History and Growth
Hilton Hotels is a prominent entity in the lodging industry mainly because of the role played the Hilton family in the organization. It started operations the year 1919 by management of the Mobley Hotel located in Cisco, Texas under Conrad Hilton. The entity was later incorporated in the year 1946 as Hilton Hotels Corporation with 15 properties spread across 11 states in the U.S. the entity focused on the domestic lodging segment by diversifying into vacation ownership and casinos after a failed attempt to undertake international ventures up to 1964.
In the year 2005, the Hilton Hotels acquired the Hilton International, which brought an estimated 400 Hilton properties into its portfolio. In the following year of 2006, the entity acquired its 1000th hotel named Promus. The entity has been active towards an aggressive brand management by focusing on delivering excellent care. Franchising has been an effective and important means for Hilton Hotels to engage with partners around the world for mutual profitability and growth.
Main Areas of Expertise
Information technology has also been an important aspect for the entity in terms of enabling it to achieve growth, differentiation, customer satisfaction, and loyalty. Information technology has been integrated with brand strategy and organizational culture to deliver effective and consistent infrastructure that is adequate to meet the needs of the organization as a brand. OnQ or “On-Cue” is an integrated information technology solution that provides a prompt avenue for service delivery to customers. This platform was designed to deliver property-level services at all hotels within the Hilton chain.
Current Position and Competitors
The hotel and lodging industry is a highly volatile industry with the presence of numerous entities possessing extensive resources and capabilities to compete aggressively in this market. Main competitors are namely Marriott International, Starwood Hotels, and Accor.
Key Stakeholders Analysis
Engagement with stakeholders is a high priority issue for Hilton Hotels group as it provides a source of information for formulation strategies that can be sued to move the entity towards success. The entity banned shark fin dishes in the year 2014, which ensured it mandated its suppliers to cease delivery of this rare commodity and in the process adhering to sustainability issues. Some of the key stakeholders in the organization include Team Members of the organization, Guest or clients, government policymakers, non-governmental organizations and international organizations, investors, shareholders and owners, and the suppliers. They all form an important source of information, which directs the strategic decisions, and approach that should be undertaken by the entity.
Financial Information Analysis
In the recent financial years, namely 2011, 2012 and 2013, the entity has seen an average growth of 12% in its Compounded Annual Growth Rate (CAGR). The entity realized Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.753Billion, $1.956 billion, and $2.210 billion in 2011, 2012, and 2013 respectively. The growth can be attributed to mergence of new markets such as the Asian region, which has seen significant growth in incomes.
The entity possess extensive resources and capabilities in terms of experience, finance and an extensive skilled labor force which has enabled the entity to engage effectively in new markets and more so with franchise investors. The entity is regarded as a industry leader which is evidence in its participation in various forums and international groups and organizations such as American Hotel & Lodging Association (AH&LA), British Hospitality Guild, GLAAD, International Gay & Lesbian Travel Association (IGLTA), International Gay & Lesbian Travel Association (IGLTA), International Tourism Partnership (ITP), The Real Estate Roundtable, UK Tourism Council, U.S. Travel Association (USTA), World Economic Forum (WEF) and World Travel & Tourism Council (WTTC). Engagement with such parties illustrates the positioning of the organization in the global hotel and lodging industry. It also enables the entity to access partnerships and increase its brand value as a trusted entity in terms of delivery of quality services. In addition, the entity has an effective strategy in terms of differentiation of its brand by providing exceptionally high standards of services.
The hospitality industry is becoming increasingly competitive which has resulted in high costs of operation associated with the need to retain market share and dominance. In addition, the declining market share has been compounded by the presence of varied government policies and regulations in its different markets of operation around the world. This has reduced its influence despite having a strong brand recall amongst consumers.
There are significant opportunities for growth for the entity and more so in differentiation through price, quality of services and positioning in the market by delivering diverse products to suit varied needs of numerous segments. Opportunities for growth can be seen in emerging markets, which the entity can utilize to deliver the much-needed hotel and lodging facilities and services. Innovation and technology will also provide the entity with an opportunity for differentiation and enhancement of brand strength and profitability.
The entry of renowned competitor brand names such as Marriott International, Starwood Hotels, and Accor could pose a threat to the success of the entity in potential areas. In addition, other issues include competitor pricing which has been associated with the stagnated growth of the entity. In addition, economic and political issues in various markets around the world have also affected the financial prospects of the entity in such regions.
Political turmoil in various regions such as the Middle East and other parts of the world has affected the entity negatively. This has impeded the entity’s ability to engage actively with consumers in these regions, and in worse cases, the entity has been forced to withdraw its presence in some regions due to risk of loss of property and lives of staff.
The economic crisis of 2008 had a significant effect on the entity’s financial position because it resulted in decline on consumer spending on luxury items such as lodging and resort bookings. In addition, economic activity varies from one region to another, which means that the entity is only restricted to operate in successful potential markets. Monetary policies and internet rates may affect the entity in terms of its ability to engage in international business in a profitable manner.
Income distribution and corporate social responsibility demands may also affect the ability of the entity to integrate itself in new markets.
Technological changes may determine the ability and direction of competitive advantage for the global hotel and lodging industry. In addition, this an integral factor for the entity, as it would enable it to achieve differentiation in terms of delivery of products and services.
Legal challenges and opportunities are seen in the form of differing tax policies, presence of international trade restrictions and regulations, labor laws, and consumer protectionism in various countries.
Sustainable business models are becoming an important bargaining point for hotels and resorts. Sustainable living is preferred by a majority of consumers around the world, which should influence the direct of the entity in terms of developing eco-friendly accommodation.
The entity currently has a strong brand, which is relative to the entity’s experience in the hospitality market. In addition, brand strength is also enhanced by its presence in numerous markets around the world and its ability to deliver excellent and quality services.
The entity should move towards solidifying its presence in merging markets given that they are the new frontier for the hospitality industry. This is a shift from the saturated developed markets. In addition, the entity should also focus on price differentiation, adoption of new technology and other innovations to enhance its brand strength and presence in the hospitality industry.
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