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Hilton Worldwide Re-engineers its Treasury As a result of a merger in 2006, Hilton Worldwide’s treasury executives took a hard look at its treasury operations, and subsequently embarked on an ambitious project to re-engineer its enterprise treasury system.

Hilton Worldwide Re-engineers its Treasury

by Donald Gradwell, Director, Treasury Infrastructure, Hilton Worldwide

As a result of the merger in 2006 between Hilton Hotels and Hilton Hotels International, Hilton Worldwide’s treasury executives took a hard look at its treasury operations, and subsequently embarked on an ambitious project to re-engineer its enterprise treasury system. As part of this project, the company realised it needed to find a way to simplify communications with the large number of banks it dealt with globally. After considering all options, the firm decided to adopt SWIFT, an industry standard for financial messaging, and to appoint a service bureau to provide a single point of connectivity to its banking network. Not only did this simplify operations, and reduce risk and costs, but it helped to free up valuable resources so treasury staff could focus on mission-critical finance tasks, rather than IT.

Following the 2006 merger, the company moved forward with a significant project to implement a new enterprise treasury system, and initiated the integration of the accounting platforms of its US and international businesses. As part of this initiative, the company realised it also needed to look at its financial messaging capabilities, and find a way to improve and simplify operations and reduce risk and costs. The company had business relationships with many banks globally and, as such, communications with each bank had become increasingly burdensome. Each day, the company had to log onto the websites of all its banks and download the bank statements, and then upload them into its treasury system. To simplify the process and impose consistency on its banking communications, Hilton Worldwide decided to adopt the SWIFT financial  messaging  standard.

Hilton Worldwide biography

Data security in financial communications is of paramount importance for the company, and it was a key factor in the choice of SWIFT and its secure financial messaging network. Another critical factor for a global operation like Hilton Worldwide was the fact that SWIFT messaging is widely adopted across the international banking industry. However, the adoption of the messaging standard brought its own challenges. SWIFT is technically complicated and requires considerable IT expertise, and Hilton Worldwide did not wish to develop a full set of SWIFT skills in-house. Bringing new staff on board would be costly; likewise training existing staff would take time and also cost money. Further, we realised early on that using treasury professionals to manage sophisticated messaging systems was not the best use of critical skills: we wanted the treasury team to be specialists in treasury, not IT.

The company also wanted to relieve itself of the burden of individual communications with multiple banks. Managing the complexity of multiple banking relationships was not only taking up valuable staff time but had also introduced risk. With information being exchanged from multiple sources, and in multiple formats, the risk of error was high. We wanted to improve operational efficiency so that we did not have to log on to multiple banks daily and download bank statements..

After exploring a number of options, the firm decided the best way forward was to engage a service bureau that could provide financial messaging through a single point of connectivity to all its banks. As it embarked on the project, the treasury team began by establishing the criteria that its service bureau partner had to meet: not only would this service bureau partner need to support SWIFT messaging, but it would also need to operate globally and provide direct bank connectivity when required to ensure Hilton Worldwide could link to banks wherever the firm had hotels or resorts.

It was also key that the bureau should have established relationships with a wide range of banks. Not only would this provide a level of comfort about the bureau’s capabilities but it would also ensure that we could get up and running with the service as quickly as possible. If the relationships and technology bridges were already established there would be no need to re-invent the wheel, and establish new channels of connectivity. Another important consideration was the ability of the service bureau provider to integrate with the new enterprise treasury system that Hilton Worldwide was implementing. In choosing a new vendor for something as important as bank communications, the company wanted to know that it already had a relationship with our treasury system vendor and could work with them.  A previous working relationship between the two parties would reduce the time to ‘go live’ and lower the project risk considerably.

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