Organizational Report on International Environment, Strategy and Risks in Hospitality Sector - Hilton Hotels & Resorts

This report provides information about international environment, appropriate strategy to expand the business and types of risk associated with international trade in hospitality sector with a case study of Hilton Hotels & Resorts.

ORGANIZATIONAL
REPORT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
International environment in the context of hospitality sector- Hilton hotels & resorts.............4
Appropriate strategy to expand the business...............................................................................7
Types of risk associated with international trade........................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
An organisational report plays a vital role as it is a process for obtaining accurate and
relevant information about business performance and the factors which can impact the
productivity of the business. The present report will be based on hospitality sector, the reason
behind choosing this is that it is the fastest growing sector in the world having areas of
competence, room for improvement and risks to modify decisions and support investment. The
selected company is Hilton hotels & resorts, it is a global brand of full service hotels and resorts.
The brand provides various types of services such as food and beverages, accommodations,
pleasant stay. This multinational hospitality company is well managed by skilled workforce and
recognized internationally as a premium hospitality firm. The current study will provide
information about international environment which can impact the operation of business.
Furthermore, it will draw some light on range of techniques applied to the management planning
process which determines the goals and strategies in an international setting. Lastly, the report is
going to examine the risks which is arising from international trade operations with relevant
examples.
International environment in the context of hospitality sector- Hilton hotels & resorts
PESTLE analysis
Basically, it is a tool which is used by company to examine the various external factors
which has direct or indirect impact on business. With the help of pestle analysis, the company is
able to get idea about different extrinsic scenarios which impact the business of the particular
brand. Brand like Hilton needs to focus on these factors and keep track on changes environment
into the marketplace so that it helps them to understand market dynamics. By using this strategy
company can easily make decisions before implementing any new business strategy to expand
internationally, Hilton can improve its operation on continuous basis.
Political factors- talking about this factor, it is most important external environment
which needs to be identified to determine the extent to which a government may influence the
economy (Hilton Worldwide Holdings Inc. PESTEL & Environment Analysis, 2022). As we all
know that the government is imposing a new tax or duty due to which entire revenue generating
structure of Hilton might change. Factors like tax policies, trade tariffs and other international
policy relation to trade restrictions can impact the business operation of the company. Nowadays,
political stability in the country is very essential factor as hospitality sector need to cope up with

the political situation in different countries in which they are operating. As we all know that
Hilton is operating in various countries so it is essential for them to go through the political risks
which is associated with those countries. Due to Brexit, there was reduction in the number of
visitors visiting the UK from different countries which has impacted the revenues of the hotel
which is situated in the UK. Not only this, due to COVID-19 the company has faced major
challenges relating to trade which has impacted the business operation so it is having a very
tough time now for hospitality sector. But as everything is going normal and smooth because
countries are also now easing their lock down which will help the hospitality industry to grow
more and increase their revenue by providing customer with great services.
Economic factors- another major factors which can impact business is changes in
economy performance. For example- if there is a rise in the inflation rate of any economy, it
would directly impact the way firms price their services or products. In addition to this, it would
directly impact the purchasing power of consumer and also their buying behaviour and attitudes
(Thomas and et.al., 2021). Not only this, it can also impact the demand and supply models for
that economy. While implementing any expansion strategy the firm needs to focus on changing
interest rates, economic growth patterns and also inflation rates. It is recommended to Hilton that
before starting a business in a particular country, Hilton needs to keep track and check the
economic condition then only they can work effectively without any issues. Due to pandemic,
many countries are having very low interest rates this has change the performance of businesses.
But now loans are available at very affordable price than before, so it creates positive impact for
hotels to expand business at global level in the country where they are not operating or any
location which needs to be developed. In addition to this, most of the countries are in slowdown
just because of pandemic crisis, so their productivity level is also low across the globe.
Social factors- as we all know that nowadays people are becoming more health conscious
due to changing social trends and cultural factors (Hilton Worldwide Holdings Inc. PESTEL &
Environment Analysis, 2022). The hotels finance is major impacted by social factors which
includes population growth rate, lifestyle of people and also demographics. For example- when
the income of people increased, then their spending habits also change which creates great
opportunity for company to provide them whatever they want as customer can purchase it
without any thinking twice. Due to this their willingness to spend on quality products increase
which is a very good thing for the hotel industry to provide them healthy meals with varieties of

options. Moreover, nowadays, people are becoming more health concern avoid social gatherings
which is a matter of concern for hotel.
Technological factors- Technology plays an important role in the success of business.
For example- if company wants to achieve success in the competitive world they must adopt new
technology and make continuous improvement then only Hilton is able to survive in competitive
world. Of course the firm cannot afford to ignore technology as it helps them to improve its
value proposition (Christodoulou and Cullinane, 2019). For eg: Adopting technology which is
new in the market is very important such as online service, supply chain, logistics related, etc.
however, the firm uses' technology such as online booking where customer can make booking as
per their choices of rooms and do self check in and check out. When the company adopts
technology and innovation then it may help them in reducing its costs and also enhance customer
experiences at the same time. As everything is going online from booking to payment, Hilton is
accepting all modes of payments. Due to increase in social media usage, the company is focusing
on developing its websites which had supported visitors to book rooms anywhere at any time as
per their convenience.
Legal factors- speaking about this factor means discussing about regulations, rules and
laws of the country as it can impact the business operations and activities in which companies are
operating (Hilton Worldwide Holdings Inc. PESTEL & Environment Analysis, 2022). There are
many factors which can impact business such as customer laws, employee laws and other legal
rules and must be followed by Hilton if they want to expand their business. When the company
does not follow legal rules this can attract intervention of the government. By keeping track on
changing legal laws can help business make the necessary changes in the business activities. In
order to tackle with the problems relating with pandemic the UK government has also made
some laws which needs to be followed by the company such as maintain the social distancing,
proper sanitize the hotel rooms as it helps visitors to stay away from harmful disease. However,
these laws have impacted the cost of operation of the company as there was increasing trend seen
in the operational cost, Hilton has to make more investment in such needs.
Environmental factors- as we all know that visitors are becoming more environment
conscious as they want to protect the environment (Achinas and et.al., 2019). It is essential for
company to keep track on changing environmental laws and must follow it the reason behind that
it people are keeping close check on which Hilton is having proper waste management or not.

Before expanding its business and entering into new market the company needs to focus on
environmental laws as different location have different rules.
Appropriate strategy to expand the business
The expansions strategy is one of the most important strategy that the company must adopt that
supports them to grow in the market. In order to have the faster growth and attain the profits in
the competitive market (Babcock 2021). It is very important for the company to do the expansion
of the business that helps to reduce the external risks. This is the foremost thing that company
must do to have survivability in the global market. there are different strategies in order to
expand the business is as described below:
1. Multi-domestic: In this expansion strategy, the smaller business used to expand their
business in the market. this helps the businesses to have the different approach in the
market where it used to operate. By having this strategy, it enables the firm to grow in the
different market independently. In this business used to expand its business in the same
country but in different states of the same country. By having multi-domestic expansion,
it increases the profitability and goodwill in the domestic market.
2. Global expansion: Global expansion refers to the taking of the company into the new
market. The firm used to have its legal presence in the country by having expanding such
in the new market. This is one of the most common expansion done by the companies
which increases the market share (Widdowson, 2018). In this strategy the business used
to outline the company expansion will be profitable or not in the foreign market. This
very beneficial for the companies to have expansion that helps them to mitigate the risks
and increases the revenue.
3. Transnational expansion: By having the international business the company used to
have better cooperation with the other countries in order to have better business activities.
This used to have emphasis in order to maximize the efficiency of the company and helps
them to have increase in sales. This is the least adopted strategy by the company in order
to expand their business in the market. As in this there is requirement of capital and this
may affect the working of company. This is the less costly strategy as compare to multi-
domestic strategy for expansion. It used to prioritize the global standardization and helps
the company to have better resources.

The cited company can adopt the global expansion strategy which helps them to have
better expansion of their business in the market. As Hilton used to have its expansion in more
countries which helps them to have better growth. Globally expanding the company provides
them the opportunity to have the high quality of talent in the firm (Holst and Niehoff, 2021).
By having the global employees used to provide the company to know about the different
culture and norms in the market. however, the cited hospitality is globally expanding as this
is one of the most appropriate strategy in order to expand the business in the new market. By
expanding the hospitality, it makes them to have diversification and have better revenues
from the different areas of operations.
It allows the company to have the lower cost in order to produce the products in the large
quantity. By having the global expansion, it will increase the competition and have the wide
customers in the market. Lowering the cost helps the company and human resources both to have
improvement and develop the countries where it used to operate. By having the globalization, it
also helps the company to be the part of rest of the world where it does not have its operations
(Dong and et.al. 2021). Somehow global expansion used to affect the company if it does not
operate well in the country where it has expanded it market.
Hilton used to follow the legal and political issues which makes them to survive in the
market where they have expanded it business. This makes the company to have the global
expansion in the market by entering in the new foreign markets. It is very beneficial for the cited
company to have expansion that supports them to mitigate the risks and having growth in the
revenue. By having new opportunities in the market makes the company to have increase in the
market share in the hospitality industry. As hospitality industry is very wide so company must
comply with the legal rules and policies of different countries in order to survive.
Types of risk associated with international trade
International trade refers to the exchange of the goods and services that are sell across the
borders as there is need of goods and services in the market. It is beneficial for the business to
have the international trade as this used to provide opportunity to have new and innovative
products (Heffron and et.al. 2021). By having the international expansion of the company there
are different risks which may affect the working. As in order to expand the market Hilton used to
face different risk which are as described below:

Economic risks: This risks refers to the exposure of the risk by investment made in the
foreign countries due to have changes in the business and have negative impact on the external
factors. Hilton used to face the economic risk in order to have expansion of the business in the
area where it does not have its operations. This includes the changes in policies,
underemployment in the country, reduction in credit planning, etc. For example, If Hilton has to
expand it hospitality in china it has to face the issues related to having the tariff barriers as it is
very hard to have trading with china (Samudrala and Yerchuru, 2021). In order to manage the
economic risks, the company must have the regular examine of the market that helps them to
grow in the market.
Political risks: The political risks used to indicate the starting of the risks that is arises by
having changes in the government body of the particular country. By having changes in the
politics it used to affect the working of the company. It is the most affecting factor for Hilton as
by having the changes in the politics it used to have negative impact on the working of the
company. For example, by having the changes in the tax policies used to have great impact on
the company and will decrease the market share as well. As company used to operate in the
different countries this is one of the most affecting risk which will decline the profits.
Commercial risks: In this commercial risks it includes the risks that the company used to
take by providing credit with no collateral security. This is the most common risks that most of
the companies used to face by providing the credit to the people with no security. In order to
expand business by the cited company they must make sure that they must not provide any credit
without any collateral (Nambisan and et.al., 2019). This can be the potential losses that used to
arise by having the trading with the different people in the market. For example, if the company
is trading with the different partners and provide the products on credit without taking any
collateral than they will be facing this risk.
Currency risks: Currency risks refers to the risks that used to exist by having the changes
in the prices of currency in relation to another. This used to have great impact on the invertors of
the company who has invested in the assets of the company. It is the most affecting risk for the
cited hospitality as it used to operate nationally and as well as internationally (Lulijwa, Rupia
and Alfaro, 2020). By having the currency risks there will be negative impact on the cash flows
of the company. As the company wants to expand its business more this will have impact on the
profits of the company.

Cultural risks: The cultural risks refer to the risks that is faced by the company which used
to operate in the different culture. This is due to changes in languages, customs, norms and
customer preferences (Ratten, 2020). By having this type of risks in the company it used to affect
the management and social culture and used to have negative impact on employees. For example,
Hilton can face the cultural issue in order to adopt the business models in the market where it
used to operate. This used to create difficulty as these used to create difficulty in order to attain
profits in the company. The company must find the new opportunities that helps them to have
better profits in the international market.
Environmental risks: This risk is related to the working environment, changing pattern of
market, climatic changes, etc. As there are different types of environmental risk which used to
have great impact on the working of the organization. This is very hazardous for the company to
cope up with this risk (Zhang and et.al. 2018). It basically includes radiations, pollution, changes
in climate, etc. which can affect the international trade for the company. This type of risk is
driven with the different outside factors and used to impact the working of the company in the
international markets.
CONCLUSION
From the above report it is concluded about the different factors that used to impact on
having the international trade. In this report it is evaluated about the international environment
by explaining the different environment. This includes political, social, tax, regulatory, legal and
technological environment. Further this report has described about the strategies and goals that
helps the company to have expansion of the business. Hilton used to have the global expansion
that helps them to have diversification in the different market. the different strategies described is
multi-domestic, global and transnational. At last this report has discussed about the risks that
arises by having the international trade. The risk includes the Economic risks, political risks,
commercial risks, cultural and environmental risks. These are the most affecting factors which
used to have great impact on the working of company. The different risks in order to have
international trade is evaluated by stating the examples as well.

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Online
Hilton Worldwide Holdings Inc. PESTEL & Environment Analysis. 2022. [online] : available
through <http://fernfortuniversity.com/term-papers/pestel/nyse4/2856-hilton-worldwide-
holdings-inc-.php