Consumer Behavior in Hotel Industry: Hilton Hotels Case Study

This report discusses the consumer behavior trends relevant in the hotel industry and on the basis of the marketing strategy of Hilton hotels. It includes different consumer behavior theories in critiquing the marketing process of Hilton Hotels along with identifying the major gap areas.

Running head: CONSUMER BEHAVIOR
Consumer behavior
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Table of Contents
Introduction......................................................................................................................................2
Brand overview............................................................................................................................2
Identification and major impacts of relevant theories.....................................................................4
Maslow’s hierarchy of needs.......................................................................................................4
Consumer decision making process.............................................................................................5
Determination of the future trends...................................................................................................6
Identification of the issues...............................................................................................................8
Recommended steps........................................................................................................................9
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................11

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Introduction
Determination of the needs and preferences of the target customers is important in the
current time due to the reason that designing of the value propositions according to the customer
needs can help in gaining competitive advantages. In addition, the rapid change in the consumer
behavior trends is also creating challenges for the business entities in managing their value
propositions. Thus, it is important for the contemporary entities to have the effective mechanism
of determination of the consumer behavior in order to gain the competitive advantages
(Cantallops and Salvi 2014). However, in this case, it should also be noted that different
industrial sectors are facing different trends of consumer behavior trends and thus they are not
having the similar sets of mechanisms in managing the consumer behavior. There are number of
the consumer behavior concepts that are being followed by the marketers in aligning the
consumer trends with their value proposition and positioning. In the current business scenario,
these framework are gaining more importance due to the reason that emergence of newer trends
in terms of the consumer behaviors should be well managed (Zhang 2015).
This report will discuss about the consumer behavior trends relevant in the hotel industry
and on the basis of the marketing strategy of Hilton hotels. They are one of leading hotel chains
in the world as well as in the Australian region. This report will include different consumer
behavior theories in critiquing the marketing process of Hilton Hotels along with identifying the
major gap areas. In addition, the major future trends will also be discussed in this report, which
will have long term impact on the consumer behavior trends in the hotel industry. Based on the
identified gap areas, a few recommended steps will be discussed.
Brand overview

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Hilton Hotels are the leading revenue units for the Hilton group and they are having more
than 570 hotels across the world. They are present in more than 85 countries and this denotes
their worldwide extensive presence. They are major offering premium accommodation and
hospitality services and accordingly their brand is being positioned in the market. However, even
though Hilton is having extensive presence across the world but the intensity of the competition
is high due to the presence if number of others premium hotel brands such as Marriott and Hyatt.
Thus, competitive forces are having higher influences on the business activities of Hilton Hotel
(Fregonese and Ramadan 2015). It is identified one of the major influencing competitive factors
of consumer behavior in the hotel industry are the availability of the alternatives in the market.
This is due to the reason that if the customers are having more and diverse options, then they are
more likely to be stringent in terms of selecting the hotel brands. In this case, customers are
having more criterions for selection. On the other hand, if the presence of alternatives is low for
the customers, then the selection criteria will also be lower for them (Krawczyk and Xiang
2016).
In terms of the environmental factors, social preferences also influence the consumer
behavior in the hotel industry due to the reason that preferences towards the premium
experiences will determine the extent to which the brands such as Hilton and Marriott will be
able to attract the potential customers. The locality and region where Hilton is currently
operating should have the positive social preferences towards the premium services. Economical
factors are also having influences on the consumer behavior for the hotel industry due to the
reason that economical conditions of the target market will determine the need recognition of the
customers (Jones, Hillier and Comfort 2014). Positive economical factors will ensure that
internal push for factors for need recognition are more as the customers will have the financial

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support and capability availing the services and vice versa. Thus, it can be concluded that there
are number of environmental and competitive factors that interact with the consumer behavior in
the hotel industry.
Identification and major impacts of relevant theories
Maslow’s hierarchy of needs
Maslow’s hierarchy of needs is one of the most popular consumer behavior theories by
which the marketers can identify the needs of the target segment and design the value
propositions accordingly. According to Taormina and Gao (2013), needs of the customers is one
of the prime determinants of the consumer behaviors as in the case of the consumer decision
making process, the first step is the need recognition. Thus, with the help of the Maslow’s
hierarchy of needs, the criteria for the need recognition of the customers can be identified. In the
case of Hilton Hotels, the positioning of them is based on the psychological needs. This is due to
the reason that according to the psychological needs of the customers, they are having the basic
needs and requirements such as food, shelter and sleep. Hilton is also offering all these facilities
and their value proposition also includes the same. It is identified that the marketing and
promotion being done by Hilton is based on the facilities offered by them. This includes the food
offerings and accommodation facilities for the customers. The major advantage that is being
faced by Hilton is tapping the maximum needs of the customers. This is due to the reason that
physiological needs of the customers are their basic needs and thus the probability of the
emergence of these needs if more (Lester 2013).
With the help of the marketing process of Hilton on the basis of their core offerings,
which are food and accommodation, the psychological needs of the customers are being fulfilled.

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However, it is also being identified that the marketing strategy of Hilton also includes the esteem
needs as per the hierarchy of need theory. Esteem needs state about the needs for prestige, status
and superiority of the customers. In the case of the target customers of Hilton, esteem needs are
relevant due to the reason that they are also promoting on the basis of the service quality and
premium positioning. Thus, the status and prestige needs of the targeted customers are also
getting fulfilled by the marketing strategy of Hilton (Datta 2014). The major benefits that Hilton
is gaining from following the Maslow’s hierarchy of need theory are proper identification of the
needs of the target customers and identifying the types of needs. This is due to the fact that
Maslow’s hierarchy of needs helps in defining the exact types of needs for the target customers.
Accordingly, Hilton is being able to develop their value proposition.
Consumer decision making process
According to the consumer decision making model, there are five steps that involves in
the buying decisions of the customers. This model is relevant for Hilton due to the reason that
fulfilling each of the steps in the consumer decision making process will help Hilton in the
ensuring the positive consumer behavior. According to Trueblood et al. (2013), determination of
each of the steps in the consumer decision main process will help the business entities in
measuring their effectiveness against the expectations of the customers. The more will be the
effectiveness, the more will be the brand preference for the customers in each of these steps of
the decision making process. The first step in the consumer decision making process is the need
recognition, which states the requirement or need of the customers in buying or availing any
product or service. In the case of Hilton, both the push and pull factors are being leveraged in
enhancing the need for the customers. Push factors for the customers include the need for
accommodation facility, which will be premium and reliable and pull factors include the

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advertisements and promotional factors, which motivate the customers (San Yap and
Yazdanifard 2014). Thus in the case of the need recognition step of the customers for Hilton,
Hilton is having the advantage of both the pull and push factors.
The next step is the search for information, which states the process of searching for
alternatives. Brands with having maximum exposure in the market will be preferable to the
customers. In this case, Hilton is initiating extensive marketing and promotional campaigns in
gaining the maximum reach among the customers. Thus, their exposure is also more in the
information search process. The mechanism of search engine optimization is helping Hilton in
getting the first preferences among the customers every time they are searching for hotels. The
next step involves is the evaluation of the alternatives. This refers to the evaluation of the chosen
alternatives from the information search. In this case, the customer centric approach and the
market focus strategy of Hilton is benefiting (Han and Hwang 2013). This is due to the reason
that customers evaluate the identified alternatives on the basis of certain criterions and market
focus approach is helping in meeting all the requirements and expectations of the target
customers. Thus, the probability of getting selected in the evaluation process is more for them.
The next step is the purchase decision and with meeting all the criterions of the target
customers, Hilton is gaining positive purchase decisions from the side of the customers. With the
help of the consumer decision process, Hilton is being able to meet each of the steps in the
consumer decision making process (Mauri and Minazzi 2013). Thus, the fulfillment process of
expectations of the customers is being followed on the basis of each of the steps and thus the
effectiveness of the entire process will be more.
Determination of the future trends

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In the recent time one of the major trends in terms of the consumer behavior is the need
for personalized services. According to Torres, Fu and Lehto (2014), customers are expecting
personalize services from the hotels. This refers to the fact that standardized services are no more
effective in attracting and satisfying the customers. It is also being stated by the authors that for
the large hotel chains such as Hilton, customers are socially and culturally diverse and thus they
are having diverse expectations from the service providers. In this case, it is recommended that
the service providers should personalize the service process according to the different
expectations of the customers. Moreover, the service elements should also meet the cultural
differences of the consumers. Hence, it can be concluded that in the current business scenario, if
the cultural factors cannot get managed, then the consumer preferences for the particular hotel
brand will also be lower.
Another potential trend in terms of the consumer behavior is the expectations of no frill
services by the customers. This refers to the fact that customers are expecting more effective core
services and fewer augmented services. According to Ren et al. (2016), in the current time
official travelers constitute a major portion of the target segment for the hotel industry compared
to the tourists. These corporate travelers are expecting more no frill services. In this case, it is
important for the premium hotel brands such as Hilton in changing their business approach due
to the reason that their existing experience based service process will not be effective in tapping
the corporate segments. On the other hand, it is also identified that customers currently are
expecting more engagement. This can also affect their behavior towards the particular hotel
brands. In this case, it is stated by Oyner and Korelina (2016) that in the current time, it is
important for the hotel brands to engage with their customers in every form possible. For
example, the customers can be engaged through the social mediums even after their stay. It is

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also being stated by the authors that in the current time, the brand recall and value for the
customers is low and with the availability of the number of service providers in the market,
brand recall value among the customers can be determined only by the level of engagement
(Cabiddu, De Carlo and Piccoli 2014). Thus, gone are the days when the premium hotel brands
leveraged solely on their service quality and standard in attracting and retaining their customers.
In the current time, they should also engage with their customers in holistic form.
Rather and Sharma (2017), co-creation model service is another potential trend in the
hotel industry where the customers are majorly expecting that they will be involved in the
service design and delivery process. This affects their behavior in terms of the evaluation of the
alternatives during the buying decision process. In this case, the co-creation model helps in
involving the customers in the service delivery process, which can further enable the hoteliers in
offering personalized services to the customers.
Identification of the issues
On the basis of the analysis of the consumer behavior trend in the hotel industry and
future trends, it is identified that the major limitation for Hilton is the offering only the premium
and experience based service. This is in line to their luxurious and premium positioning in the
market. However, the emerging trend will affect the potentiality of Hilton due to the reason that
millennial is the largest group in the coming few years and this age group is in the preference for
no frill services. Thus, Hilton is trailing behind in terms of tapping the millennial. In addition, it
is also being identified that low market penetration and exposure of Hilton will also affect the
behavior of their target customers. This is due to the reason that the more will be the brand
availability in the market, the more will be the customer preferences during the evaluation of

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alternatives and vice versa. In this case also, Hilton is trailing behind of their competitors as they
are having lower market penetration. Lastly, it is identified that as per the Maslow’s hierarchy of
needs, Hilton is meeting the basic psychological needs of the target customers but the definition
of their psychological needs is different. This is because of the fact that target customers of
Hilton are the premium segments and their psychological needs include the luxury
accommodations and offerings. Thus, fulfillment of needs of the customers by Hilton is limited
and narrow, which is also restricting their business potentiality in the market.
Recommended steps
It is recommended that Hilton should also offer the no frill based service process in order
to tap the growing percentage of millennial. Introduction of the no frill services will help Hilton
in getting the positive response from their customers in the process of their buying decisions. The
service diversity for Hilton will get increased and will meet larger criterions in their evaluation
of alternatives. Hence, the preference of Hilton among their target customer segments will get
increased. In addition, it is also being recommended that Hilton should increase their market
presence, exposure and penetration in order to have the better recall value among the customers.
It should be noted that market penetration and more market presence is important for Hilton in
targeting the millennial and offering them no frill services. Offering of the budget services will
extend the fulfillment of the psychological needs of the customers. This is due to the reason that
budget service offerings will help to tap the middle customer segments and thus their
psychological needs will also be fulfilled. Lastly, it is recommended that Hilton should enhance
the process of post purchase services for gaining major two advantages with one being the higher
customer engagement and the other being the higher preferences in the post purchase evaluation
in the consumer buying decision making process. The more effective will be the post purchase

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services of Hilton, the more will be the brand recall among the customers, which will ensure
positive response in terms of the consumer behavior.
Conclusion
This report concludes that Hilton is competing in one of the most competitive business
sectors and thus the determination of the consumer behavior is important. It is identified on the
basis of consumer decision making process and Maslow’s hierarchy of needs that Hilton is
having multiple approach of meeting the expectations of the consumers that further affects the
consumer behavior. In addition, this report also identified a few trends that will have long term
impacts on the consumer behavior in the hotel industry. Based on these trends, it is identified that
Hilton is facing a few limitations such as low market penetration and lack of no frill services.
This report also recommended a few strategies that can further help Hilton in overcoming these
shortcomings.

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