(FORTUNE Magazine) –

It's after midnight in Chicago, and Tom Pritzker looks totally wiped. He spent today running the family's hotel, industrial, finance, and real estate empire, said to be worth more than $15 billion. Tonight he has hosted an awards ceremony and dinner for the Pritzker Prize, the so-called Nobel Prize for architecture. Now it's the afterparty at the bar of one of the family's newest hotels, the Park Hyatt Chicago. The room is narrow, with high ceilings, large windows, and dark wood floors--basically a wide hallway that doubles as a watering hole. Moving from table to table, Tom and his cousin Nick,

the family real estate guru, bump into a friend, architect Frank Gehry. "You know, I really have always hated this hotel," Gehry says, only half-jokingly, about the building's design. "When are you going to let me design one of your new hotels?" Tom shakes his hand with a smile and slight chuckle. "Don't worry, Frank," he says. "We'll find you a great project. We're building a lot these days."

It's big news to hear the Pritzkers talking about a hotel-building spree. Hyatt, of course, is the crown jewel of the family's holdings--the company that Tom's father started by buying a dinky motel near the Los Angeles airport and that has grown into a $5-billion-a-year global chain famous for its flashy style, high quality, and atrium lobbies. Yet Hyatt has never really kept pace with its competitors. During the past decade, as the lodging industry consolidated and expanded, it largely sat on the sidelines. The Pritzkers seemed content to extend their roster of 200 or so hotels one or two at a time, even as publicly owned giants like Marriott and Hilton added many hundreds and saw their market caps soar.

All that has begun to change. In a rare series of interviews Tom, 55, broke the family's notorious silence to elaborate on his push for growth. Hyatt not only has 29 new hotels under development around the world but also surprised Wall Street in January with the acquisition of AmeriSuites, a 146-hotel chain now renamed Hyatt Place. "Already people are seeing that we're not what we used to be," Pritzker says. "Everybody scratched their heads when we announced our expansion. Everybody scratched their heads when we announced the AmeriSuites deal. Well, they're going to see a pattern of those kinds of deals. We're serious about being a global player in the hotel industry."

With the industry booming both in the U.S. and abroad, it's hardly surprising that the owners of a name like Hyatt would expand. "These days it seems hotels can charge almost whatever they want for a room," says Steven Kent, a lodging analyst at Goldman Sachs. "The industry has become an oligopoly, and all the major players are doing well." Yet behind Tom Pritzker's ambition is an open secret: Four years ago the 11 Pritzker heirs, torn by internal strains, committed to a ten-year breakup plan that calls for distributing the assets it took four generations more than a century to amass. That challenge has fallen to Tom, a serious and shy Midwesterner, who will tell you he is bent on maximizing the family fortune for when the day of reckoning comes.

THERE'S NOTHING ostentatiously Zen about Tom Pritzker. Interviewing him, with his slight Chicago accent and gentle disposition, is a bit like having a long chat with a favorite uncle. It's easy for a discussion about hotels to morph into a fascinating digression on his friend the Dalai Lama, Tom's recent vacation in Kabul, or the archaeology of an 11th-century kingdom in the Himalayas. (For excerpts from FORTUNE's interviews with Tom, see "Pritzker Unplugged.") After a decade running the business, Tom has built a reputation as a diligent and often shrewd dealmaker. But the joke among his relatives is that if it weren't for his father, Jay, having insisted on his learning the family trade, he'd be a monk in Tibet. "I have this very strange habit of how I spend my vacations," says Tom. "I don't go to Miami. I don't go to the South of France. I go off and do these certain things."

At least once every year or two, he packs up his laptop and satellite phone and relocates to the wilds of Nepal and Tibet. It's not uncommon for him to perch atop a cliff during a monthlong walk with a dozen yaks, corresponding via e-mail and deciding whether to leverage this company or buy that one.

Yet the call of the office has become much stronger. That's because after the death in 1999 of Jay Pritzker, the mastermind of the family fortune, almost nothing went according to plan. Jay had handpicked Tom and his cousins Penny and Nick, all lawyers by training (Tom and Penny also have MBAs), to run the holdings: Hyatt; a $6.3-billion-a-year industrial conglomerate called the Marmon Group; the $1-billion-a-year TransUnion credit bureau; and vast tracts of urban real estate, mainly in the U.S.

Barely a year had elapsed before the clan began to squabble. In summer 2000, Tom's two brothers and a handful of his cousins sent a letter asking him to restructure the holdings. The family was no longer a cohesive whole, they wrote, and therefore the business needed the kind of transparency a public corporation might have. A year later the family agreed on a governing structure for the Pritzker Organization, requiring Tom to open the books, hold annual meetings of family shareholders, and issue regular financial reports. Under the plan he has until 2011 to distribute the assets among the heirs. Though the details have never been made public and Tom won't comment, Wall Street assumes that will involve taking Hyatt and perhaps other companies public.

Divvying up the billions is exactly the opposite of what Jay wanted. In his view, Pritzkers were entitled to nothing by birthright and should never receive more than they had contributed to the family or to society. Founded by Tom's great-grandfather Nicholas, developed by his grandfather A.N., and perfected by Jay, the organization proved brilliant at value investing. The family would buy any company, regardless of its industry, if they saw an angle--be it profit or simply tax benefits. During a tenure of nearly 50 years, Jay bought and sold more than 200 companies--mostly obscure industrials like Darling Store Fixtures or Amarillo Gear Co. but also an airport motel called Hyatt House. What evolved is a business that operates in more than 40 countries, has more than 100,000 employees, and is owned by the family through a web of some 950 "ancestor trusts" structured to avoid taxes.

The cousins assumed Tom could cloak the preparations for their big payday in the same secrecy for which the family was famous. He might have pulled it off, if it hadn't been for Liesel, an 18-year-old cousin who filed a lawsuit in 2002 accusing her father, Jay's brother Robert, of unlawfully draining her trust fund and that of her older brother Matthew. Soon details of the family business were splashed across the pages of newspapers worldwide. "That was a tough time for all of us," Tom recalls. But he adds that it was also a perfect time to lay low and plan the family's next steps. By last January, when Liesel and Matthew received a settlement estimated at more than $500 million each, the reorganization was well underway.

Tom's first priority was Hyatt. Like most large hotel companies, it owns and operates some of its hotels, manages others under long-term contracts with investors, and franchises still others. (The breakdown for Hyatt is 37/50/13.) But unlike other hotel companies, Hyatt was a grab bag. Mostly for tax reasons, its assets had been lumped in with those of dozens of other businesses, including a container-leasing firm and a maker of aggregate materials for the construction industry.

It took Tom and Nick, along with two teams of lawyers and accountants, fully two years to complete the 55 mergers needed to create a unified hotel company--unveiled in 2003 as Global Hyatt. "The process was mind-boggling," says Tom. "Outside lawyers, auditors, accountants, investment bankers--all of them--said, 'Wow, this is the most awesome project any of us has ever worked on.' Every time you had an issue, you had to get 30 people in a room and work it out." As a clear picture of the hotel operations emerged, the family realized that Hyatt had been so far eclipsed by rivals that it was worth less than they'd hoped. "We began to see that you really had to have scale to be a major player," Tom says. "[And when] we looked at our portfolio, we said, 'We have some scale, but it's just all over the place.' "

Clearing up the mess also whetted Tom's and Nick's appetite for Pritzker greatness. "Sure, we have family drama," Tom says. "But we also have a great opportunity to grow this thing. And despite it all, exploiting opportunity is what Pritzkers do best."

NICK PRITZKER never stops moving--especially when he's in a hotel like the Park Hyatt in Washington, D.C., which he toured on an August morning. Located in the city's fashionable West End neighborhood, the hotel had just shut for renovations. Nick was there to swing the first sledgehammer. Then, walking the property with Hyatt's chief designer, he inspected with manic intensity a room that had been built as the template for the makeover. He checked everything from the number of sheets on the bed to the comfort of the swiveling chairs. He even sent an aide to flush the toilet as he stood by the bed to see if the room was sufficiently soundproof. (It wasn't.)

The most gregarious Pritzker, Nick, 60, has been in the lodging business for 28 years and is the closest any family member comes to being a hotel impresario. But he likes to downplay his expertise. He recounts a moment not long ago when he was on a hospitality-industry panel. He was asked how Hyatt could grow so fast and ensure consistent quality.

"To be honest, I had no idea," he says. "But what I said was that we've always believed in decentralized control, so we know at every hotel there are people coming up with new ideas and implementing them. As I said that, the head of development for Marriott turned to me and said, 'We do it differently--we just give our general managers a big book that tells them everything they need to know.' "

For Hyatt, decentralization has been both its greatest asset and its biggest liability. Pritzker hotels have innovated in many areas, like ditching the traditional lobby coffee shop for themed restaurants. Yet decentralization has also spawned inconsistency, particularly in the U.S., which is home to about half of Hyatt's hotels. Precise branding is essential in the hotel business for building customer loyalty, but how many travelers know the difference between a Hyatt Regency, a Grand Hyatt, and a Park Hyatt? Even within the company, there were no clear distinctions--at least until recently. For example, the Pritzker-run hotel in New York was named the Grand Hyatt simply because it was next to Grand Central Station and there already was a Regency hotel in the city owned by someone else.

Bernd Chorengel, the German-born head of Hyatt's international operations, loves to talk about how Hyatt plans to bring coherence to its brands: Park Hyatt on top, then Grand Hyatt, Hyatt Regency, and Hyatt Place. "Grand Hyatts should be a hip-hip-hooray hotel," says Chorengel, "for people who want to be seen, who want to have fun. They drive a Ferrari, wear a big, gold clunker watch. But if I go to a Park Hyatt, I drive a Mercedes and have more money than the guy in the Ferrari, and my wife dresses in Chanel and likes white wine. The guy staying at the Regency is Mr. Motorola. He's traveled on business throughout the world and just wants to sit in his room and work all evening long."

Better branding still leaves Hyatt with a lot of catching up to do. The chain is small--212 hotels worldwide, vs. Marriott's 2,676, Hilton's 2,296, and Starwood's 723. During the 1990s, industry leaders like Marriott discovered there is huge opportunity in establishing a presence in each segment of the lodging market. It lets business travelers treat hotels like airlines--they can pick a favorite brand, join its frequent-guest program, and build up points no matter where their travels or budgets take them. Each brand's reach has become as important as how comfortable its beds feel, sparking a vast consolidation. Starwood bought the Sheraton chain with shares of its sky-high stock and also launched its hip W Hotels. Hilton multiplied its locations more than sixfold when it bought Promus, owner of the popular Doubletree, Hampton Inns, and Embassy Suites.

The Pritzker clan checked out most of those deals before they happened, but passed, typically saying the prices were too high. As a private company, Hyatt lacked stock it could use as currency; it faced no pressure from stockholders to make purchases; and the family had other businesses competing for the capital. For hotel growth, the Pritzkers largely concentrated on buying individual properties, even though that put Hyatt behind in the global game. Admits Nick: "Strategy has never been our strong point."

ALL OVER THE WORLD there's dramatic evidence that Hyatt has changed. You can see it in Shanghai, where a Park Hyatt is going up in what will be the world's tallest building--one of ten new Hyatts in China. You can see it in Dubai, where the company just opened its second hotel in two years. You can even see it in Kabul, where Hyatt is building Afghanistan's first luxury hotel.

The mastermind of the expansion is Doug Geoga, a longtime Pritzker executive whom Tom tapped in 2003 as president and COO of the new company. One of Geoga's first moves was to acquire AmeriSuites and rebrand it Hyatt Place. It made Hyatt a player in the "limited service" category: comfortable, unostentatious hotels for business travelers that keep down costs by eschewing amenities like room service, valet parking, and dry cleaning. It's one of the industry's fastest-growing and most lucrative segments. Hyatt says it will spend $175 million redoing the existing AmeriSuites and also plans to open 50 to 60 new Hyatt Places a year.

Geoga and his team are full of ideas to make Hyatt stand out. Besides building new hotels, the company is spending $237 million this year and next on renovating 13 Pritzker-owned hotels in the U.S. The concept is to make each reflect its city. The Park Hyatt in Washington will feature Amish artifacts and other Americana. The formerly tacky pink Hyatt West Hollywood will have suites with recording studios (Nick got the idea from some rock star friends). Says design chief Chorengel: "The Four Seasons and Ritz-Carlton do everything the same, from Miami Beach to Chicago. We say every hotel is different. When I wake up in the morning after traveling halfway around the world and the curtains are closed and I put on the light, I'll know where I am."

THE BUILDING and refurbishing should help Hyatt win over a crucial clientele: the developers and investors who bankroll most of the world's new hotels. In the battle for management contracts, says an industry insider, "Hyatt is on the list, but it is not yet at the top of the list." Adds hotel consultant Chase Burritt: "We just don't see them out there. They always have the chance to enter back into the game, but I still don't feel it yet." Geoga acknowledges that Hyatt has been an "underutilized resource" but says those days are over. The goal now is to add eight to 12 hotels a year domestically and more internationally--not counting Hyatt Place, a mostly franchise operation that will grow even faster.

Though the Pritzkers don't release financial results, there's evidence that the growth push is already paying off. Hyatt says its revenue per available room--a key indicator in the business--grew last year by more than 9% in the U.S. and nearly 32% abroad, while operating profits rose 21% and 29%, respectively. That's a good start, says an expert, but Hyatt will still need a couple of years to expand its base of loyal customers, command premiums on its rooms, and collect management fees matching those of its top rivals--the signs Wall Street will look for if Tom decides to take Hyatt public.

For Tom, of course, the clock is ticking toward that deadline for distributing the family assets. "That's the whole other side of the stuff that I'm doing," he says. "I'm trying to make the transition to the next generation work. It hasn't been perfect. I have people who are jealous, angry, happy, and thrilled. I'm not holding a royal flush, but I was dealt enough interesting cards to keep in the game." (Other family members declined to comment.) Much remains for him to do--untangling the family's scores of other businesses, for example.

Most Pritzker watchers expect that as 2011 nears, Hyatt and other businesses will go public and the family will divvy up the shares, enabling heirs to cash out if they want. But Tom and Nick say they are in the hotel business for keeps. For both, it's a matter of family identity and personal passion. Nick loves developing properties like his current favorite, the Hotel Victor in Miami.

The Victor is the Pritzkers' newest, most glamorous, most likely-to-get-serious-airtime-on-celebrity-TV-shows hotel. Its February opening was a gala party attended by Diddy and Tara Reid. The hotel boasts a "vibe manager," a deejay in the dining room, and a lobby aquarium with iridescent jellyfish. (For $5,000 you can bathe in 1,000 liters of heated Evian water.) "I don't know if we'll do a chain of Victors, but that kind of defeats the purpose," Nick says. He pauses, then adds philosophically, "If you don't take time to do something that you love and embrace new ideas, you get boring and let your competitors walk all over you. We've done that before. We're not going to let it happen again."

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