TeamWhat Hilton Cuba International Expansion Project

teamwhat

Teamwhat.org

TeamWhat. TWC is a consulting group from EMBA15 at LMU. We are presenting a business expansion project for Hilton Worldwide’s entry into Cuba. #TeamWhatWhat teamwhat.org 533 posts

Lola Wheeler

1 million followers

354 following

Alena Andrews

Ian Harris

Diana Rodriquez

Philip Rowe 1

Hilton Worldwide: Cuba Expansion Project www.teamwhat.org

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vision • Hilton mission + an authentic Cuban experience • Realities of Cuba’s lack of infrastructure • Cuba offers an exciting investment opportunity

• Doing nothing = not competing • Hilton’s passion match to the art, music & passion • Hilton’s portfolio of brands to open in Cuba

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opportunity • Shortages of available hotel rooms in Cuba is an opportunity to enter the market • Move forward as soon as possible to compete with other leading US hotels brands • On par with Hilton’s average rate of return on investment & will spur greater opportunities in the future

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market size • • • • •

In 2015, American inbound tourist to Cuba increased 50% amongst 3 million tourists Many tourism agencies report tour packages and accommodations are already booked for the next 12 to 18 months Cuba’s luxury and boutique hotel segment is getting occupancy rates at 98% during the busy winter season During our visit – there were tourists and tour buses everywhere we went Future horizon of Americans wanting to travel to Cuba is up 40%

The question is, where will Americans want to stay while they explore our exotic Caribbean next-door neighbor?

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local competitive analysis • diana

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location

location

location

location

location

Hotel Telegrafo, Curio Collection by Hilton

product/solution

63 rooms, 1 restaurant, 2 bars, a Rooftop lounge. Located in Old Havana’s sizzling intersections. In the early 20th century, the property had Cuba’s only telegraphic cable

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growth strategy The Hilton Resort and Tru Havana - 2nd expansion property dual branded oceanfront resort near Havana’s Miramar neighborhood

• Expansion Property - Second expansion property that would be a dual branded oceanfront resort near Havana’s Miramar neighborhood. Miramar is a Havana suburb with middle to end residences loaded with restaurants, clubs and mansions and the location would serve as a nice contrast to a Hotel Telégrafo Curio by Collection by Hilton in Old Havana. This next property could also offer transportation services between Hilton’s Old Havana location and the beach location providing guests at either property to experience another area of Havana while still remaining within a Hilton hotel. The Hilton Resort and Tru Havana would, of course, offer additional rooms in this high growth market and appeal to additional market segments.

• Community Development Initiatives • Parklet - Developing of the adjacent (to TRU) open area we see as a great opportunity to partner with the Cuban government, local neighborhood as well as Hilton guests to create a park and green space development that extends from the ocean to Avenida 3ra. The resulting open space would benefit both Hilton’s guests as well as offer a place for locals to gather all the while providing an opportunity for a mixing and interaction of cultures providing a unique, authentic Cuban experience.

• Hospitality Education Initiative - Connect with Cuban Universities to build capacity within their hospitality school

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competitive advantage 5 star luxury properties Full suite of Hilton management solutions Brand and execution knowledge Timeless brand with operational/amenities flexibility The location.. The building..

Broad demographic appeal

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Upcoming Projects

Gran Hotel Costa Rica (undergoing renovations)

CURIO regional comp set COMP HOTELS

MIDSCALE CLASS

UPPER MIDSCALE CLASS

Adriatika Boutique Hotel Guatemala Grand Hotel Costa Rica

53 107

Grand Hotel National

75

Hotel St. Anthony

90

Posada Belen Museum Hotel

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Tryp by Wyndham San Jose Sabana Hotel Grand Total

UPSCALE CLASS

98 253

173

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why now? stories to tell “Some are well known. Some are local legends. As fascinating they call home, each Curio hotel has stories to tell and secrets to share that satisfy your curiosity to discover local and remarkable experiences.�

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why now? discover local “Cuba, the ballet is something of a national treasure. You can find anyone in the street here in Havana who can dance as well as most professionals. The resulting photographs, featured on his Instagram, capture some of Cuba’s best talent jumping, twirling and stretching in the streets, providing a beautiful and even surreal glimpse of just how deeply rooted Cuban ballet is.

“Behind the postcard, there’s an urgent musical movement bubbling in Cuba’s capital, fuelled by a local population that loves to party.

While the likes of salsa, jazz, hip-hop, and reggaeton rule the island, a cluster of DJs and producers are pushing a four-four pulse. Electronic music is not a new phenomenon in Cuba. “

In Havana, the film production of “Fast and Furious 8”

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The “Cuba” Factor Current Framework | Considerations • Hilton Financial Targets • Internet Connectivity

Future Framework | Experience Economy • Hilton meets its numbers • Internet Detox #liveauthentic

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business model HILTON (STRATEGY PARTNER)

BROOKFIELD (INVESTOR)

HABAGUANEX (“OWNER REPRESENTATIVE”)

Asset-light

Well-capitalized

Requires JV partnerships only

Management only business model

Long-term hold strategy & value add fund

Cuba is a long term hold

Regulatory Hurdles

Canada based company

US Embargo does not apply

Thayer Lodging

Hilton & Thayer have done 4 Hilton deals (Highland Curio in Dallas)

Proven Partner

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financial summary • Assumptions: Optimal Scenario • Top Line Revenue Generation: Rooms, F&B for Habaguanex & Investor • Top Line Revenue Generation: Franchise & Management Fee for Hilton Worldwide

FINANCIALS JOINT VENTURE PARTNERSHIP

INVESTMENT IRR (UNLEVERED) Y6 NET PROFIT EQUITY MULTIPLE (UNLEVERED)

FRANCHISE MANAGEMENT

HABAGUANEX

INVESTOR

HILTON

$10,133,809

$9,736,405

$525,000

13.61%

13.08%

N/A

$758,891

$729,130

$2,942,177

1.82

1.75

N/A

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timeline

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summary Join Us – Newest #CurioCuba campaign #wishyouwerehere • Cuba provides a sustainable future demand: • Proximity to US • Global attraction • Timeless quality • Once-in-a-lifetime vacation • Authentic experience • Help Cuba Rebuild • Community Activation + Park Programming available @ Hilton Resort + Tru Havana • Future footprint for Hospitality Education Partnership Initiative (HEI)

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Thank you

Question and Answer Session

Appendix

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