Hospitality Business Strategy: Analyzing Macro and Internal Environment, Competitive Forces, and Growth Strategies for Hilton

This report analyzes the macro and internal environment of Hilton, including PESTLE and SWOT analysis, McKinsey's 7s framework, and Porter's five force analysis. It also evaluates appropriate growth strategies using Ansoff matrix.

41: Hospitality Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
PART - A.........................................................................................................................................3
Analysing impact of macro environment on Hilton....................................................................3
Analysing internal environment and capabilities of HILTON....................................................5
Evaluating the competitive forces in the given market for HILTON..........................................6
Appropriate strategies to improve market position......................................................................7
PART - B.........................................................................................................................................8
Evaluating different types of strategic directions available to HILTON.....................................8
Recommending the most appropriate growth platform and strategy...........................................8
Applying a range of theories, concepts and models, interpret and devise strategic planning for
HILTON.......................................................................................................................................9
Strategic management plan .......................................................................................................10
Critique and interpreting information and data applying environmental and competitive
analysis.......................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................11

INTRODUCTION
Hospitality industry can be defined as the field within the industry which is consisted of
food and drink, theme parks, travel, tourism etc. The managers and the owners have to focus on
making such strategies that are necessary for achieving the business goals (Aladag and et.al.,
2020). The above report will analyze the macro environment factors that have influence on the
HILTON Hotel and will determine the decision of strategic management. HILTON is an
organization engaged in the hospitality business. The report will highlight the analysis of internal
environment to identify the internal capabilities of the organization. Further, the report will be
based on the strategic directions available to the organization and the strategic management plan
will also be highlighted. Competitive analysis and environmental analysis will also be interpreted
in the report.
PART - A
Analysing impact of macro environment on Hilton
Impact of Macro environment on Hilton Hotel will be discussed by using PESTLE and SWOT
analysis which is as under:
PESTLE analysis
Political Factors - Hilton being a big hotel chain has to cope up with the changing political
factors, so political stability becomes necessary in the country. If this is not the situation, people
will not visit the country thereby resulting in loss of revenue for hotel companies. Some political
risks that Hilton Hotel has to face are Brexit in which the UK left the European Union that
reduces the no. of visitors to UK. Pandemic and trade wars between the countries have also
affected the revenue of the country.
Economic Factors - Economic factors included inflation and interest rates in the country and the
Gross Domestic Product of the country. Due to pandemic, the spending power of people have
reduced which has resulted in decrease of profits for Hilton. Many countries are offering low
interest rates which can benefit the hotels as investors will invest in their business (Alexandru-
Ilie and et.al. 2020).
Social Factors - Social factors included the gender, culture, population, consumer preference etc.
Increase in the income will lead to increase in spending power of people which is a benefit for
the hotel. Due to pandemic, people are avoiding social meet ups and thus it reduces the revenue
of the hotel. Being in hospitality industry it is difficult to have control over the social factors.

Technological factors - Hilton has to adopt different technological changes happening in the
environment to increase profitability. With the use of technology, hotel can reduce the
operational cost and increase customer base by offering quality services. Digitalization can allow
online mode of payment to visitors. Websites and social media can help the customers to gain
full knowledge about the hotel.
Environmental Factors - Environmental factors are serious threats to the working of Hilton as
people have become more cautious about the protection of the environment. The country of
united kingdom has standards for environmental protection that affects the profitability of the
hotels. To maintain the goodwill, Hilton should try to take initiatives to protect the environment.
Legal factors - Laws and regulations constitutes the legal environment and it affects the
operations of the hotel. Employment laws, customer laws and different legalities have to be
followed by the hotels. Government has made certain intervention because of the global
pandemic Covid-19 to sanitize in order to reduce the spread of the disease resulting in increase of
costs.
SWOT analysis
Here is the SWOT analysis for analysing the factors related to internal environment of Hilton:
Strength – the company has a large no. of outlets and it is a big multinational brand. The
customer base of the hotel is also very wide and loyal (Asobee, 2021). Being a big brand its
strength is that it has a very good brand image in the market and among the customers. They
offer benefits to their employees who in return provide them with maximum profits. Hilton has
the capability to acquire new technologies to increase revenue.
Weaknesses – Breach of the data and disruption of privacy is a major weakness for the hotel.
Stakeholder do not hold much trust in the management of the hotel which affects the operations
of the business. By using Social media platforms many customers have given weak reviews
about the hotel.
Opportunities – marketing about the services of the hotel using different platforms has been an
opportunity for HILTON. Also, the hotel has partnered with lots of other companies from
different countries to use the effectiveness of other hotel companies. The opportunity of
investing in developing countries can increase the revenues for HILTON.
Threats – Due to lawsuits for stealing the private documents by some employees of the hotel,
different stakeholders were gone away and HILTON has to pay high amount of price.

Competition with other hotel brands can affect the overall profitability of the business
(Waldburg-Zeil, 2020). Global pandemic had been another threat for the business as the profits
of the hotel has reduced due to lock down and spending power of the people.
Analysing internal environment and capabilities of HILTON
Internal environment and capabilities of HILTON can be analyzed by using McKinsey's 7s
framework. The hard elements are consisted of strategy, structure and systems whereas soft
elements are consisted of skills, shared values, staff and style. Following is the analysis:
Strategy
Directions for the strategic business are clearly defined to all the employees and other
parties for managing performance and devising different strategies. Strategy of the business
guides the behaviour of different parties including employees and stakeholders to achieve goals
of the business (Davahli and et.al., 2020). Also, it considers the pressures of the competitor
brands for sustainable development. These strategies are flexible in nature and rigidity in the
strategy can lead to obstacles in the development of the business.
Structure
Hilton has a proper hierarchical organizational order that allows the employees to have
direct contact with the top level management. There are cordial relations between the various
department of the hotel. Each department of the business focus on team work and work towards
achieving group goals. Communicating to the employees about the management of the business
has been a key structure of the HILTON.
Systems
Hilton has well-defined system of management. The hotel is filled with different
departments for different work like the HR department, marketing, finance, sales etc. tools and
methods are designed to control the performance and evaluate it on daily basis for achieving the
goals. To maintain harmony among departments proper alignment of the organization is
necessary.
Skills
Workforce of HILTON is hard working and very skilled. They work according to the
requirements of the task allotted to them by using their best skills. HILTON ensures to enhance
the skills of each and every employee in the hotel. To remain competitive in the market, the

management try to develop their employees according to the job position so that they can
contribute towards achieving the objectives of the business (Stamevska and et.al., 2019).
Shared Values
There are certain cor values like trust, honesty, creativity that HILTON tries to imbibe
into the employees of the business. Departments ensure to create corporate culture in the
business to enhance diversity and reducing partiality. The tasks given to each employee is
aligned towards achieving the objectives and do not deviate from the path towards fulfilling the
goals.
Staff
Different employees are hired to perform certain specific task depending upon the
urgency or the skill requirement of the task. HILTON has large no. of employees with different
culture, age and skills. Human resource department of the business appoints the employees best
suited for the position to complete the given task.
Style
Hilton follows participative style of leadership which enables its employees to participate
in the decision making process of managerial decisions. This type of style if highly effective in
nature. HILTON ensures cooperation among different departments and make employees
collaborate with each other towards achieving goals. It has various teams for its operations that
run effectively for attaining group goals (Elbanna and et.a.l., 2020).
Evaluating the competitive forces in the given market for HILTON
The evaluation of the competitive forces in the given market for HILTON can be done by using
Porter's five force analysis which is as under:
Threat of new entry
There is high level of competition in the hospitality industry and so does HILTON have
to face this competition. This makes the threat of new entry moderate because it is difficult for
new entries to survive in such a competitive environment. But if the new entrant have the
capabilities of surviving then it can be a threat to the existing players in the market because
success of the new ones can reduce of their share in the market (Okumus and et.al. 2019). The
new entries can bring new technological developments which can attract the customer base and
this can reduce the customer base of Hilton. Therefore, it can be said that there is a moderate
threat of new entries.

Power of Buyers
Companies cannot make profits unless until the customers buy its services or products.
Same is the case of Hilton, if the visitors do not visit the hotel then the hotel has to face loss of
revenue. Power of buyers in the hospitality business id high. If the customers find anything
wrong in the services provided by the hotel, they have many options to switch to and can easily
get whatever they need. Therefore, taste of consumers and their preferences affect the business.
Power of Suppliers
There are lot of suppliers working for HILTON all over the world. This included the
agents involved in the hospitality business and cab service company. Also, there are suppliers
who are engaged in supplying the hospitality products. Therefore, the power is in the hands of
the suppliers as to what rates are offered to the hotels. Increase in competition among the
different brands increases the price for supplied products and materials. Therefore, it can be said
that power of suppliers is very high and can affect the operations of the business.
Competitive Rivalry
Hilton is a highly competitive brand and it offers commendable services to its guests as
well as the travellers. Rivalry is similar to the competition prevailing between different
hospitality companies to increase the share in the market. Hilton also had acquisitions and
mergers to remain competitive in the market. Many rival companies offer its customers with
rewards for loyalty and offers memberships to maintain the existing customer base (GIRGEN,
2021). Therefore, we can say that competitive rivalry is very high.
Threat of Substitutes
Substitute product services are the ones which satisfy the needs of the customers in the
similar manner. Cabs are used by the Hilton hotels by which customers are able to sight-see. But
if the customers find the that the price charge is more, and they go for the option of public
transport then this will act as a threat of substitute to the hotel. Therefore, there are many
substitute products and services that can influence the profitability of the hotels.
Appropriate strategies to improve market position
◦ Innovative strategy – Hilton should focus on innovating its services to attract new
customers.
◦ Effectiveness strategy – Hilton should ensure that it should work at its maximum
effectiveness to ensure success.

◦ Technology based strategy- the hotel business should use the latest technology to
offer services to reduce the operational cost (Hayes and et.al., 2022).
◦ Information advantage – this strategy will allow the business to gain full knowledge
about the ongoing business environment so that the business can run effectively.
◦ Competitive advantage – this strategy ensures that competitive edge of the business is
maintained and the customer needs are satisfied while being competitive.
PART - B
Evaluating different types of strategic directions available to HILTON
Porter's generic strategies are used by HILTON to achieve its objectives. They are as under:
Cost Leadership – The prime focus of this strategy is to maintain market position by making the
value chain effective. It targets the middle class population which focus on the price and this
helps HILTON to increase its share in the market. The hotel offers services which are affordable
to all income groups to increase its revenues. They frequently offer discounts on regular tie
intervals to attract more visitors.
Differentiation – This strategy focus on differentiation of the services provided by the HILTON
hotel to increase customer base. The hotel ensures that customer needs are fulfilled and
innovation in offering can help them to achieve their goal of satisfying customer needs. HILTON
ensures heavy investment in the field of research and development and the marketing department
to promote its business. Making a brand image can help the hotel to attract new as well as
existing customers.
Focus Strategy – it is the third main strategy available to Hilton. This allows the hotel to offer
quality services to its customers at a very low cost. To serve the needs of different consumers,
this strategy is developed so that they can also make use of the services offered by Hilton. They
focus on maintaining the price and branding of the business in order to ensure the satisfaction of
customer needs. The management brings about changes in the strategies and making the
functioning of the organization smooth and flexible (Malivan and et.al., 2019).
Recommending the most appropriate growth platform and strategy
Most appropriate growth strategy for Hilton can be recommended by using Ansoff matrix which
is discussed below:
Market Penetration – Hilton hotels are working towards achieving growth and development of
its profits by using the strategy of market penetration. Its defines producing existing services in

the existing market. For example: growth plans like reducing per day stay to meet requirements
of the consumer. Hilton provides products like rewards with benefits and other facilities to its
customers. Brand-image of the hotel allows it to penetrate the market by offering its services at
cheap rates.
Product Development – this is the second strategy that Hilton hotels can use to expand its
growth of business by using various technologies to be in existing market and to attract new
customers. Hilton should ensure to offer its customers of online checking in and booking the
rooms. Also, it should ensure that luxury is provided to the visitors because of the customer base
constitutes the elite class people.
Market development – market development is the most effective strategy that Hilton can use for
its effective functioning (Mekhruza and et.al., 2022). The hotel should ensure to develop the
strategy in order to maintain a competitive edge in the market. It can develop its services to
attract new customers and draw a successful business plan to offer its services in another markets
as well lie other Asian countries.
Diversification – it is the last strategy and known as the risky strategy for the HILTON hotels.
With the help of this strategy, the hotel can offer new services in the wholly new market. It can
start operating in another market place ad offer services which are in demand in that place. This
would attract new customers and launch fully new services in new markets. For example: its
should start dispersing in the developing countries where there is speedy growth to ensure
success.
Applying a range of theories, concepts and models, interpret and devise strategic planning for
HILTON
The theory used to interpret the strategic planning process is the porter's generic strategy.
 Cost leadership strategy will allow the hotel business to earn more profits. By this
strategy, the costs of the services are kept low by assuring high level of profits .
Competition and profits go hand-in-hand in this strategy.
 With the help of differentiation strategy innovative services are provided to the visitors in
a way that attracts the customer base and ensuring that the services are different from that
of the competitors.
 Focus strategy is not suitable for HILTON hotel business as there is high level of
competition in the market which do not allow the hotel to focus on a particular market.

Strategic management plan
The priorities and objective of the HILTON hotel is to increase the customer base,
customer share and amount of sales of its services (Linxi, 2021). Strategic management plan
refers to the process setting of goals and objectives for an organization. HILTON will ned to
ensure differentiation to remain in the market. The differentiated services will allow the hotel to
attract new customers. Hilton needs to be dependent upon the focus strategy because it focuses
on certain market and that should gain share in the market. To overcome the problem of price
rise and inflation in the market focus strategy will help the business to focus on a particular
market. Therefore, it becomes necessary for HILTON to adopt focus strategy and include it in its
strategic management plan.
Critique and interpreting information and data applying environmental and competitive analysis
To interpret the environmental analysis of the HILTON hotels, PESTLE analysis is used
and to acquire knowledge about the competitive analysis, porter's five force analysis is taken as
effective. Due to Brexit, the political structure of the country is affected adversely. Hilton has
made huge profits in the past years, and they have built cordial relationships among their other
parties. The hotel must be able to adapt to the technological changes occurring in the
environment. In the legal system, there have been a no. of laws and regulations that every
business has to follow in order to survive in the market (Jollyta and et.al.., 2021). Porter's five
force analysis allows knowing about that the threat of substitutes is very high whereas threat of
new entrants is moderately low.

CONCLUSION
It has been concluded from the above report that with analysing the macro
environment needs and important of needs of different organizations can be identified. Macro
environment can ensure development for hospitality businesses like HILTON. The report
included the PESTLE and SWOT analysis of to know the impact of macro environment. Also,
the report highlighted about the internal capabilities by McKinsey's 7s model and evaluation
of competitive forces by porter's five force model. Moreover, porter's generic strategies
highlighted the strategic directions available to the hotel and justification of appropriate
growth platform. The report summarized the strategic management plan and the planning
process used in the business of HILTON.
REFERENCES
Books and journals
Aladag and et.al., 2020. Strategy implementation research in hospitality and tourism: Current
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BUSINESS DEVELOPMENT: INTERACTION BETWEEN VRIO FRAMEWORK
AND McKINSEY 7S FRAMEWORK.
Asobee, M.S., 2021. Exploring the importance of strategic thinking to strategic planning in
the strategic management process. Journal of Business and Management
Sciences, 9(2), pp.68-70.
Davahli and et.al., 2020. The hospitality industry in the face of the COVID-19 pandemic:
Current topics and research methods. International Journal of Environmental
Research and Public Health, 17(20), p.7366.
Elbanna and et.a.l., 2020. The harder firms practice strategic management, the better they
are. Strategic Change, 29(5), pp.561-569.

GIRGEN, M.Ü., 2021. IMPORTANCE OF MARKETING STRATEGIES FOR TOURISM
COMPANIES. Research and Reviews in Social, Human and Administrative
Sciences-I.
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process: a literature review & research agenda. International Journal of
Advertising, 41(2), pp.210-232.
Jollyta and et.al.., 2021. Cluster Analysis Based on McKinsey 7s Framework in Improving
University Services. Journal of Artificial Intelligence and Engineering Applications
(JAIEA), 1(1), pp.1-8.
Linxi, X., 2021, September. The Digital Transformation Strategy of Hilton During COVID-
19. In 2021 International Conference on Financial Management and Economic
Transition (FMET 2021) (pp. 317-321). Atlantis Press.
Malivan and et.al., 2019, October. MODERN OFFICE MANAGEMENT: MCKINSEY 7S
FRAMEWORK. In INTERNATIONAL ACADEMIC MULTIDISCIPLINARY
RESEARCH CONFERENCE IN BERLIN 2019 (pp. 92-95).
Mekhruza and et.al., 2022. PERFORMANCE OF HILTON: HOW HILTON TACKLES THE
EPIDEMIC COVID-19 DISEASE. Thematics Journal of Business
Management, 5(2).
Okumus and et.al. 2019. Corporate-level strategies. In Strategic management for hospitality
and tourism (pp. 135-151). Routledge.
Stamevska and et.al., 2019. Role, importance and benefits of strategic
management. Economics and Management, XVІ, 2, pp.58-65.
Waldburg-Zeil, T., 2020. How to enhance the use of Influencer Marketing for luxury hotels &
PR companies?.

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