HILTON : A CONTEMPORARY CLASSIC Backgrounder

Hilton Hotels Corporation is recognized around the world as a preeminent lodging hospitality company, offering guests and customers the finest accommodations, services, amenities and value for business or leisure. While the Hilton brand has, for more than 80 years, been synonymous with excellence in the hospitality industry, our acquisition in 1999 of Promus Corporation expanded our family of brands to include such well-known and highly respected brand names as Hampton Inn, Doubletree, Embassy Suites Hotels and Homewood Suites by Hilton. Through ownership of some of the most recognized hotels in the world and our newly enhanced brand portfolio, Hilton is now able to offer guests the widest possible variety of hotel experiences, including four-star city center hotels, convention properties, all-suite hotels, extended stay, mid-priced focused service, destination resorts, vacation ownership, airport hotels and conference centers.

Today’s Hilton can be viewed as a major industry competitor in a number of areas:

• Owning hotels. Hilton owns such unique, irreplaceable hotel assets as New York’s Waldorf=Astoria, The Hilton Hawaiian Village Beach Resort and Spa on Waikiki Beach, the Hilton Waikoloa Village and Chicago’s Palmer House Hilton and the Hilton San Francisco on Union Square. These large-scale properties occupy the best locations in the nation’s best markets.

• Managing/franchising hotels. The company is a prominent franchisor of hotels across its entire brand family, with income from management or franchise fees accounting for some 30 percent of Hilton’s total cash flow.

• Vacation ownership. Hilton Grand Vacations Club, the company’s vacation ownership business, operates properties across the country including such desirable locales as Las Vegas, Orlando, Miami, New York and Honolulu.

• International. A global strategic alliance with Hilton International, the London-based company which owns the rights to the Hilton brand outside of the U.S., brings to customers a single, seamless Hilton system of 2,000 hotels in more than 50 countries throughout the world. Additionally, Conrad Hotels offers five-star luxury hotels in New York, England, Ireland, Belgium, Hong Kong, Singapore, Turkey and Egypt.

The following pages outline how Hilton has become an industry success through a vision of aggressive expansion efforts and cutting-edge innovation.

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BUSINESS TRAVEL PROGRAMS

Since 1919, Hilton Hotels has led the way with innovations for executives on the road. Recent innovations include:

Hilton Hotels designed a program of special services with the business traveler in mind. Executive Floors is available at most Hilton and Hilton International properties. Separate check-in, complimentary continental breakfast, evening hors d’oeuvres and in-room fax machines are just some of the amenities available with most Executive Floors guestrooms.

Our fully-staffed business centers help business travelers with many office tasks such as graphic presentations, faxing, copying and word processing.

In September 1995, Hilton Hotels Corporation was the first hotel company to team up with American Express to offer a no-fee co-branded credit card that features what many frequent travelers value most. The Hilton Credit Card from American Express offers card members one of the richest rewards structure of any leading travel rewards card program, no annual fee and a low introductory interest rate.

QUALITY

In recent years, Hilton Hotels has taken an aggressive stand to upgrade its national network of hotels and ensure consistent delivery on the Hilton promise. Recent initiatives include:

Strategic Performance Management System. The Hilton Balanced Scorecard tracks financial and competitive performance along with internal and external customer satisfaction/loyalty measures in order to align the efforts of team members system-wide. Since 1997 the scorecard has provided managers with actionable information by utilizing hotel-specific priority reports based on customer- driven needs and a continuous improvement process to implement operational service and product improvement. This approach also encourages an innovative entrepreneurial spirit focused on all of Hilton’s constituents by linking results to a variety of reward and recognition initiatives. The Hilton Balanced Scorecard was featured in the August 1999 edition of the Cornell University Hotel and Restaurant Administration Quarterly in an article entitled “Hilton Hotels: A Comprehensive Approach to Delivering Value for All Stakeholders.”

Upgrading hotels. The company has spent more than $1 billion renovating flagship properties such as The Waldorf=Astoria, the Hilton Hawaiian Village Beach Resort & Spa, the Hilton Chicago O'Hare Airport and Hilton New York. Renovations are ongoing throughout the system, in order to maintain excellence in appearance and accommodations.

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Hilton Quality Service Institute (HQSI). In 1992, Hilton Hotels established this institute at its world headquarters in Beverly Hills, California. The HQSI provides an intensive series of workshops that educate all Hilton property managers regarding Hilton Hotels’ corporate programs and service philosophy. The end result is greater consistency and quality among individual properties.

Franchise review. Hilton Hotels has undertaken a vigorous franchise review process, eliminating those hotels that do not meet the company's standards.

Satisfaction Guarantee. The 100% Satisfaction Guarantee is an operating culture and philosophy that focuses each team member and owner on complete guest satisfaction. Through our guarantee, we commit to high quality accommodations, friendly and efficient service, and clean comfortable surroundings, for all guests. It is the cornerstone of every hotel’s operating philosophy that empowers employees, ensures consistency throughout the brand, continually raises the bar for quality and service, and positively impacts each hotel’s bottom line.

MARKETING PROGRAMS This drive for quality has worked hand-in-hand with a series of national marketing programs that appeal to Hilton's key target audiences. These programs include the following:

Guest Reward program. Hilton's acclaimed guest reward program, Hilton HHonors® Worldwide was expanded April 3, 2000 and now includes Doubletree, Embassy Suites Hotels, Hampton Inn, Hampton Inn & Suites, and Homewood Suites by Hilton hotels, along with Hilton and Conrad. Only Hilton HHonors now offers members the ability to earn both Points & Miles for stays at nearly any rate, at more than 2000 hotels around the globe.

Family vacations. Hilton Vacation Station is a program of special family services and amenities designed to help families traveling with children maximize their leisure time together. Since 1990, families have taken advantage of the program’s special family vacation premiums and our toy and game-lending desk. The program is available at more than twice as many U.S. locations as its primary competitors and located in the most popular vacation destinations across North & South America. In 2000, we are delighted to welcome several Doubletree hotels into the program; look for more next year.

Mature travelers. Among the first businesses to recognize the importance of travelers over age 60, the company has created Hilton Senior HHonors® Worldwide, one of the hotel industry's only membership-based travel programs for mature travelers.

Hilton's marketing programs, renovations and aggressive expansion all underscore a continued commitment to those principles that have made the Hilton name synonymous with first-class hospitality.

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INNOVATIONS Hilton has been on the forefront of hotel innovation since its inception. Hilton’s firsts include:

First hotel company to list on the New York Stock Exchange – June 23, 1946.

First company to operate a hotel gift shop. Called the Hilton Country Store, the gift shop reflected Conrad Hilton's determination to maximize every square foot of hotel space and serve the hotel guest.

In 1997, Hilton Hotels Corporation (HHC) and British company Hilton Group plc, formalized a global marketing alliance to reunite the Hilton name worldwide for the first time in over 30 years. Hilton International (now a wholly owned subsidiary of Hilton Group) was spun off from HHC in 1964. Hilton Hotels Corporation continued to operate hotels separately in the U.S. and Conrad International Hotels Corporation, a subsidiary of Hilton Hotels Corporation, operates hotels outside the U.S. There are more than 2000 Hilton, Conrad International, and Vista hotels in 50 countries, and the reunification of the brand further enhances Hilton’s leadership position in one of the world’s fastest growing industries.

With customer service as a Hilton hallmark, the company was the first brand to offer amenities such as air conditioning and direct-dial telephones as standard features in guestrooms.

Pioneered concept of airport hotels with the opening of the San Francisco Airport Hilton in 1959. The company now boasts 40 airport properties located strategically in major markets in the U.S.

First upscale lodging company to develop the concept of franchising hotels, 1966. Formed Hilton Inns, Inc. to create a network of franchise hotels bearing the Hilton name. This practice is now an industry standard. Hilton has approximately 1,352 properties under franchise agreements.

Another breakthrough in customer service was the development of centralized reservation services, HILTRON, uniting all Hilton Hotels, in 1973. Today, HILTRON has a 99 percent up-time that remains unrivaled in the industry. In 1999, Hilton announced the successful launch of its new $30 million state of the art central reservation system (CRS) called HILSTAR, creating a network of more than 500 hotels worldwide.

The debut of the Hilton’s Internet web site at http://www.hilton.com in August 1995 made Hilton Hotels an industry pioneer on the information superhighway.

In what may be the most aggressive travel-related sleep experiment to date, Hilton Hotels, in cooperation with the National Sleep Foundation (NSF) and an array of sleep-product

manufacturers, introduced 25 Sleep-Tight Rooms in October, 1996. The rooms are part of a nationwide program to determine how to increase sleepability among travelers. Hilton Hotels and NSF began their relationship in 1994 by establishing the “Sleep and the Traveler” cooperative research effort, which led to the development of these special guestrooms.

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Hilton Hotels Corporation and Hilton Grand Vacation Company introduce the Urban Vacation Ownership Product and announce The Hilton Club – New York, located on two designated floors of the Hilton New York, as the flagship property in the new Hilton Club Collection. The Hilton Club concept establishes a distinctive new niche in the vacation ownership industry by incorporating a spectacular urban setting and a collection of high-end services and exclusive travel privileges tailored for Members Only.

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CONTACT: Kathy Shepard/Jeanne Datz/Kendra Walker/Thomas Wingham/Melissa O’Brien* Hilton Hotels Corporation 310- 205-4545 or *901-374-6462

04/02