Why did Blackstone pass on Hart?

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The Blackstone Group wasted no time putting its stamp on the newly acquired Hilton Hotels. The question is what does that stamp mean?

Less than a week after it closed on the $20-billion deal to buy the lodging giant, Blackstone installed Chris Nassetta as Hilton's new president and CEO. The 45-year-old hotshot is a good choice, given his track record at Host Hotels, which he's headed since 2000. The real shock for many people, including me, is Blackstone's snub of Hilton veteran Matt Hart for the top job. The wise-cracking, but financially savvy Hart was heir apparent for the company's top job after Steve Bollenbach announced his retirement but before Blackstone's bid for the company. Hart now gives up his job as president and COO but gets a seat on the Hilton board of directors. He'll be gone to greener pastures soon.

Blackstone's choice of Nassetta over Hart can have several meanings. The easy one is the oldest one: Nassetta has a history with several Blackstone partners, including Jonathan Gray and John Schreiber. They know Nassetta, have dealt with him before and obviously were impressed with his performance at Host. Hart may be less polished and too much of a plain speaker for their tastes. Yet, but all accounts, Hart's a financial genius.

The other theory may hold more water, although it's less juicy. Blackstone may like Nassetta because at Host he oversaw a REIT that owns real estate, and perhaps Hilton's new owners wish to move the company more in that direction, in addition to its franchising and management efforts. As some press accounts have noted, the hiring of Nassetta probably means Blackstone plans to bolster Hilton's business lines rather than break it up into sellable parts.

It will be especially interesting to see if and how Blackstone proceeds in integrating some of its other lodging assets, e.g. LXR Resorts and La Quinta, into Hilton. Nassetta has a big job ahead, and Iâ€â„¢m sure heâ€â„¢ll do well. Of course, so would have Hart—at least in my opinion.

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