Managing Innovation in Business - Hilton

MANAGING
INNOVATION IN
BUISNESS

EXECUTIVE SUMMARY
Managing innovation in business is term to be a process of coming up with latest and
updated ideas which are easily acceptable by the market for their success. In simple words it can
be said that it is a new method of invention and generation of valuable thoughts for business to
achieve a successful mode. This report focuses on how Hilton hotel overview and about the
innovation history of its. Apart from this organisation existing innovation performance and
capabilities are also being explained which will help reader to to analyse and interpret how
innovation can help an organisation in achieving and managing successful business growth.
PEST analysis will be carried out so as to analyse the innovation history of Hilton.
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Organisation and its innovation history......................................................................................3
The organisations existing innovation performance and capabilities.........................................5
The industry in 2018...................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
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INTRODUCTION
Innovation management is defined as a set of tools which allows engineers and managers
to corporate with a common understanding of goals and process. Apart from this it also allows
business to respond to internal and external opportunities and use its creativity and innovative
ideas, products and processes. Innovation can take place in any form as an incremental
improvements to existing products and as major breakthrough (Tidd and Bessant, 2014). The
organisation which is being considered to carry out this report is Hilton hotel which is a global
brand of full service hotels and resorts and brand of American multinational hospitality
organisation. It was founded in 31 may 1919 by Conrad Hilton. The main purpose of this report
is to give brief innovation history of Hilton hotel and about its existing innovation performance
and capabilities. Apart from this overview of the industry in 2018 is also being explained in this
report.
MAIN BODY
Organisation and its innovation history
Hilton resort is a global brand of full services resorts, hotels and and brand of American
multinational hospitality company. This company was founded by Conard Hilton in 1919. As of
2017 there were approx 570 Hilton resorts and hotels properties in about 85 countries and across
sis continents. Apart from this it can be said that it is a Hilton flagship brand which is term to be
one of the largest hotel brands in the world as it is targeted for both both leisure and business
travellers with location as a major city centres and they are near airport, popular vacation
destination, convention genre etc. Members who book directly through Hilton owned channels
tends to get exclusive amenities and discounts such as free digital check-in, Wi-Fi etc (Talukder,
2016).
Innovation history of Hilton Hotel
It all began in 1919 when Conard Hilton came up with his first hotel, since then they have led the
industry with innovative approach to its services, products and amenities. Thus, because of
which today Hilton hotel is considered to be as a stylish and forward thinker leader in hospitality
sector.
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In 1927:Waco Hilton hotel were opened up which consist of air -conditioning in public rooms
and cold running water.
In 1947:Roosevelt Hilton hotel which were establisher in new york were considered to be the
world first hotel to install television in guest rooms.
In 1948: Became first organisation to come up with multi-hotel rese4rvation system which were
considered to be the modern day reservation system.
In 1950:First special amenity for female travellers were created which included a seeing kit and
a booklet with helpful names and telephone numbers.
In 1957: Hilton offered first brand wide direct dial telephone service.
In 1959: First Hilton airport hotel were opened up.
In 1973: Using computer technology first centralized reservation service were developed.
In 1987: Guest loyalty programme were introduced by Hilton.
In 2008: Hilton Vancouver Washington makes history as its first hotel to be both green sea;
certified and leadership in environmental design and in energy.
In 2010: Openings at Hilton short hills efoirea spa operates in china, United states and in
Thailand.
In 2011:Hilton Huanying were launched for Chinese travellers abroad by Hilton hotel and Hilton
resorts.
In 2013: New dinning concept Herb N' Kitched worldwide were launched by Hilton.
In 2014: Hilton time square terms to be first brand hotel to live stream a concert on you tube.
In 2016: Hilton expanded its footprint in approx 100 countries and territories all around the
world with its new opening in Chad of Hilton N'Djamena.
In addition to this there are certain factors like political, social, technological and
economical etc. which are term to be a drivers force to Hilton hotel in achieving innovation in
business.
Political: As the government of UK terms to be very supportive in nature and render
support to those industry and organisation who come up with innovative aspects. So this aspect
of UK government has helped Hilton hotel to drive innovative aspect within business.
Social: As preferences and demands of society keep on changing and in order to render
services to customers as per their preferences the Hilton hotel needs to come up with innovative
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ideas, products, services etc. Thus, changes in social factors also term to be an effective force of
drive for Hilton to come up with innovative aspects (Snihur and Tarzijan, 2018).
Technological: As in modern era technology advancement keeps on taking place and
such advancement in technology has forced Hilton hotel to grab and come up with innovative
technology like Wi-Fi etc.
Economical:As the economic condition of UK terms to be quite stable which term to be
helpful fir Hilton hotel to achieve successful growth. Good economic condition of UK help
Hilton to come up with innovative aspects with new products, ideas, amenities, services etc.
The organisations existing innovation performance and capabilities
To attain a strong presence within marketplace, every business organisation is required to
evaluate its strengths and weaknesses along with measures to transform those weaknesses into
strengths. By this, a hotel can achieve required objectives and targets in a profitable manner.
Main aim of management in Hilton hotel is to enhances the strengths of hotel, so that high
revenues and profitability can be attained (Ritala and et. al., 2013). To attain this, efficient and
optimal use of resources is required. To determine the strengths and weaknesses in a proper
manner, SWOT analysis can be used as it will also helps in identifying potential opportunities
and threats which will benefits Hilton hotel to gain competitive advantage over rival companies.
 Strengths: Within hospitality industry, to gain competitive advantage over rival
companies, an organisation is required to have large property and enhanced number of
customer base. This will enhances the brand reputation and market-shares of company
within marketplace. Hotel provides full service under flagship brand of American MNC
Hilton, and posses more than 580 hotel and 4610 properties properties in around 86
nations. Hilton comprises 13 brands within it including Conrad, Waldorf Astoria, Hilton
resorts etc. Due to enhanced business presence, hotel gains advantage form economies of
scale to a visible extent. Hotel offers best loyalty programs to its customers. These
programs involves digital check-in, discounted price, several offers and schemes, free
internet access etc. other than that due to large property ownership, operational cost of
company is low. This has resulted in more investment and consideration towards the
needs & requirements of customers due to which hotel has maintained high customer
base with more than 50 million loyal customers (Rajala, Westerlund and Möller, 2012).
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This has resulted in gaining of competitive advantage over rival companies operating in
same sector.
 Weaknesses: By acknowledging weaknesses, a company can build its strategic position
and competitive advantage so that high profitability can be achieved. Weaknesses will
define those areas where Hilton management can improve. Major weakness observed in
case of Hilton hotel is gaps in product range which is sold by hotel. Lack in alternatives
can shift the preferences of customers towards other organisation operating in same
sector. Hotel raises more capital and funds to invest in inventory due to which long-term
growth of company will be hindered (Möller and Halinen, 2017). Beside this, another
weakness is that financial planning within Hilton is not carried out efficiently and
properly. Current and liquid asset ratio of company are not showing any profitable
results. Due to less investment in training and development of employees, employee
turnover is high and existing employees faces issues in satisfying the exceptions of
clients in an appropriate manner.
 Opportunities: These aspects will specify an organisation about those areas in which
business expansion will results in earning of high revenues and profitability. In case of
Hilton hotel and resorts, exploring Australian market will be very beneficial. As Australia
has sustained the position of world's biggest economy it promises huge growth to hotel.
Hotel is planning to acquire local hotel and chains so that competition form local
competitors can be eliminated and customer base can be expanded desirably. More
investment in digital media can benefits Hilton in gaining wide attention of customers
without spending high amount of capital. By taking regular feedbacks and surveys,
expectations of customers can be fulfilled in a proper manner, hence starting different
programs to understand perception of customers will be opportunistic for hotel (Jansen,
Cusumano and Brinkkemper, 2013).
 Threats: This analysis will benefits the manager in Hilton hotel to understand the areas
which can impact the growth of business in a negative manner. Hotel and other properties
associated with Hilton group can face penalties and law suites in markets due to
fluctuations in their product standards. As hospitality industry is a fastest changing
industry, expectation and choices of customers changes on a regular basis which is a
potential threat to the company. Other than that, terrorism is another factor that can
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impacts the hotel business. Due to fear and threat to life, people cancels their trips which
results in heavy loss for business organisation (Gyrd-Jones and Kornum, 2013). By
providing safe environment to customers and managing business activities in an
systematic manner, company can reduce these threats and maintain profitability.
This analysis will benefits Hilton in understanding those factors which will add value to
the organisation and removal of those aspects which hinders the success & growth of company.
In case of Hilton hotel, it is analysed that launching of voice sensitive remote will be beneficial
for company. This will benefits the guests in taking advantage of services and facilities offered
by hotel with the help of voice recording. This will helps the company in gaining competitive
advantage over rival companies in an appropriate manner.
The industry in 2018
To understand the competitive environment for an organisation in an appropriate manner,
porter's five force is a powerful tool. It will helps in explaining the potential profitability
attributed to strategies associated with management in Hilton hotel. To analyse current business
environment of Hilton in a proper manner, some aspects are stated below:
 Competitive rivalry: Hotel industry is very fierce in premium segment. Main rivals and
competitors of Hilton are Hyatt regency, Renaissance, Marriott etc. Due to heavy
investment in several kinds of facilities and services form past years, Hilton hotel is
enjoying high revenues and profitability as compared with its rival organisations. Diluted
EPS of company in first quarter of 2018 is 0.51 dollars where as net income for quarter1
is 163 million dollars. Rooms available by hotel reaches 10,600 in number which is 7
percent more as compared with the outcomes of quarter 1 in 2017. For quarter 2 net
income was 217 million dollars which is 44% more than previous year. Amount returned
to shareholders is 1.6 billion dollars. For quarter 3, net income is 164 million dollars
which is similar to the earnings of previous years. For quarter 4, net income earned is 225
million dollars and capital return is projected around 1.5 billion dollars (Gawer and
Cusumano, 2014).
 Threat of new entrants: It is related to the entry of new competition within same
industry by introducing new and innovative concepts so that high attention form
customers can be gained by asking them lower price for services. But to achieve high
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brand reputation and customer base high investment is required which is not possible for
any local hotel. Hence, company has no threat form this aspect.
 Threat of substitute: This aspect will be low in intensity due to high performance of
rival hotels such as Marriott, Hyatt agency etc. other than that, local hotels are also
offering good services to customers in reasonable price (Drucker, 2012). To overcome
this aspect, hotel is required to be service oriented rather than product oriented. This will
help them in satisfying the needs and requirements of customers in an appreciable
manner.
 Bargaining power of customers: It is directly linked with the customer base within
industry. If the number of customers will be high, in that case bargaining power of
customers will be less but if less number of customers will deal with Hilton hotel then
their bargaining power will be more. At peak time, Marriott hotel reduces their price due
to which their customer base increases and downfall will be faced by Hilton. In that case,
bargaining power for customers will be high and to maintain revenues company is
required to satisfy their needs without charging them high (Brown and Osborne, 2012).
 Bargaining power of suppliers: All companies associated with hospitality sector
purchases their raw material form different suppliers. If suppliers will be dominant then
profit margins of Hilton can reduce considerably. To tackle with high bargaining power
of suppliers, manager in Hilton hotel is required to maintain efficient supply chain with
multiple suppliers. By using alternative for those materials which are short in number is
another method to reduce the bargaining power of supplier (Björkdahl and Holmén,
2013).
CONCLUSION
From the above mentioned report, it has been analysed that hospitality is a wide industry
and it is very important for organisations to upgrade their services on a timely basis so that high
profitability and revenues can be achieved. To achieve desired profitability, hotels are require to
innovate new services so that competitive advantage against rival companies can be achieved.
Along with this, identifying present capabilities and performance is very essential so that overall
working productivity of an organisation can be acknowledged and those elements can be
eliminated which do not add value to the revenues and brand reputation of company.
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REFERENCES
Books and Journals
Berglund, H. and Sandström, C., 2013. Business model innovation from an open systems
perspective: structural challenges and managerial solutions. International Journal of
Product Development. 18(3-4). pp.274-285.
Biemans, W., 2018. Managing innovation within networks. Routledge.
Björkdahl, J. and Holmén, M., 2013. Business model innovation–the challenges ahead.
International Journal of Product Development. 18(3/4). pp.213-225.
Brown, K. and Osborne, S. P., 2012. Managing change and innovation in public service
organizations. Routledge.
Drucker, P., 2012. Managing in turbulent times. Routledge.
Gawer, A. and Cusumano, M. A., 2014. Industry platforms and ecosystem innovation. Journal
of Product Innovation Management. 31(3). pp.417-433.
Gyrd-Jones, R. I. and Kornum, N., 2013. Managing the co-created brand: Value and cultural
complementarity in online and offline multi‐stakeholder ecosystems. Journal of
Business Research. 66(9). pp.1484-1493.
Jansen, S., Cusumano, M. A. and Brinkkemper, S. eds., 2013. Software ecosystems: analyzing
and managing business networks in the software industry. Edward Elgar Publishing.
Möller, K. and Halinen, A., 2017. Managing business and innovation networks—From strategic
nets to business fields and ecosystems. Industrial Marketing Management.67. pp.5-22.
Rajala, R., Westerlund, M. and Möller, K., 2012. Strategic flexibility in open innovation–
designing business models for open source software. European Journal of Marketing.
46(10). pp.1368-1388.
Ritala, P. and et. al., 2013. Value creation and capture mechanisms in innovation ecosystems: a
comparative case study. International Journal of Technology Management. 63(3-4).
pp.244-267.
Snihur, Y. and Tarzijan, J., 2018. Managing complexity in a multi-business-model organization.
Long Range Planning.51(1). pp.50-63.
Talukder, M., 2016. Managing innovation adoption: from innovation to implementation.
Routledge.
Tidd, J. and Bessant, J., 2014. Strategic innovation management. John Wiley & Sons.
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