　　What can you tell us about Hilton’s asset sales strategy?

　　Chris Nassetta: We spend a lot of time talking about real estate when we’re out on the road, so there’s no question that the market is very interested in it. I think that’s for a really good reason, and that is it’s a great time to have real estate. We’re in a part of the cycle where it really is pretty close to the sweet spot in terms of what the upside potential is in real estate. So we like the real estate and think there is still a huge amount of upside potential.

　　At the moment we have every intention to keep it and maximize it. Maximizing means we have lots of upside potential in terms of base operations, sort of EBITDA growth. We did a lot to create efficiencies in those hotels and as the market continues to season and get better, RevPAR growth becomes more rate-driven and the group business comes back, which is it in a meaningful way, there is a lot of upside in these assets. They’re still meaningfully off the prior peak as is the case with most big portfolios of real estate.

　　The other opportunity we have in this real estate is what we would describe as value enhancement opportunities as a result of, in part, the financing structure of what the company was when it went private. There wasn’t a ton of flexibility to peel assets out or make material changes to the use of properties. It was a great debt, it was cheap debt, and it was no covenant or covenant-light so it allowed us to make it through a very difficult time. It was all floating rate and was really wonderful in many ways. It was not so wonderful in the sense of creating a lot of flexibility to do things in the real estate. So we have a handful of the biggest assets where there are some pretty interesting opportunities with other uses, potentially timeshare, residential and incremental retail. We like those opportunities and we intend to be very focused on them. So we feel like there’s a lot of value to create and capture in real estate, and so our job is to go do that.

　　At some point in the future there is an option to consider exiting the real estate in some way, and exactly when and how we do that we don’t yet know.

　　Here’s what I said to investors, so I’ll say it to you. My job is really simple: maximize the value for our shareholders. So, if at any point I think that maximizing value means being lighter on the real estate and exiting some or all the real estate, that’s what I’m going to do because I’m not emotionally attached to anything other than making my investors money, period. End of story.

　　Look at how Marriott just acquired Protea. Will Hilton be acquisitive?

　　Nassetta: You never say never. We look at everything. So there may be opportunities over time to do something. I’m not being coy, but there is nothing I have in mind right now.

　　What I like about what we have, as I said, is that the right pieces have been put together. What was wrong with the company is that is wasn't functioning properly, and we didn’t have the team and the culture in the right place. We do now and I think we have great brands. We have the opportunity, as you will see, to do some brand additions. The higher likelihood is never say never (to acquisition), but the likelihood is we’ll grow organically because we have the base infrastructure.

　　I feel like we have what we need with the brands we have, the commercial engines we have, the development teams that we have and the relationships we have around the world so that we don’t need to be acquisitive.

　　And we pretty much cover the segments. I know you could argue lifestyle, but it is a small segment. We have a very powerful platform that is not strategically really missing anything major. It’s little tuck-in things, and those things are not that hard to do ourselves.

　　How did Hilton get such a big pipeline advantage in Europe?

　　Nassetta: I don’t think we get enough credit for our Europe story to be brutally honest. When I got to the company, I looked at all of the resources we have deployed around the world. When I looked at Europe six years ago, I knew like the U.S. it was going to have some challenging times, and said we need to do something different.

　　You don’t grow without development people, and I said I want us to lead. We weren't going to go crazy, but probably incrementally add to development. But before we did that we needed to make sure we had the right products adapted properly. So we were strategic about how we layered those in the markets, and we knew Europe was going to be tough.

　　Nobody was going to be building luxury and they were not even going to build full-service. It was going to be a value play. So we really needed to make sure we had our act together with Doubletree by Hilton because it’s an amazing conversion brand with a 106 or 107 market share. In fact, we took out 10% of the brand and we still doubled it. Today it’s almost up to 400 hotels.