HOSPITALITY BUSINESS DEVELOPMENT 13
Thehospitality sector has been experiencing exponential growth in therecent times as a result of the immense globalization that hasallowed for the expansion of markets and increase in the demand forthe services and products offered in these businesses. This hasallowed hospitality business entities to expand to other parts of theworld rather than the areas or countries where they were started.This is the case for Hilton Hotels.
Thehistory of Hilton Hotel dates back to 1925, when Conrad Hiltonestablished the first Hilton Hotel in Dallas. This hotel experiencedexponential growth to the extent of being listed in the New YorkStock Exchange in 1946 under Hilton Hotels Corporation, with Conradbeing the president. In 1970, the Hilton Hotels took an aggressivebusiness approach through venturing into the gaming industry, as wellas purchasing flamingo Hilton and Las Vegas Hilton. Testament to itsaggression in the market is the fact that Hilton Hotels established astrong global alliance with Hilton International, in which case theyshared the Hilton brand in spite of the fact that each of theentities was owned by a different individual or entity. It is alsoworth noting that the Hilton Hotels operates in the internationalmarkets using brand names such as Embassy Suites, Homewood Suites,Hampton Inn & Suites, Doubletree, Conrad Hotels and Hampton Inn.Researchers have acknowledged that the future of Hilton Hotels isdependent on the alliances that it created with Hilton International,which has the capacity to determine the growth of the two companies.
HiltonHotel is known to own and franchise more than 2400 vacationproperties, resorts and hotels across the globe. This competitiveadvantage is complemented by the design of the varying hotel themeson the basis of the needs of varying market segments. As much as thehotels are under a single corporate umbrella, they operate undervarying brand names.
Marketingand Promotion Strategies
Asone of the largest players in the hospitality and service industry,Hilton Hotel is popular for the effective and stylish services thatit affords to its consumers. It would be easy to apply the Four P’sMarketing Mix in the marketing strategies used by the companyincluding Product, Place, Price and Promotion. These are used inensuring that that the marketing department attains its goals.
Withregard to products, Hilton Hotel offers both tangible goods andintangible services to the consumers. These are offered with properattention to safety and quality, where Hilton ensures that itsconsumers are accorded the best and highest quality of services.Hilton’s products are offered in three levels including core,facilitating and supporting products. The core products for the hotelunderline the main reasons for getting services from the business,with Hotel Rooms being the core reasons why individuals go to Hilton.The facilitating products are services that help consumers take upthe core products, where, for Hilton, these would be the popularproducts like online reservations facilities, bars and restaurants,as well as customer services. The supporting products are theadditional services and products offered so as to have competitiveadvantage through enhancing the value of the core services andproducts. For the hotel, these are concierge services, free magazinesand newspapers for business travelers, and 24/7 room service.
Placeprimarily underlines the distribution strategy that the company uses.In the case of Hilton, the distribution strategy is heavily dependenton internet and information technology. The company website comes asa crucial and effective platform for distributing its services,coming with numerous capabilities and features that offer practicalassistance to consumers including events and wedding planning,booking airport pickups, scheduling meetings, as well as hotelbooking. It service and product distribution is also facilitated viamobile convenient applications that are available on android andIPhone platforms.
Price,on the other hand, ensures that the services are offered atcompetitive rates in the market so as to attract the right consumers.As much as the company may be offering luxury services whose pricesare quite high, it also considers early payment and cash discounts soas to attract consumers. On the same note, it applies seasonalpricing and price flexibility so as to ensure fairness in the pricesat which the products and services are offered throughout the year.Its pricing can, however, be termed as premium since it only offersfour and five star rooms. The premium charges are effected since thehotels offers varied intangible benefits like luxury, sense ofachievement and high status.
Lastly,promotional strategies play a crucial role in marketing the Hiltonbrand. Fortunately, the brand has a dedicated promotional team whichdoes a large proportion of the marketing and advertising via theinternet. Online promotional strategies allow the company to targetthe appropriate clients, reach a wide range of them while alsoreducing the costs of marketing. Other elements of the promotionalmix include public relations, sales promotion and personal selling. Apopular advertisement slogan commonly used by the company is “StayHilton. Go Everywhere” which aims at communicating the notion thatthe hotel is a global brand that maintains high levels of quality.This message is communicated in its online, as well as offlineadverts including in newspapers, magazines, and broadcast media.
Needlessto say, Hilton is a major player in the hotel industry. Itscompetitive advantage has not emanated from the provision of servicesat a low price rather it has been based on the provision of thehighest quality of services in almost every part of the globe. On thesame note, the company has numerous and differentiated products thatcater to almost all the needs of the consumers. Further, the companyhas put in place the OnQ System that allows for the provision ofbetter services, creation of customer loyalty, and enhancement ofrevenue generation. This has also allowed for effective management ofcomplaints which assists in resolution of dissatisfaction thatconsumers face thereby preventing their occurrence in the future. Inessence, it would be noted that the competitive advantage of thecompany emanates from its customer focus.
Thesales techniques for the company may include personal selling, publicrelations among others. with regards to the hotel, public relationsis maintained via communication with different parties such asemployees, customers and other public and private organizationsthrough offline and online presses in a regular way, as well ascommunicating via newsletters with organizational stakeholders. Itssales promotion is accomplished via HHonors points that are based ondiscount vouchers and rewards programs available in the companywebsite.
SWOTAnalysis of Hilton Hotels
ASWOT analysis of any business entity allows for the determination ofthe competitive advantage of the entity alongside examining theweaknesses that may be hindering it from reaching its potential, aswell as threats that may undermine its capabilities.
Oneof the key strengths of Hilton Hotels Corp. is the fact that it is aglobal leader, where it is ranked as the second largest hotel chainin the hotel markets across the globe. This means that it has a wellestablished name and reputation, which makes its entry into otheroperations pretty easy.
Inaddition, the company has a diversified product portfolio which isfounded on services and prices. In total, the company has ninedifferent brands under its wings including The Waldorf=AstoriaCollection, Conrad Hotels & resorts, Embassy Suites Hotels,Hampton Inn & Suites, Hilton Grand Vacations, Doubletree, Hilton,Homewood Suites, and Hilton Garden Inn. This not only increases itsreach and profitability, but also enhances the flexibility of thecompany since the varying brands complement each other (Clarke &Wei Chen, 2007).
Further,the company incorporates a focused pipeline development as seen inthe growth strategy that it is aggressively pursuing so as to furtherconsolidate its reach in foreign markets, as well as capitalize onthe growing travel and tourism industries in the emerging marketssuch as China and India. Indeed, the company announced in 2008 itsplans for establishing about 300 hotels in the Asia-Pacific regionwithin the following ten years. This enhances its revenues andcompetitiveness.
Onthe same note, the company incorporates a well recognized loyaltyprogram known as Hilton HHonors. This loyalty program was extended in2007 through the advent of Experience Rewards, providing the 17million members increasingly experience-oriented and personalizedrewards options. This is complemented by the elimination of theblackout dates, which enhanced the value of the program to the users.Scholars note that the strong focus on the loyalty program is crucialto the retention of customers, as well as the creation of brandloyalty in among the new ones and promoting future revenues (Medlik,2000).
Inspite of its strengths, the company’s growth is inhibited by someweaknesses. First, the company is seen as excessively focusing on thedomestic markets. Indeed, the Hilton Hotels Corporation has 85% ofits operations in the United States, in which case it is considerablyvulnerable to economic downturns that may affect the domestic market(Rutherford&O`Fallon, 2006).
Inaddition, the fact that the company has a single private owner meansthat it is vulnerable to decisions that Blackstone makes whetherregarding divestiture of a particular hotel brand or even theenhancement of daily rates so as to justify the high prices that arepaid for property (Rutherford&O`Fallon, 2006).
Onthe same note, the company started the international expansionconsiderably late, which is seen to have curtailed its prospects.Scholars note that considering the challenges that multinationalcompanies face when they are expanding to other markets, it issignificantly difficult to get to a stage similar to the one that hasbeen reached by the first entrants (Clarke & Wei Chen, 2007).
Numerousopportunities, however, abide in the company. First, there is adynamic growth in the emerging markets including the developinginfrastructures, enhanced economic conditions, as well as the growthof urban middle class and developing foreign tourism, which arepromoting strong growth in the emerging markets such as China, Indiaand Russia (Medlik,2000).These are potential markets for the Hilton Hotels.
Inaddition, there are distinctive travel experiences, where customerdemand has shifted towards distinctive travelling experience therebycreating opportunities for operators to come up with unique brands,services and properties (Clarke & Wei Chen, 2007). Currently,Hilton has been investing in the development of considerably moresophisticated services and amenities and the building of TheWaldorf=Astoria Collection in highly individual boutique, landmarkand historic hotels.
Further,the technology revolution has allowed for the adoption of completelynew technologies. When this is coupled with the persistent globalbranding focus, a larger commitment to internet is created withtravel accommodations such as hotels persistently enhancing onlineactivities to lower their costs and enhance the services provided tocustomers. Still on this, there is the green appeal where studieshave shown that tourists are becoming more concerned about thesocial, environmental and business responsibility (Rutherford, 2007).In essence, the Green Buildings’ adoption would make a difference,which means that hotels such as Hilton Hotels, which have thecapacity to maintain the operational costs to lower levels, as wellas enhance services via the provision of healthier work environments,alongside more comfort tourists have the potential to strengthentheir future competitive advantage (Medlik,2000).
However,there are fundamental threats that have the capacity to cripple thecapabilities and future prospects of Hilton Hotels (Clarke & WeiChen, 2007). First, there is the downturn experienced in the businesstravel. It is well acknowledged that Hilton Hotels are highlydependent on business travelers, in which case the worsening ofeconomic conditions alongside the persistent pressure to push downthe costs especially in Western Europe and US poses a considerablethreat to the performance of the company in the future. On the samenote, there is the likely air travel downturn as a result of theincreasing prices of fuel which have forced airlines to reduce theircapacities and increase the price of their services (Clarke &Wei Chen, 2007). This has happened particularly in the European andU.S markets, which would have a negative impact on the demand forhotel rooms, with travelers being forced to use less expensivebrands.
EXISTINGAND FUTURE DEVELOPMENT STRATEGY
Inan effort to maintain its competitive edge, Hilton Hotels Corp. hasestablished an aggressive growth strategy that allows it to expandinto other markets. As much as the company has a large proportion ofits operations in the American market, it has also ventured intoother areas including Asia and African countries. Its expansionstrategy is accomplished through the establishment of retail hotelseither as branches or as franchises. For instance, in 2009, thecompany managed to open 170 hotels which amounted to a total of29,400 rooms. Further, it signed franchise and management agreementson over 320 hotels with over 320 hotels that have a total of morethan 62,000 rooms. Further enhancing its competitive advantage is thecompany’s expansion into the Latin America, where its portfolio wasexpected to get to 50 hotels by the 2013-year end.
Ofparticular note is the fact that the company has not only divestedits international operations but also franchised some of its hotels.In the 60s, the company is known to have had its internationaloperations divested thereby establishing Hilton International Co.which is separately traded. The company also ventured into otherbusinesses that would essentially complement its core operations. Keyamong these is the Casino Business, in which the company expanded inthe 70s in Las Vegas (Clarke & Wei Chen, 2007). Testament to theefficacy of this expansion is the fact that the casino business wasresponsible for around 44% of the total income of the company. Withinthe same time, Barron Hilton came up with a franchising modelalongside the launch of a computerized reservation system calledHILTRON. With regard to its business model, the company came up withan agreement in 1975, where 50% share of the major hotels would besold off with Hilton continuing the management of the properties forthe portion of returns (Clarke & Wei Chen, 2007). Thedistinctive business model became the standard business practice inthe industry. In its expansion strategy, the company had the optionof creating subsidiaries as it did in the creation of the ConradInternational Hotels, which opened hotels in countries such as NewZealand, Uruguay, Hong Kong, Australia, Egypt and Turkey.Alternatively, it could purchase stakes in other companies as it didin Britain through the purchase of stakes in Ladbroke, where the twocompanies agreed to operate together so as to establish new hotelsand conduct their marketing activities together.
Inan effort to enhance its market share, the company boasts of numerousproduct offerings created through acquisitions and expansionsthroughout the years, which cater for a wide range of consumer typesand business segments(Clarke & Wei Chen, 2007). The segmentsunder its model include luxury, full service, and curio, selectservice, extended stay suites, and timeshare (Rutherford&O`Fallon, 2006).In timeshare, individuals can jointly own resort villas, while curiosare unique hotels, distinctive in every area that they operate in andaimed at maintaining the character and history of the city where theyare located.
Sincethe company has one owner Blackstone Inc, it has shifted from theconventional franchising model and become more of a consultant.Researchers note that of the more than 4000 Hilton properties, lessthan 4% are leased by the company or directly owned by the companyitself. The company, instead, merely manages them for a share of theprofits or even has a franchisee fully operating it (Clarke &Wei Chen, 2007). The model eliminates the concerns pertaining to realestate fluctuations from the company, as well as problems of capitalinvestment and property values. the company instead focuses ondeveloping its brand, occupancy and customer service, with thefranchise fees ensuring that the franchisees comply with the hotelstandards.
Asmuch as the company is a major player in the hotel and hospitalityindustry, it needs to revise its strategies so as to maintain itscompetitive edge. First, it needs to considerably differentiate itsproducts so as to create high quality but low price products andservices. These would attract clients from the lower end of theeconomic divide and increase the customer base of the company.Further, it needs to increase its subsidiaries in other countriesparticularly in the Asia Pacific region so as to enhance itscompetitive edge (Clarke & Wei Chen, 2007). Additionalsubsidiaries in the emerging market would increase its revenues andensure that it has an established grip on other markets at an earlystage. Lastly, diversifying its products even further andincorporating the use of the varied technologies would be imperativein maintaining the leadership position of the company in both thelong-term and the short-term.
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