Hospitality Business Strategy: Analysing the Macro and Internal Environment of Hilton

This report analyses the macro and internal environment of Hilton, a famous hotel brand, using SWOT, PESTLE, VRIO and Porter's Five Forces models. It also recommends growth strategies using Ansoff's Growth Matrix. The report includes a detailed analysis of the competitive forces in the market and justifies the most appropriate growth platform and strategies for Hilton.

Hospitality Business Strategy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Analysing the influence of the macro environment on Hilton.....................................................3
Analysing the internal environment of Hilton by using VRIO....................................................6
Evaluating competitive forces that exists in the market of Hilton by using the model Porter
Five Forces ..................................................................................................................................6
Evaluating the different types of strategic direction available to the business organization:......7
Justifying and recommending the most appropriate growth platform and strategies using
Ansoff growth matrix:..................................................................................................................8
Explaining strategic planning process:........................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES................................................................................................................................1

INTRODUCTION
Business strategy refers to the group of plans, goals and actions that frames the entire
working of a business, of how the business will be mending its policies in order to be successful
and make a goodwill in the market. It becomes very important for each business to make its own
strategy in order to be successful and retain good profits in the future (Ali and Anwar., 2021).
For a hospitality business there are four crucial strategies that the owners must use, which
includes increasing consumer value, building the franchise, completing the role of a good citizen
and to be able to achieve operational excellence. Hilton, being a very famous hotel of all the
times, is a brand which offers a complete service of resorts and hotels. The brand currently
operates in 94 countries (Njoroge, Anderson and Mbura, O., 2019). This report will comprise all
the complete external and internal analysis which provides a base for the strategic planning of
the Hotel Hilton and By using different tools and models devising a strategic plan on the basis of
environmental analysis.
MAIN BODY
Analysing the influence of the macro environment on Hilton
Determination of the environment in which business functions is the first and foremost
step that a business must take and also turns out to be very important as the right analysis of the
surrounding makes the functioning of a business even stronger. SWOT and PESTLE analysis
gives the right knowledge of the business environment by undertaking and studying all the
factors that affect the smooth going of the business. Here is the following analysis done on the
Hotel Hilton.
SWOT analysis
This is a tool that is used by almost every business to predict the external environment, it
consists of strengths, weakness, opportunities and threats (Benzaghta And et.al., 2021). This tool
enables a business to know its strength and weaknesses to hold and eliminate them and also helps
the business to identify the right opportunities and the threats that are available in the external
environment in order to grab the chances and take precautionary measures as well.
Strengths-
 The brand comprises 13 other businesses under itself including the most famous
businesses such as Waldorf Astoria, Embassy Suites, Hilton resorts and hotels, Conrad
etc. The brand serves in above 100 countries and has served over 140 million guests.

 Hilton offers one of the best customer service, by offering a luxurious comfort and also
by offering very good discounted prices, free access of internet, late checkouts and many
other things which are appreciated by the customers all over the world.
Weaknesses-
 Dependence on the home market of US is the one major weakness of Hilton as 80% of
revenue generation is done from the US market and only 6% of the revenue is generated
from Asia Pacific market.
 The second major weakness of the Hilton is the high amount of debts that were recorded
in 2015. It had a debt of around 5 billion, including non-recourse debt of USD726
million.
Opportunities-
 The brand has a scope of further expansion in the international market. By focusing more
on the R&D Hilton can also enhance it services and operates on a much bigger level in
the future.
 Hilton can also introduce its services in the mid-level market and by forming strategic
alliances and changing its approach (Teoli and et.al., 2019). The brand can come up with
even more pocket friendly budgets and can enlarge its customer base.
Threats
 As the company operates worldwide there is threat of political instability and terrorism
that can affect the smooth functioning of the organization.
 There are many other threats that are observed in the Hotel chain like ethics related issues
which are arising and complaints by the customers in the feedback column which are
increasing. This can affect the growth of the business in the near future.
PESTLE analysis
With the help of this tool a business can analyse all the important factors that are present
in the business operating country and can affect the working of the business (Shtal And et.al.,
2018). It includes the following factors
1. Political factors- This factor is linked with the politics of a particular place. For the
growth of any business political stability becomes a key factor as it helps in smooth
functioning. Hilton as it operates on a large scale, is exposed to this very risk. In recent

times the visitors to UK had reduced because it has left behind the European Union and
as a result the revenue of the hotel has also declined.
2. Economic factors- This factor is associated with the economic condition of the country.
The economic factor is very crucial for the hotel industry as it is not under the control of
the industry but can directly impact the operations of the hotel. Hilton by offering a
luxurious experience, should focus on the country areas where the income of the people
is stable and other factors cannot affect its revenue generation.
3. Social factors- Social factors consist of all the things such as latest trends, cultures,
lifestyles, fashions etc. On being a well recognized brand across the globe the revenue of
the brand can be affected by various factors such as the consumer demographics, gender
ratio, growth rate, cultures etc. but due to the increasing income of the people their
lifestyle has also evolved, and they are Willing to spend more and more. Hilton by
offering luxurious services is targeting such customers.
4. Technological factors- These factors are engaged with all the technologies that are
evolving day to day and making the lives easier. With the help of new technologies the
business can also reduce its costing and attract more and more customers towards itself.
Hilton is engaged in offering luxurious experience it should also focus on updating its
technologies.
5. Legal factors- legal factors are associated with the laws and rules of a particular country
in which the business operates. These are almost linked with the political factor and
shape the laws related to the employees and workforce that should be followed by the
hotels. Hilton should also consider the factor and the laws that are made by the
government related to the safety issues due to Covid-19.
6. Environmental factors-These are associated with the environmental practices that are
followed by the people ad undertaken by many businesses. Hilton is also indulging itself
in various activities that protect environment. But climate change is a big threat for the
Hilton hotels.
Analysing the internal environment of Hilton by using VRIO
VRIO

This framework helps to analyse the internal environment of the business and also helps
to identify all the resources and advantages that helps a company by giving it a competitive edge
(Buzatu And et.al., 2019). It includes the following factors
1. Value - The brand has a valuable relationship with the wholesalers and retailers and has a
leadership vision that sets the onwards challenges. Hilton also has a value for the
competitive costs, as it is engaged in low cost operations and making high profits.
2. Rarity- In order to attain growth and gain a goodwill in the market it becomes important
for a business to have something of its own that is unique and rare. Hilton holds rarity
with its channel partners and also has access to the critical raw materials for the
successful execution.
3. Imitation- When there is a high imitation risk in the society the customers often tend to
shift their interest on the substitutes that are available at low costs. Hilton has services
that are very difficult to imitate as is offers luxurious experience. It is difficult to imitate
the logistics costs and the relationship with the wholesalers and retailers that the brand
has, but it is not impossible.
4. Organization-This factor is associated with the utilization of full potential and
capabilities that a brand is doing. Hilton has utilized all its resources efficiently and has
also proved out to be a shinning Hotel chain that operates on a large scale.
Evaluating competitive forces that exists in the market of Hilton by using the model Porter Five
Forces
PORTER FIVE FORCES
This framework is used by the businesses when there is a need of complete analysis of
the external environment to determine the competition in the market (Bruijl and Gerard., 2018).
Here is the Porter Five Forces used on Hilton and below mentioned are the factors of this model.
1. Threats of new entrants- Hilton is a diversified hotel brand which operates globally. For
any new entrant, it is next to impossible to compete in front of Hilton hotels and resorts.
So there is no threat of new entrant to the brand.
2. Threat of substitute- There is no such significant threat to the Hilton hotels as, when
people opt for choosing a substitute, they often end up choosing relatives or friends
homes. Slight threat that exists is between the similar premium hotels as Hilton of UK.

3. Rivalry amongst existing firms- The company offers premium services so the
competition of the brand is with the similar brands only, such as Marriott, Radisson Blue,
Westin, Hyatt Regency and other premium brands of the chain. But out the these
premium segments Hilton enjoys the highest profits.
4. Bargaining power of suppliers- The power of the suppliers is low as the hotel purchases
from 4000 different suppliers or even more, so they automatically lack the uniqueness
and their bargaining power is less.
5. Bargaining power of buyers-Hilton is indulged in offering services to the premium
customer base so there is very less power in the hands of the customers for bargaining.
The high class people often tend to utilize the coupons that are made available to them by
the company only, but there is no such bargaining other than that.
Evaluating the different types of strategic direction available to the business organization:
Every business organization want stability of their business in highly competitive market,
Hilton desire to have tag of industry ruler which is challenging process, they can consider some
strategies which is introduced by Porter often called Porter generic strategies, these are:
The cost leadership strategy: This is one of the most common type of growth strategy not only
to give neck to neck competition to rivals but this is often used to capture title of industry ruler
(Islami, Mustafa and Topuzovska Latkovikj, 2020). Hilton can consider this strategy to become
highly competitive in the market, to gain cost leadership they simply have to lower the cost of
their product and service, low means as low as possible. However, Hilton's brand image will be
impacted.
The differentiation strategy: This is another common type of strategy which allow firm to
differentiate their product from rivals by keeping or introducing innovation. Here, firm need to
bring major modification in their product and service or need to introduce innovation (Omsa,
Abdullah and Jamali, 2017). Hilton can consider this strategy to capture the market, this is highly
risk which might become reason for company's failure in the market.
The focus strategy: The focus simply means firm need to focus on niche market in which they
need to segmented their audience, this is limited and might impact sales of the company but firm
enjoy continuous growth, this strategy include both focused cost leadership and focused
differentiate in which strategies remain same but market become niche.

Justifying and recommending the most appropriate growth platform and strategies using Ansoff
growth matrix:
Every business organization focus in growth, they look for best possible platform or
strategies which allow firm to explore new and different market (Dawes, 2018). It is very clear
that firm need platform to explore new market they need certain strategies, Hilton need to
consider Ansoff matrix to explore new market and need to consider certain strategies included in
the model, these are:
Market penetration: This is one of the most common but effective type of expansion strategy in
which firm try to increase sales of existing product and service in existing market, here firm do
not consider new market, nor they focus on introducing new product. Hilton is one of those
hotels brand who have great brand image and reputation in the market, they can increase sales in
existing market by focusing more on marketing and advertising. Hilton need to consider concept
of marketing if they are planning to adopt market penetration as growth strategy, becoming the
industry ruler is challenging process.
Market development: This is another common but effective expansion strategy which allow
firm to enter new market with the help of existing product, this simply means entering into
foreign market to increase sales of the existing product. Many multinational brand consider this
strategy to capture new market, Hilton already have considered this strategy to win the market.
This hotel brand have image and reputation all over the world which make this strategy easy for
them, Hilton consider market development where they explore new foreign market. Here, role of
company's brand image does matter in terms of surviving new market.
Product development: This is another effective strategies consider by mid rang firm who have
innovative idea to introduce new product, here firm will focus on innovation and test this
innovation in existing market. This strategy is risky where firm need to take risk, innovation may
survive and may even fail which cost heavy to the firm. Hilton can not consider this strategy for
expansion process because this is highly risky and might impact firm's brand image reputation.
Product development is risky but many brands consider this because, great risk bring great
opportunity, firm will become market leader.
Diversification: Diversification is last and most risky strategy in which firm focus on entering
new market with new product, risk involve in every step because firm do not have experience of
new market and do not have knowledge how to make new product success in completely new

market. Hilton can consider this strategy because they have brand image, they can introduce new
feature in their room which might attract new market and new consumer (Loredana, 2016). This
strategy is risk but for reputed brand, this strategy might become key to success, diversification
include concept of new market with new product and service.
Explaining strategic planning process:
Every business organization perform strategic planning to win the market, strategic
planning simply means business will focus on betterment of the business process (Hasan and
Chyi, 2017). Using balance scorecard model of strategic planning, Hilton perform strategic
planning and measure success, these are:
Balance scorecard:
 Financial performance: Focusing on financial performance of the firm provide clear
view whether strategies are going as per the requirement. Hilton can balance strategies
according to the financial performance, firm need to consider reviewing this area.
 Stakeholder performance: This is another common type of element in balance
scorecard area in which firm focus on reviewing performance of stakeholder and craft
strategies accordingly. This process aligned with financial projection.
 Efficiency: Firm need to review efficiency of their strategies and need to bring change
accordingly, they need to consider internal look of the organization and need to judge
their process and review their strategies.
 Organizational capacity: Organizational ability simply mean firm need to focus on
capacity they carry and need to act accordingly, it is very clear that capacity of
organization does matter when it comes to strategic planning.
CONCLUSION
This report has discussed hospitality strategies process and its importance in maintaining the
business growth. Later this report has discussed impact and influence of macro environment
including PESTLE analysis and its impact on hospitality organization and its business strategies.
Later organization's internal area is been explored with the help of SWOT analysis. Later this
report has discussed porter five force, porter generic strategies, ans off growth matrix and
balance scorecard model which allow firm to survive in the market.

REFERENCES
Books and journals
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changing business environment. Available at SSRN 3192207.
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development: Interaction between VRIO framework and Mckinsey 7s framework. In
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Two Logical Problems (February 27, 2018).
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sustainability in the hospitality industry. The Bottom Line.
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implementation of Porter’s generic strategies to gain firm performances.
Shtal, T.V. And et.al., 2018. Methods of analysis of the external environment of business
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Teoli, D. and et.al., 2019. SWOT analysis.
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