The Hiltons: The True Story of an American Dynasty (4 page)

The Mobley was a two-story, redbrick, down-in-the-dumps operation catering to the roughnecks who worked in the oilfields. “When I first saw it,” he would recall, “it looked like a convenient place to sleep. Nothing more.” Despite its dilapidated condition, Conrad was astonished to find that the place was fully occupied, with a waiting list of customers attracted to its low room cost. Hilton soon also discovered that the hotel’s owner was renting out rooms by the hour in three shifts, in addition to the daily or weekly rate—and still he was turning people away!

Though the Mobley had the appearance of a flophouse, Conrad still saw great promise in it. He became even more enthused about the forty-room facility than he had been about possibly striking it rich in the oil industry. Therefore, when he learned that the Mobley’s proprietor wanted to sell it and enter the oilfields himself, Conrad made an offer of $40,000. However, he only had $5,000 to his name. His devoted mother, Mary—who had long ago come to the conclusion that Connie was a chip off the old block that had been Gus—along with the help of friends and the assistance of a bank loan would provide the balance for the purchase. This—his second foray into the hotel business, if one considers the hotel at the Hilton compound his first—would be the decision of a lifetime for young Conrad. He seemed to know it, too. When the deal was completed, he sent his mother a telegram: “Frontier found. Water deep down here. Launched first ship in Cisco.”

From his earlier experience in the hotel business, there was one thing Conrad Hilton knew for sure was important: the careful utilization of space. To that end, he ripped out the lobby and sectioned it off into bedrooms. He then reduced the size of the front desk by half and added a retail shop. Removing three chairs and a sofa from another section of the lobby, he installed a newsstand. As carpenters moved into the Mobley and did their work, the place became a beehive of activity, which for some reason did not seem to bother the customers. They found it all exciting. Meanwhile, Hilton would move among his patrons with ease, mingling with one and all and constantly selling them on the virtues of his new venue. It worked. His “guests,” as he called them, soon extolled the hearty meat-and-potatoes menu Hilton offered, the splendid service of his capable staff, and the accommodations he now offered at affordable prices.

It was with the Mobley that Hilton began to understand that a staff of contented employees usually resulted in a thriving business. He began to encourage regular meetings with his staff, listening to all of their concerns and taking care of each as best he could. Caring about his employees and viewing them as people with families and lives of their own rather than merely his charges would become an integral way of doing business for Conrad Hilton, and in years to come would account for much of his success as a hotelier. He soon outlined for his employees his personal guidelines for success, and then asked that they adhere to them. His code could easily apply today, almost a hundred years later, as one for better living. As he put it at the time, “Find your own particular talent; Be big; Be honest; Live with enthusiasm; Don’t let your possessions possess you; Don’t worry about your problems; Look up to people when you can—down to no one; Don’t cling to the past; Assume your full share of responsibility in the world and, finally, Pray consistently and constantly.”

With the Mobley, which he later called “my first love, a great lady,” it seemed that Conrad Hilton was well on his way to success in the fickle hotel business. He forgot all about the idea of banking and decided that instead he would focus on his new passion. In doing so, his success would be like a juggernaut that could not be stopped. By 1923, Hilton had more than five hundred rooms in Texas in different small hotels he had purchased along the way, such as the Melba in Fort Worth. Because these were all dilapidated establishments that appeared to be on the verge of closing, Conrad was able to get them for a steal. He would then invest in renovating them with his own special touches—turning extra space in lobbies into rooms or, in some cases, bars; closets into gift shops—and before long they were turning a profit. As success seemed to be happening all around him, Conrad felt that he needed a slogan, something that would brand his hotels and the work he had put into them. After deliberating on it for some time, he came up with what he thought was the perfect catchphrase: “minimax.” What did it mean? Minimum price for maximum service—a slogan he began to use on all of the advertising for his growing chain of hotels.

Once Conrad was making about $100,000 a year, he began to fantasize about building a hotel that would bear his own name. It didn’t take long for that dream to come true, because after aligning himself with a team of financial advisers and backers, Conrad broke ground for the Dallas Hilton on July 26, 1924. He was thirty-seven. After leasing for a one-hundred-year term the ground upon which the hotel would be built, he used that purchase as collateral for a half-million-dollar bank loan, a staggering amount of money in 1924. He also invested $100,000 of his own money and another $200,000 from backers. Then, when he still didn’t have the financial resources to fully complete the job, he somehow convinced the man from whom he had leased the land, a funeral director, to help him with some of the final details. It was as if Conrad Hilton could convince anyone to do anything for him. This would be the first of a series of hotels he would open in Texas in the next ten years, including hotels in Dallas, Abilene, Long View, Lubbock, El Paso, and Plainview. In 1927, he would even be named president of the Texas Hotel Association.

Losing It All

C
onrad Hilton was having a good run, no doubt about it. Unfortunately, it wouldn’t last. Everything would come to a crashing halt not only for him but for most people in October 1929 with the onslaught of the Great Depression. This turn in the country’s fortunes not only increased the country’s homeless population, but it forced many successful entrepreneurs to abandon their businesses and look for menial labor, anything to bring in a meager wage to support their families. Men much wealthier than Conrad Hilton found themselves in dire financial straits. Now there were many fewer traveling businessmen, and those that did still have jobs certainly couldn’t afford to stay in hotels like Conrad’s, choosing instead any flophouse they could find to put a temporary roof over their heads.

The Depression couldn’t have happened at a worse time for Conrad. He was right in the middle of building the Dallas Hilton, and had already sunk a great deal of money into the project. As things went from bad to worse, in less than a year he found himself deeply in debt, having lost all but one of his hotels, the towering, grand El Paso Hilton (billed in one advertisement as “the Southwest’s Finest Hotel. A Stone’s Throw from Mexico. Radio in every room!”). At $500,000 in debt, he was all but ruined. The rapid speed by which things had taken such a turn was stunning. “I was heartsick about it,” he would later recall. “But, of course, everyone in business was facing ruination at this time in our history. I had a sense that if I could just survive this, I could survive anything.”

Conrad was still a determined man, even in the face of so much adversity. He believed that if he could at least keep the El Paso Hilton in business, he might actually be able to ride out the Depression. “He was the kind of man who always believed no bad situation to be permanent,” said his son Barron. “He had become imbued with this kind of optimism back when he discovered Helen Keller’s transformative book when he was a teenager, and he built upon it with the passing of the years. He also had great faith in America and in its ability to bounce back, and whereas many of his colleagues in the hotel business were certain that there was no going back, and the country would never return to its former glory, my father never bought into such negativity. It would take time, he suspected, but things would get better—if he could just hang on a little while longer.” Meanwhile, Conrad had some of the rooms of the El Paso Hilton boarded up, he cut back on heating, electricity… whatever he could think of to lower his overhead.

When the lease payment became due on the El Paso, Conrad made a deal with a banker in Missouri who promised to give him the $40,000 necessary to keep the property. Hilton then took a prop plane—an extravagant way to travel at the time, but also the most expedient way in an emergency such as this one—to Missouri, only to find that the banker had changed his mind. Now Conrad was frantic. He knew that losing his only hotel would amount to his complete demise. He went back to Texas to begin brainstorming with a group of his suppliers—and his mother, who was living at the El Paso at this time. He promised that if they each contributed $5,000 to help him out of this tight spot, he would do business with them for as long as he was a hotel owner. Why was his mother present at the meeting? Could the others turn him down with Mary Hilton eyeing them, and willing to pitch in herself—which she did—to the tune of $5,000? Soon, the other seven businessmen in the meeting agreed to put up $5,000 each. Donald H. Hubbs, director emeritus of the Hilton Foundation, recalled that Hilton grabbed the money, “raced to the elevator, ran to the bank and made the lease payment. He said, had he not made that payment, he would have most certainly lost his empire right then and there.”

Though he managed to save the El Paso, Hilton was still in big trouble. It was just one problem after another as things crumbled all around him. At one point, a sheriff showed up at the Dallas hotel with a judgment. “I’ve come to collect,” he told Hilton. “Pay up or I’ll tack this judgment in the lobby.” Though it was a humiliating moment for Conrad, what could he do about it? “Tack away,” he said blithely. “I’ll go find you a ladder.” A half hour later, the sheriff returned, saying, “You knew I would never be able to find a place to tack this, didn’t you? The whole lobby is marble!” To which Conrad responded, “And you knew I would pay it as soon as I had the money to do so.” The sheriff left, giving Conrad just a little more time to come up with the money, which he did, “but it wasn’t easy,” he later recalled. An even more mortifying moment occurred when Conrad owed just $178 to a furniture company and they took him to court for the debt. At that point, his attorneys strongly encouraged him to declare bankruptcy. Pounding his fists on his desk during more than a few meetings with those same lawyers, Hilton steadfastly refused. He insisted that the situation was just temporary, that he was going to wait it out.

“I’ve seen numbers in my research that suggest that over 80 percent of the hotels in America went bankrupt during the Depression,” says Mark Young of the Conrad N. Hilton College of Hotel and Restaurant Management. “No one was traveling, no businesspeople especially, so the rooms were just sitting empty. All of the creditors, if they wanted to, could have called in all of their notes and totally wiped him out, but many of them realized that he was doing the best he could under horrible circumstances. They had faith in him, and plus he was a good barterer, like his dad. For instance, there was a dairy supplier in El Paso whose bill was due, and Conrad said, ‘Look, if you’ll just extend me more credit, as long as I’m operating a hotel here I’ll buy all my dairy products from you.’ And he did, for many years. He never forgot. We have so much correspondence from him to people saying, ‘You helped me when times were tough, now I would like to help you. Would you like a job? Or would you like to buy stock in the company? What can I do to repay you for helping me?’ ”

Every day it seemed that Conrad was closer to complete financial collapse. “A very good story is that at one point he was $500 in debt and a bellman in Dallas gave him his life savings,” recalled Conrad’s granddaughter Linda Hilton (his son Eric’s daughter). “And the bellman said, ‘Mr. Hilton, this is my life savings, but I want you to have it because I know you’re going to make this into something.’ My grandfather said he would not take charity, but he would take it as an investment. He was such a visionary of where he was going and what he was doing. There was no doubt in his mind that he was going to get the next deal.” (Incidentally, the bellman Linda Hilton spoke of eventually had his money returned to him by Conrad many times over. He received dividends on Hilton stock for the rest of his life.)

Soon, Conrad Hilton’s intuition about the strength and resolve of his beloved country began to pay off; ever so slowly, America got back on her feet. As she did, Hilton’s small empire also began to recover. Because he had so stubbornly refused to default on his many bills, he found his reputation greatly enhanced among creditors and future backers. He also found that he now had even greater alignment with important backers who knew they could trust him even at the worst of times, and this would remain the case for him moving forward. “They all wanted to sell to Conrad Hilton because he was the one who didn’t declare bankruptcy,” said Donald Hubbs, “and that’s partly how he was able to acquire so many hotels in the future.”

In 1939, Conrad would expand his influence to the West Coast with the purchase of the elegant and tasteful Sir Francis Drake Hotel in San Francisco—twenty-two stories tall with 450 rooms and a $300,000 luxury nightclub, built at a cost of $4.1 million. Hilton got it for a cash outlay of $275,000. He also now owned a hotel in Long Beach, California, and another in Albuquerque, New Mexico. Now that the Depression was finally over, there seemed to be no stopping Conrad Hilton.

It was 1940 when Conrad finally moved to Los Angeles. His siblings were doing well, too. While his brothers had continued with their educations, one sister married well and lived in a mansion outside of Boston; another had become an actress, and yet another was valedictorian of her high school graduating class.

A year after moving to the West Coast, Conrad established his company’s first headquarters outside of Texas, with offices on Wilshire Boulevard in Beverly Hills. By this time, most interested Americans were well aware of the Hilton name and what it represented in terms of quality hotel accommodations at reasonable prices. Without a doubt, Conrad Hilton had become a major player—arguably
the
major player—in the hotel business, respected not only for his instincts and business acumen but also for the fact that he had not only survived but had gone on to thrive during a time when most American businessmen had no choice but to throw in the towel.