The Key Man
(See Cover)
Puerto Rico's historic capital of San Juan busily prepared for a fiesta. At Governor Munoz Marin's mansion, servants made ready for a party, washing the fine crystal, putting a high polish on the silverware. On traffic-jammed Ponce de Leon Avenue stood a huge welcome sign: Bien-venidos. In the plaza, the excited chatter was all about the opening this week of Puerto Rico's finest hotel, which islanders hope will be a rich new source of revenue and prestige for their economy.
The new, ten-story Caribe Hilton stood dazzling and white on a peninsula, amid a garden of yellow hibiscus trees, breadfruit, almonds and tall waving palms. On one side of the hotel were the coral beach and the long rolling waves of the Caribbean; on the other, old San Geronimo Castle, a blue bay, pink and white houses and, in the distance, mountains.
Inside, the finishing touches had been made. Artists had just put the last bright reds and yellows to the 25-ft. mural showing a Puerto Rican feast-day celebration; roulette wheels, chemin de fer and dice tables had been moved into the casino. The blue-tiled swimming pool cut out of the coral rock and the bright yellow-awninged beach cabanas were all ready for the first guests.
The Right Note. The planeloads of guests for the opening would include Actress Alexis Smith, oldtime Star Gloria Swanson, Eastern Air Lines President Eddie Rickenbacker, R. H. Macy's Beardsley Ruml, David Rockefeller and Julius ("Cap") Krug. But none of the party-goers would enjoy the round of banquets, swimming parties and tennis tournaments as much as their party-loving, party-giving host, Conrad Nicholson Hilton, the world's No. 1 hotelman, who this week was getting his first excited look at his newest hotel.
When the Puerto Rico Industrial Development Co. decided to build the Caribe, it sent out letters to seven U.S. hotel owners asking them if they were interested in coming to Puerto Rico. Only Connie Hilton had the graciousness to start off his reply in Spanish: "Mi estimado amigo." His esteemed friends in Puerto Rico were so overwhelmed by this friendly tone--and by the Hilton name--that they decided to build the $6,500,000 hotel for Connie Hilton. The deal is a friendly one.
Hilton will pay for his investment with two-thirds of his yearly profits. The rest of what he makes, an estimated $300,000 a year, will belong to Hilton tax free.*
World's Biggest. It was by equally shrewd deals that Connie Hilton had become the world's biggest hotelman. His 13 hotels in the U.S., Mexico and Puerto Rico--ranging from a small hotel in Lubbock, Texas to Manhattan's famed Waldorf-Astoria--have an estimated worth of $125 million and a replacement value of $175 million. He employs 11,250 people, and likes to boast that in his 12,500 rooms he "could sleep in a different bed every night for 40 years."
Until eight years ago, Connie Hilton had only a small chain of eight Southwestern hotels. Then, with the luck of a gambler and the persistence of an insurance salesman, he made the most of the wartime blackouts and travel restrictions, which had depopulated many a hotel. While some hotelmen were still skulking through their half-filled hostelries half expecting to see a bondholders' protective committee behind the potted palms, Connie Hilton saw only opportunity. He realized that as soon as the wartime prosperity spread, the big trick would be to find a hotel room, so he performed the much easier trick of getting the hotels. On the Pacific coast, where hotel owners were most worried, he put his theories to work.
Bombs & Bubble Baths. In Los Angeles, there were so many empty rooms at the high-priced Town House that the manager used to dash through the building every night turning on the lights, hoping to convince outsiders that the place was jammed to the eaves. Owner Arnold Kirkeby thought it was only a question of time until the Japanese bombed out his property anyway. So when Hilton teamed up with Insurance Man Willard Keith, Kirkeby could hardly wait to unload the $3,000,000 Town House for $850,000.
Hilton promptly set about luring in business and making such relentlessly demanding tenants as Tallulah Bankhead and Howard Hughes feel at home. Hilton equipped all the Town House bathrooms with bubble bath powder, presented famed guests with their favorite candy, liquor and flowers when they arrived. For Gertrude Lawrence, there were always white roses; for Noel Coward, orchids. When Opera Singer Helen Traubel came to stay, a Baldwin piano was put in her room, and a roast of beef and portable stove were wheeled in for her husband, who likes to cook. When the Gaekwar of Baroda insisted that his two serv ants sleep outside his door, the Town House obligingly bedded them down in the hall on blankets. The management balked at only one request; it refused to supply Scottish bagpipers in the lobby to greet a Canadian army officer who wanted to impress his bride.
Too Good. From Los Angeles, Hilton went shopping in New York. "When I saw all those people in the streets, I didn't see how you could lose money," he says. "And I had to establish myself in New York. I could borrow money from my Texas friends to buy a small hotel, but only in New York could I get the millions I wanted to swing the deals I had in mind." The first deal looked too good to Hilton. The famed Ritz Hotel was offered to him for $700,000 and he turned it down. Said he: "I thought they were just taking advantage of a fellow from out West." (They weren't; Hilton now regretfully estimates the Ritz to be worth at least $2,500,000.) Instead, for $300,000, he bought control of the Roosevelt, which bustles with salesmen and is as different from the Town House as Coney Island is from Beverly Hills. The Roosevelt deal established Hilton in New York and got him the backing he wanted from such moneybags as Atlas Corp.'s Floyd Odium. With the help of Odium, Hilton paid out $7,400,000 for New York's stately old Plaza, which was as deeply encrusted with stately tradition as it was with the grime of years. The Plaza's first guest in 1907 (at $30,000 a year) had been Alfred G. Vanderbilt, and since then the hotel's quiet, Old World atmosphere had made it a favorite of Manhattan's lorgnette & limousine set. One longtime Plaza guest was so frightened at the thought of a breezy Westerner taking over that she dashed off a letter to Hilton which began : "Dear Sir: If you touch a speck of the sacred dust of the dear old Plaza . . ."
White Elephant. In Chicago, Hilton ran into tradition of another kind. For years the $30 million Stevens, world's biggest (3,000 rooms) hotel, had stood like a half-filled honeycomb as a monument to the folly of its builders. The Army used it as a barracks at the beginning of the war, and in 1943 Chicago Contractor Stephen Healy bought the white elephant and caught Hilton's eye by making it pay in the war boom that was suddenly filling all hotels. But when Hilton began to bargain for the Stevens, he met his match in Healy. The contractor jacked up the price three times, until Hilton suddenly let it be known that he was going after the Palmer House instead. Healy finally came to terms, but they were his own and gave him a clear profit of $1,500,000 for his 15-month ownership. Says Hilton in admiration of Healy's horse-trading ability: "If I had a dollar for every time I called that bricklayer an S.O.B., I wouldn't want the Stevens." Even at the $7,500,000 price, Hilton thought it a bargain.
The Proud Past. By the time he had bought the Stevens, Hilton was convinced that he also wanted the dignified old Palmer House, which was as dear to the hearts of Chicago's Gold Coast as the Plaza was to New Yorkers. To get it lock, stock and history, Hilton teamed up with Builder Henry Crown (TIME, Nov. 28) and signed the biggest check of his career--$7,500,000--as a down payment. For a total of $19,385,000 he picked up a hotel that had cost $25,800,000 to build on land worth $10,000,000. He thought that it was even a better bargain than the Stevens.
Some years before, he had made a trip to Washington and stayed at the Mayflower. He liked many things about it, including the Presidential Dining Room where columnists, politicos and union chiefs served up the latest gossip as piping hot as the famed terrapin soup. Most of all he liked the way the Mayflower had gone through the financial wringer and come out making money. He bought it for $2,528,825.
The Full Life. By that time the bargains were fast going up in price in the postwar boom. Hilton decided to consolidate his gains and let a biographer, who had been busily trying to keep up with the fast-moving life of Hilton, get out his book under the title The Man Who Bought the Plaza. Two months ago, with 7,500 copies already printed, the title had to be changed to The Man Who Bought the Waldorf. Now, says Hilton solemnly, "I've promised myself not to buy any more hotels until the book comes out."
Though each of Hilton's hotels is different from the others, together they form a rich pattern of 20th Century U.S. hotel life. In the U.S., more than any other country, the big hotel has become a city in itself. There, says Hilton, "you could live out a full life without ever going out of doors. They have nightclubs, banquet halls and shopping centers. You can read a book in the library and use the safe deposit vault as a bank. If you get sick, there's a hospital, with a doctor and a nurse. You can park your car, eat your head off and sleep till noon. Home was never like that!"
On the Town. Through this complex, wholly artificial beehive of modern living, Connie Hilton moves with the speed--and often the freshness--of a cowboy on the town. No "bellhop with a manicure" --as some hotelmen are scornfully labeled in the trade--Connie Hilton is a towering (6 ft. 2 in.), broad-shouldered, leatherfaced extravert who proudly wears a $100 Stetson and talks with astonishing frankness about his income (see box] and business affairs.
At times he still seems a little amazed at the speed of his climb. While talking to an acquaintance some weeks ago, Hilton answered the phone, listened for a moment, then crowed with delight: "I just made half a million today." He bubbled out an explanation that the stock of Hilton Hotels Corp., of which he owns 400,-ooo shares or 26%, had risen five-eights of a point, giving him the paper profit. Then he soberly corrected himself: "No, it was just about $250,000 at that."
His vast store of nervous energy makes it impossible for him to sit still long enough to read anything but business reports. Even while dictating he usually swings a No. 3 iron at imaginary golf balls. At 62, he is still willing to try almost anything once. At Sun Valley, not long ago, he spotted "Prince" Mike Romanoff, the Hollywood restaurateur, on skis, and promptly declared: "If Romanoff can do it, so can I." Soon Hilton was snowplow-ing down the beginners' slope.
Lobster Cocktail. In his hotels, Hilton does not make a practice of greeting the prominent guest or throwing his rank around the lobby. Recently when a temperamental Town House barber said that he was too busy to come to Hilton's room, Hilton went to the barbershop, borrowed a straight razor and shaved himself. A small-towner for all his wealth, Hilton is still often horrified at hotel prices. In Chicago, while dining with Hotelman Kirkeby in Kirkeby's Blackstone, he ordered an appetizer, then spotted the $1.60 price. "My gosh," he exploded, "what a price to pay for a lobster cocktail!"
Such naivete cost Hilton considerably more when he married for the second time in 1942. Divorced from his first wife, Mary Barren Hilton, eight years before, he married beautiful, 25-year-old Sari ("Zsazsa") Gabor, Miss Hungary of 1936, the day he opened his Palacio in Chihuahua, Mex. After 4 1/2 years of off & on marriage, exotic Zsazsa told an exotic-sounding story to the press. For six months, said Zsazsa mysteriously, she had been confined in a hotel room under dope; it would probably take $10 million to make her forget it. Actually, she forgot it for a divorce, which cost Hilton $250,000, and a handsome trust fund for the daughter she bore him. She has since married Movie Star George Sanders.
Chuck-a-Luck. For all his seeming artlessness, Hilton has the adding-machine mind of a banker, and never forgets a figure. His hotel-running day begins at 8. At home in his $55,000 house in Bel-Air, Calif, he breakfasts in bed, usually on orange juice and coffee. A practicing Catholic, he walks to church almost every day, then rides to his Town House office in one of his two Cadillacs. He keeps close tabs on all of his hotels from the daily operating reports, which are detailed down to such items as corkage and the weather. Though Hilton can generally guess very close to the actual profit figures, sometimes he gets a jolt. In a report from a hotel that he had just bought in Las Vegas, Nev., he once read: "Craps, $1,200; chuck-a-luck, $800; twenty-one, $750." Said Hilton: "It's money, all right, but it's not the kind of hotel business I understand." He sold out at a $1,000,000 profit.
Promptly at 6 p.m. every day, Connie Hilton stops working, starts playing. On a flying trip to Manhattan last week he started playing at a cocktail party for Socialite Felice Vanderbilt, then went to the Plaza's Rendez-Vous Room for dinner & dancing. His favorite dance step is the Varsoviana, described by a friend as "a Texas version of a Hungarian square dance." From the Rendez-Vous Room he dashed to zebra-upholstered El Morocco, then on to the Waldorf's Wedgwood Room. He finally rolled into bed at 3:15 a.m.--the end of a perfect Hilton day.
On weekends at home, he roars around the Pacific in a converted PT boat, plays golf in the high 80s, or drives to his mountain retreat on Lake Arrowhead. Trying to describe hard-playing, hardworking Connie Hilton, one associate said triumphantly: "He's a. . .a. . .Texan!"
Coal Mines & Graveyards. Actually he is not. The son of a Norwegian immigrant, he was born on Christmas Day of 1887 in little (pop. 500) San Antonio, N.Mex. His father, August Holver Hilton, parlayed a jug of whisky into the town's general store, livery stable, and eventually a coal mine, which made him one of the richest men in that part of the country.
Young Conrad, the second of eight children, went to private schools (Albuquerque's Goss Military Institute and New Mexico Military Institute at Roswell), and to college for two years (New Mexico School of Mines). When father Hilton was wiped out by the panic of 1907, he started taking roomers into the family's modest adobe dwelling at $1 a day, and Connie helped him. But it wasn't what young Hilton wanted. He went into politics and, with the help of a well-organized graveyard vote ("the best people in the county"), was elected, at 24, to New Mexico's first state legislature.
Flophouse Nights. Politics was not for Connie either and he started a bank, San Antonio's first. When World War I came, he enlisted. Two years in the Army and a year as a lieutenant in France opened Hilton's eyes to the world beyond New Mexico. He had sold his little bank, and in 1919 (after his father died) he set out for the oil-rich town of Cisco, Texas, looking for bigger game. Instead of a bank, Hilton bought the shaky old Mobley Hotel with $5,000 of his own money, $15,000 from friends and a $20,000 bank loan.
"The Mobley," Hilton recalls, "wasn't exactly a hotel--it was sort of a flophouse. We considered it a bad day when we didn't have a three-time turnover on the beds. It was a bad night when I had a bed of my own." But the flophouse made $3,000 the first month and Hilton decided "to freckle Texas with Hilton hotels."
Murderer at Large. Freckle No. 2 was Fort Worth's 80-room Melba ($28,000); No. $ was Hilton's first Waldorf--in Dallas--which he bought with the help of a syndicate of friends. In deal No. 4, he bought Fort Worth's Terminal Hotel with two partners and learned that there were more dangers for a hotelman than the complaints of dissatisfied guests. One of his partners, D. E. Soderman, thought he was being cheated, stalked down the third partner and shot him dead. When Soderman got out of jail, he phoned Hilton and asked to see him. Fearing that he was next on the list, Hilton told Soderman to come to his office--and laid his Army automatic in an open desk drawer. Soderman came, but nothing happened. Says Hilton: "I never did find out why he came."
Shortly after, Hilton decided that Dallas needed a new hotel--and he built it by a fabulous deal that Dallas still recalls with wonder. He started by persuading George Loudermilk, an ex-undertaker and a large landholder, to give him a 99-year lease on some Dallas property he owned. Then he used the leased land as collateral for a $500,000 bank loan. Hilton put up $100,000 of his own money, and raised $200,000 from friends. He needed another $150,000, and he borrowed it from the contractor who was to build the hotel. Then he ran out of money and his troubles began. When a secretary mistakenly mailed a $50,000 check to pay a plumber's bill, Hilton dashed to a friend who knew the postmaster to get the check back before it was delivered. Without being asked, the friend lent Hilton $50,000 to cover the check. When Hilton ran out of money again, he went back to his landlord and persuaded him to finish and furnish the building. Then Hilton rented it back from him at $100,000 a year.
Dark Days. It was worth all the trouble; the Dallas Hilton was a whopping success. Hilton branched out throughout Texas and formed Hilton Hotels, Inc. (succeeded in 1946 by Hilton Hotels Corp.). When the depression hit, and an estimated 80% of all U.S. hotels went bankrupt, he was far overexpanded. He hurried from hotel to hotel, yanking out the room telephones and closing off some of the floors to cut costs. When a guest asked for ink, a bellhop would ceremoniously pour out enough to write one letter.
Finally, the American National Insurance Co. of Galveston, Hilton's biggest creditor, took over his hotels. But Hilton still kept a foot in the door; American National gave him an $18,000-a-year job running their hotels. Gradually he raised enough cash to get back five of his nine hotels. By 1939 things were going so well that he built the Albuquerque Hilton and was on the move again.
Free Rein. Hilton runs his sprawling empire with the help of a crack team which includes Executive Vice President Robert P. Williford, 49, who started as a desk clerk in 1931; Vice President James B. ("J.B.") Herndon Jr., 50, who was the first manager of the Albuquerque Hilton; Vice President Spearl ("Red") Ellison, 36, who started as a $5-a-month bellhop; Vice President Joseph P. Binns, 43, a relative newcomer to the corporation, who managed the Stevens before Hilton took over. Hilton's son Nick, 23, is learning the ropes from them (his other sons by his first marriage, Eric, 16, and Baron, 21, are not in the business). Hilton lets his managers run things pretty much as they please. He merely sets the targets. When he bought the Palmer House, he installed Binns as manager, told him: "This place should net another $600,000 a year." Then he took off for the Coast, leaving Binns to figure out how to do it.
"Put Them In." The managers do it by putting every foot of hotel space to work. In the Plaza, Hilton's men converted a basement storage space into the swank Rendez-Vous Room, where New Yorkers and visitors now pay $500,000 a year to dine & dance. Stockbrokers E. F. Hutton & Co., who had been paying only $5,000 a year for valuable ground-floor space, were moved upstairs (for the same rent). In their place the original Oak Bar was restored; it now grosses $25,000 a month. When Williford saw the chance to make $18,000 a year by renting out small showcases, known as vitrines, in the lobby, he wired Hilton for an O.K. Hilton wired back: "I don't know what a vitrine is, but if they'll bring in that much, put them in." In the Palmer House, a bookstore that was paying a rent of $250 a month was replaced by a cocktail lounge grossing $2,000 a day. Employee locker space was centralized, making space for 50 additional rooms. In Hilton's first year, the Palmer House's operating profit rose $1,300,000 to $4,321,000. Hilton's men keep close tabs on food & beverages, figure that they saved $100,000 last year by careful menu-planning, and this year have spent $215,000 improving dining facilities in the Dayton Biltmore, alone. (In the Stevens, they discovered that only two orders for finnan haddie had been placed in one month, one by Vice President Herndon, the other by Hilton; off the menu went finnan haddie.)
Resort Trouble. Like all other hotel-men, Conrad Hilton is currently riding the crest of the wave. In most hotels, the trick is still to find a room and Hilton is confident that business will remain good for at least five years. Because of increased efficiency, the break-even point of Hilton hotels is now down to about 60% to 75% of capacity, as against a national average of 80%. For the first ten months of 1949, their operating profit totaled $6,886,108, slightly higher than last year.
Some hotelmen, who have enviously watched Hilton's amazing growth, darkly say that he has grown too fast. But Hilton points to his books in answer. Still remembering his collapse in the depression, Hilton has cut the total debt on his hotels from $32,806,000 in 1946 to $21,308,252 (not including the Waldorf), now owes nothing on the Stevens, the Mayflower or the Hilton Hotels in Lubbock and Albuquerque. He thinks he is as depression proof as any business can be.
Hilton's only recent flops have been in resort hotels. (He does not consider the Caribe Hilton primarily a resort hotel.) "Whenever you see an offer of a 'Hotel in the Pines,'" says he, "stay away from it." He bought the Palm Beach Biltmore, was glad to sell it for a net loss of $183,353, also lost money in a flyer in three Bermuda hotels.
Things to Come. There are also a few other clouds ahead. Tourist courts and motels are already giving Hilton and other hotelmen hard competition. "We have to keep making our hotels better," says Connie Hilton. "Rooms will have to be larger and they'll have to be soundproofed . . . They will have books, magazines and newspapers, just like a home. They will have radio and television and recording attachments on the telephones so that the guest will receive his messages in the actual words in which they're given. Bathrooms, besides their present equipment, will have ultraviolet-ray machines, suntan and infrared lamps . . . What do you think of a future like that?"
Conrad Hilton thinks such a future is fine and he plans to start making it come true by building high-priced, small hotels in the smaller cities which were passed over in the hotel-building '20s. He is now eyeing land in Atlanta, Beverly Hills and Havana. But he does not think that anyone will ever again build huge hotels like those he gobbled up in the last few years. Nor does he expect to buy any more big ones, at least not right away. With the air of a tired conqueror he asks: "After all, where can you go from the Waldorf?"
*To lure U.S. capital and industrialists to the island, the Puerto Rican government grants tax exemption to many new industries until 1959.
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