The worst-kept secret in the hotel industry was revealed this morning as Hilton Hotels Corp. pulled the triggered on a long-rumored acquisition of Hilton International, thus reuniting a company that never should have been split in the first place. Hilton will pay $5.7 billion in cash for its overseas sister.

From a branding point of view, one of the biggest blunders in the history of the lodging industry was the 1964 break-up of Hilton into a U.S. company and a London-based firm that stewards the brand everywhere else in the world. Physically, today’s transaction creates a system of 2,800 hotels and 475,000 rooms in 80 countries and operating under nine brand names. The purchase includes 40 hotels, 200 leases, 160 management contracts, 80 managed health clubs and—probably the key to the deal—the remaining 50-percent ownership of Hilton HHonors and the Hilton reservations system.

In the past few years, the two companies have worked closely to align their interests and to present a worldwide set of physical and service standards for the Hilton name. Yet, it’s just common sense to understand that one company, with one world headquarters and one set of leaders will be more effective for Hilton and will enable it to more readily compete with its global adversaries in the business (i.e., Marriott and Starwood).

The tough job, of course, will be integrating the two corporate cultures, a task that will be even more challenging following last week’s resignation of top Hilton executive Dieter Huckestein (see The Front Desk, Dec. 22).

It’s exactly the kind of news that neither Marriott nor the timeshare business wants to hear. Yesterday, Marriott Vacation Club International revealed that it has lost computer tapes containing data on 206,000 employees, timeshare owners and timeshare customers. The data, which Marriott claims would be difficult for anyone to access, includes addresses and some credit card information. Marriott quickly took steps to mitigate any effects of the blunder, including an offer to enroll those affected in a credit monitoring service.

It’s unlikely that the information will fall into the hands of identity thieves or that anyone’s personal data will be compromised. But ID theft is a hot button issue in the media, and in recent months a number of companies besides Marriott have had to disclose these kinds of security breaches.

We can only hope that Marriott miraculously finds the missing tapes or that the information doesn’t fall into the wrong hands. The timeshare industry, in particular, has had a shady past and can’t afford any bad publicity.

• As expected, the Fairmont Hotels board of directors yesterday rejected Carl Icahn’s $40-a-share bid for the company (see The Front Desk, Dec. 9). Corporate raider Icahn owns five percent of the 80-hotel chain and wants to acquire a controlling stake in order to either deal the company to another hotel chain or sell off the underlying real estate.

The surprise came with the rumors that other suitors may make competing bids for the Toronto-based firm. Leading contender seems to be the Ontario Teachers’ Pension Plan Board, although one media report says ubiquitous investor Prince al-Waleed from Saudi Arabia could be another potential white knight.

• Choice’s Chuck Ledsinger got rewarded earlier this week (The Front Desk, Dec. 21) with a four-year extension of his contract to lead the franchising chain. An SEC filing released yesterday disclosed financial terms of the deal: Ledsinger will get a base annual salary of $720,000, subject to annual reviews by the Choice board, plus a “targeted cash bonus” that could equal his base salary. He’s also eligible for annual stock awards, and as signing bonus he receives a grant of 51,727 shares of stock (How did they come up with that number?) that vest over four years. The sole downside is a non-compete clause that’s in effect for two years following Ledsinger’s departure from the company.

It’s a substantial and well-deserved package for Ledsinger, but it’s certainly not excessive in comparison to pay packages of other contemporary corporate leaders in and out of the lodging industry.

The lodging industry—at least Hilton Hotels—is losing the services of one of its most dynamic leaders. Dieter Huckestein, a key cog in Hilton’s success for the past 35 years, says he’ll retire from the company early next year.

While Dieter deserves to move on to the next phases of his professional and personal lives, it seems an odd time for him to leave the company. Most recently, Huckestein has been both chairman and CEO of the company’s Conrad Hotels brand and president of the Hilton Global Alliance, the liaison group between Hilton in the U.S. and London-based Hilton International.

Both Conrad and the Hilton-Hilton International relationship are at important crossroads. Conrad is a chain that’s finally poised to move to the top of the luxury hotel segment after many years languishing as an afterthought in the world of Hilton. More critically, a long-anticipated merger between Hilton Hotels and Hilton International seems to finally be in the offing. Some speculate an announcement will be made soon after the first of the year.

It seems that the leadership and international experience Dieter possesses would be invaluable once the merger happens and the tedious, but crucial work of integration begins. Nonetheless, I wish Dieter well in his future pursuits. My guess is the hotel industry hasn’t seen the last of the debonair Mr. Huckestein.

The Choice Hotels board of directors made a smart move this week by signing President and CEO Charles Ledsinger to a contract extension that keeps him at the helm of the hotel franchising giant through 2009. In his seven years as leader of the company, Ledsinger has done a remarkable job in keeping Choice on a strong growth track while pleasing franchisees in the ways that matter most to them—by putting heads in their beds and profits on their bottom lines.

In making the announcement, the board cited the phenomenal 29-percent annual return shareholders have seen during Ledsinger’s time at the top. He’s also helped guide the company through a steady increase in units that was accomplished through organic growth of existing brands as well as the development of new ones (Cambria Suites) and the purchase of others (Suburban Extended Stay Hotels).

Ledsinger is a dynamic and forceful leader who believes in consensus building, an important tool in the sometimes-nasty world of lodging franchising. I wish Chuck all the best and look forward to writing many more stories about him and Choice in the next four years and beyond.

By the end of January, Gold and Diamond VIP members of the Hilton HHonors guest reward system will be able to use eCheck-in, spending what Hilton says will be no more than two minutes to book a room at all 2,300-plus Hilton Family Hotels. The rollout of the ambitious, cross-brand online process empowers guests, continues the shift to automation and gives Hilton a potent new customer relationship management tool.

With eCheck-in, Gold and Diamond members can check into their room in advance via a brand website, select a room with features they want and print the confirmation. Since guest information is stored within guests’ online personal accounts, all the hotel has to do upon arrival is dispense key cards. Guests also can collect room key cards from available lobby kiosks.

Hilton bills eCheck-in as a convenience for the guest—which it is. But it also facilitates companywide marketing and branding: It gives Hilton information on guest needs and preferences and, through OnQ, Hilton’s common technology platform, suggests targeted marketing. What Hilton takes away from it remains to be seen, but the potential is undeniable.

A smart move all around.

It’s a drop in the bucket for the adult entertainment industry, but adult movies on demand are big business for hotels. A new industry study from Adult Video News reveals that in-room video-on-demand purchases of adult titles accounts for $500 million in annual sales, or four percent of the $12.6-billion adult industry.

Another revealing statistic from the report: 55 percent of hotel VOD purchases are adult titles. That comes as no surprise to you if you’ve spent any time behind the front desk or as a night auditor and have had a chance to review guest folios.

A couple of other interesting but non-revelant numbers from the study:

• 13,588 hardcore adult video titles will be released this year.

• About one-third of adult industry sales are registered by video sales and rentals. Adult Internet sites account for 20 percent of sales.

Cendant Corp. issued a long, highly technical press release yesterday that mostly addressed the ongoing problems in its Travel Distribution Services division. Buried in the release was a short announcement that affects the structure of the four new companies to be created next year out of the current Cendant organization. In the original October announcement of the split-up, the new Hospitality company was slated to include the Fairfield Resorts and Trendwest Resorts timeshare development, marketing and ownership units but not the RCI timeshare exchange and services division or the Vacation Rental Group. Perhaps illogically, RCI and VRG were slated to be part of the new Travel Distribution Services company.

In yesterday’s release, Cendant switched gears and said that all of the timeshare-related businesses—RCI, vacation rentals, Fairfield and Trendwest—will now be included in the yet-unnamed new Hospitality company. Here are some thoughts on this development:

• As Cendant Chairman Henry Silverman said in way of explanation, keeping RCI and VRG out of the distribution company will free up management to focus on its significant problems. And since the hospitality group will roll out several months before distribution, “We will be able to distribute about two-thirds of our EBITDA to our shareholders more quickly,” said Silverman. Of course, maybe the distribution company is the one that will need that EBITDA to keep it afloat during what will undoubtedly be a rough start for the new venture. But distribution’s loss is a gain for the hospitality company’s bottom line.

• While it seems to make sense to unite all vacation ownership activities under one umbrella, one Cendant insider said to me at the time of the announcement that it’s better operationally to have RCI separate from Fairfield and Trendwest. The reasoning is that like most of RCI’s customer base, Fairfield and Trendwest are timeshare operating companies, and some of RCI’s clients feel—probably unfairly—that the company gives preferential treatment to its in-house cousins. I’m not sure how serious of a problem that poses for RCI, but if it is one management will need to face the issue all over again.

It seems a certainty that big changes are ahead for Fairmont Hotels, that hard-to-define, sometimes-quirky collection of hotels with a superb history and pedigree. Investment shark Carl Icahn is circling around the company, looking to buy a controlling interest and then flipping either the whole company or some of its valuable real estate parts.

The officers of the Toronto-based firm will probably fight the takeover attempt, but the likely outcome will be some significant reincarnation of the chain. At the least, the company will be forced to divest itself of most or all of its considerable real estate holdings. If he gains control, Icahn might seek to sell-off the real estate and then sell the valuable brand name to another lodging firm (Cendant, InterContinental, Marriott, even Starwood all come to mind).

This kind of corporate intrigue and asset swapping comes with the public ownership of companies, and it’s the kind of exercise that makes the corporate world go around. I fear, however, that the rich tradition of the Fairmont name and some of the innovative and forward-thinking operating practices the company has developed will get lost in the shuffle. The travel industry needs more companies with individual style and personality. I hope the Fairmont style doesn’t become a casualty of corporate warfare.

No group of hoteliers like to have a good time as do the members of Americas Best Value Inn. The nearly 600 members of the chain partied hard last night as part of the group’s annual conference at the Monte Carlo Casino Hotel in Las Vegas.

Most chain conventions I attend have some element of intrigue, typically with various factions of franchisees plotting against each other or, much more frequently, against the “suits” at franchise headquarters. That kind of atmosphere rarely lends itself to anything more than quiet cordiality at chain-wide conventions.

At ABVI meetings like the one this week, there’s no intrigue, no in-fighting and no animosity toward headquarters or chain officials. As a result, the event’s opening reception became a party full of food, drink and a good-natured karaeoke contest. It’s that kind of conviviality that builds a community out of a company. It’s just too bad I don’t see it at more chain conventions I attend.