Table of Contents
1 Situation Analysis.............................................................................................................1 1.1 Market Summary.......................................................................................................1 1.1.1 Market Demographics.........................................................................................2 1.1.2 Market Needs......................................................................................................2 1.1.3 Market Trends.....................................................................................................3 1.1.4 Market Growth....................................................................................................3 1.2 SWOT Analysis ........................................................................................................3 1.2.1 Strengths.............................................................................................................3 1.2.2 Weaknesses.........................................................................................................3 1.2.3 Opportunities.......................................................................................................3 1.2.4 Threats.................................................................................................................4 1.3 Competition................................................................................................................4 1.4 Services......................................................................................................................4 1.5 Keys to Success..........................................................................................................4 1.6 Critical Issues.............................................................................................................5
1 Situation Analysis Conrad Hilton built the first Hilton hotel in 1925 in Dallas (Hilton Hotels, 2006). Formed and listed on the New York Stock Exchange in 1946, Hilton Hotels Corporation appointed Conrad Hilton as its president. Hilton Hotels decided to take an aggressive approach in business by venturing into the gaming industry in 1970 and purchasing the Las Vegas Hilton and the Flamingo Hilton. In 1997, Hilton Hotels and Hilton International formed a strong worldwide alliance that share the Hilton brand although each entity belongs to different owners (Hilton Hotels, 2006). Because Hilton Hotels purchased Promus in 1999, HILTON HOTELS operates in international markets with brand names such as Conrad Hotels, Doubletree, Embassy Suites, Hampton Inn, Hampton Inn & Suites, and Homewood Suites. The future of Hilton Hotels depends on, among other things, its alliances with Hilton International, which will shape both companies’ growth. Hilton Hotels face pressing issues competing in the lodging industry which include economic downturn, threat of terrorisms, and natural disaster.
1.1 Market Summary Hilton Hotels now owns and franchises over 2,400 hotels, resorts, and vacation properties worldwide (Hilton Hotels, 2006). Adding to the corporation’s competitive advantage is the design of different hotel themes based on the needs of different market segment. Although these hotels are under one corporate umbrella, they operate under different brand names. Some of the different themes include luxury accommodation, family residential, and glamorous resorts. For the time being, a subsidiary of Hilton Hotels, Hilton Reservations Worldwide (HRW), manages international hotel properties owned or franchised by HI in countries like Mexico, Belgium, Hong Kong, China, Thailand, Malaysia, Indonesia, to name a few. Hilton Hotels and HI each has an equal interest in HRW. Besides being involve in
the lodging industry, Hilton Hotels also undertakes other business operations such as Hilton Equipment Corporation, specializes in the purchase and distribution of furniture, furnishings, equipment, food and beverage, and operation supplies. Hilton Hotels is also involves in eBusiness that provide customer service, Internet access, and business services to all Hilton’s entities and alliances.
1.1.1 Market Demographics The following are the profile for Hilton’s customer:
1.1.1.1 Geographics • Hilton Hotels along with its business alliance, HI, operate globally providing lodging services to customers at the best locations around the world. • There are approximately 2,700 hotels in more than 70 countries across the globe. • Conrad International hotels cater to the higher end of the market segment at a premium price. • Expands into major gaming operations in the U.S. as well as outside the U.S.
1.1.1.2 Demographics • Hilton Hotels provide full and limited service hotels, resorts, urban, and suburban areas • Demographically, Hilton Hotels focus on the vast majority of baby boomers travellers (age 35-54), mature travelers (over age 60), business travelers, and family vacationers.
1.1.1.3 Behavior Factors • •
To survive in the competitive hotel industry, Hilton Hotels must understand the specific groups of customers, who they are, where they are coming from, why they are there, and what their likes and dislikes are in order to promote the business based on their needs. Baby boomers travelers will pay for luxury, expertise and convenience. Baby boomers are not necessarily big spenders because they still look for a good price on something of great value • Mature travelers seek alternatives experiences and opportunities to learn. They have money and time to spend. They put high priority on traveling and tend to be in good health. • Business travelers look for a mid-priced business hotel that provides services such as a business center, a health club, a spa, a 24-hour restaurant, and speed delivery of service. • Family vacationers are more of price-sensitive travelers but seek for a place that can cater to the different needs of each family member such as golf course, water park, video game arcade, and spa.
1.1.2 Market Needs To attract target audience, hoteliers should be committed to meet the market needs and providing the guests with a comprehensive and leading service. Hilton Hotels requires a professional approach to getting their strategy right and moving with the changing needs of the market. Finding a niche market and building their marketing efforts around that
market can increase business with less marketing effort. For example, Hilton can offer an online Arabic service to appeal to the Middle-east vacationers and enabling them to make rooms reservation online and get the best-published rate online. Hilton can easily reach the target market through the word of mouth, which will spread much more quickly among vacationers that Hilton offers online reservation that meet the unique needs of the Arabic language.
1.1.3 Market Trends The current trends surrounding the hotel industry show some major shifts in the industry performance and direction. Hotel industry has progressed into a sophisticated global business stimulated by advanced technology, major brands, and consolidated business structure. Hoteliers face intense competition as the major hotels aggressively expand their portfolios around the world. Undeniably, the hotel industry has grown exponentially on all fronts with mega beach resorts, economy city hotels, and the high-end boutique hotels (Burns, . The latest trend that is emerging in the largest cities like New York, Los Angeles, Hong Kong, Shanghai, and Milan, is the increasing demand for service apartments combined with a hotel for the 24-hour hotel services to the apartment units.
1.1.4 Market Growth Factors such as cautious business spending, price-sensitive consumers and the ongoing threat of terrorism throughout the world remain fears of the industry. A worldwide decrease in business travel and cuts in travel budgets of international have had a tremendous effect on the hotels industry. Hilton has extended its global expansion following the acquisition of Hilton International in early 2006. The company plans to add 7-percent gross room additions per year and focus on faster growth markets. Hilton is not anticipating any growth in franchising in Europe as well as Asia because such concept has not been well accepted in both regions. On the other hand, Hilton is expecting a stronger growth opportunity in the U.S. for brands such as Embassy Suites, Garden Inn, and Homewood Suites (Higley, 2006).
1.2 SWOT Analysis 1.2.1 Strengths Strong brand awareness Improving financial outlook Strong cross-selling Sale of properties
1.2.2 Weaknesses Poor recent performance Debt Economic instability
1.2.3 Opportunities Increased technological usage Brand and timeshare development growth
1.2.4 Threats Uncertain political climate Loss of pricing control and weakened image Market prone to periods of depression
1.3 Competition Hilton currently competes with
• • • • • • • • • • • • • • •
ACCOR American Skiing Company Bharat Hotels Limited Caesars Entertainment, Inc. Carlson Companies, Inc. Cendant Corporation De Vere Group PLC Global Hyatt Corporation Host Marriott Corporation Hotel Properties Limited Kempinski Marriott International, Inc. Starwood Hotels & Resorts Worldwide, Inc. TRT Holdings Wyndham International
1.4 Services The demand for hotel services and accommodation is largely generated by the resource attractions of a locality whether inherent (seaside, mountain, lake, ancient, city, historic town) or created (theme park, resort, marina) and by the activities which draw visitors, tourists, business, and investment to the area. Besides being located at the center of resource attraction, Hilton also cater to different market segment by providing an array of services such as full-service lodging for business or leisure travelers, hospitality and gaming. Although Hilton is seen as a business brand, a significant number of Hilton new hotels are located in great locations, which resulted in the creation of a new resort brand. Hilton Equipment Corporation, Hilton’s subsidiary, provides other services such as renovation, freight consolidation, installation and purchasing services for furniture, fixtures, equipment and operating supplies for Hilton properties and other non-Hilton entities.
1.5 Keys to Success • • • • • •
Focus on service excellence and guest satisfaction Continue to improve hotel performance Reduce costs Increase growth Maintain brand consistency and brand improvement. Create a marketing strategy for both markets, business and leisure .
1.6 Critical Issues • • • •
Continue to increase market share Pay attention to changing market trends Retaining the market during economy Continuous hotel re-branding can hurt corporate identity and any unfavorable changes can lose customers rather than attract them • Continue to differentiate, as the item become standard, in order to maintain competitive advantage
Reference Burns, R. (2006). Reflections. Hotels, 40(8), 14-46. Retrieved August 28, 2006 from Ebsco Host database DataMonitor (2005). Hilton Hotels Corporation SWOT Analysis. Company Report. Retrieved August 27, 2006, from Ebsco Host database Higley, J. (2006, August). Hilton Hotels finalizing worldwide expansion blueprint. Hotel & Management, 221(14), 126. Retrieved from Ebsco Host.
