Hilton's Strategic Expansion in Egypt

This assignment delves into Hilton Worldwide's strategic expansion plans within the Egyptian hospitality market. Students are tasked with examining the company's objectives, identifying key market opportunities and challenges, analyzing the competitive landscape, and evaluating potential strategies for successful growth in this dynamic environment.

Running Head: STRATEGIC MANAGEMENT 1
Strategic Management for International Hospitality Industry

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Contents
Introduction......................................................................................................................................5
Background to the Hotel Company.................................................................................................5
Strategic Position of the Hotel.........................................................................................................5
Segmentation, Targeting and Positioning....................................................................................6
Competitors in Market.................................................................................................................6
Analysis of SWOT...........................................................................................................................7
Strengths.......................................................................................................................................7
Strong supply-chain:.................................................................................................................7
Strong Management:................................................................................................................7
Utilization of better technology:...............................................................................................7
Brand Recognition and customer Loyalty:...............................................................................8
Diversification of services:.......................................................................................................8
Weaknesses..................................................................................................................................8
Limited Market Share...............................................................................................................8
Downturn in global economy:..................................................................................................8
Workers’ strikes.......................................................................................................................8
Opportunities................................................................................................................................8
Technology Revolution:...........................................................................................................9
Growth in Emerging Markets:..................................................................................................9
Going Green.............................................................................................................................9
Threats..........................................................................................................................................9
Competition:.............................................................................................................................9
Political and Economic Instability:..........................................................................................9
Global Hospitality Markets......................................................................................................9
Background to Emerging markets.................................................................................................10
PEST of selected emerging market and the global market............................................................11
Political Factors..........................................................................................................................11
Economic Factors.......................................................................................................................11
Social Factors.............................................................................................................................12
Technological Factors................................................................................................................12

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Micro Environmental Analysis......................................................................................................12
Competitors:...............................................................................................................................13
Suppliers:...................................................................................................................................13
Customers:.................................................................................................................................13
Market Growth Strategy to be adopted and to be implemented (using strategic model and
frameworks) within the entering market........................................................................................13
Porter’s generic strategies..........................................................................................................13
Ansoff Matrix.............................................................................................................................14
Justification, implementation of the strategy and moving forward...............................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
Appendix:......................................................................................................................................20

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Introduction
In hotel and hospitality industry, it is very important to manage the systems and processes
strategically. Strategic management is an approach that manages all the processes of organization
in an effective manner and implements the appropriate strategies and tactics accordingly. This
report includes the strategic management for a hospitality organization, i.e. Hilton Hotels. Hilton
Hotels is the leading global hotel organization, which is spanning the accommodation sector
from luxurious service resorts and hotels to higher priced suites and mid-priced hotels. This
report examines the strengths, weaknesses and other external factors of Hilton Hotels. The
company is planning to expand its business in a new country market, i.e. Egypt. Furthermore, it
includes the PEST analysis of hotel organization in new country. It examines different factors,
which may impact the growth of organization in new country. At the end, it describes the market
growth strategy that is adopted and implemented by the organization while entering in new
market.
Background to the Hotel Company
Hilton Hotels is a major organization in the hospitality industry that is spanning the
accommodation sector from the deluxe full-service hotels to stay suites and mid-priced hotel
rooms. Company is serving the customers from last 90 years. Hilton is providing leisure and
business travellers the luxury in service, amenities, accommodations and value. Organization is
fully devoted to continuously offering exceptional guest experiences across its global markets. It
was first founded in the year 1919 by Conrad Hilton. Currently, it is a global hospitality
company with more than 3890 hotels in many countries. Hilton Hotel Company is possessed by a
private equity firm, i.e. Blackstone Group. According to Forbes, it is ranked at in the list of
biggest private organization in the United States (Colliers International, 2013).
Strategic Position of the Hotel
The mission of Hilton Hotels is to become the most hospitable organization in the world by
offering the best experiences to visitors and guests, significant opportunities to the employees
and team members, high value to owners and a progressive impact in society. The mission

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statement of the organization basically depends on two factors, i.e. best hospitality and positive
impact.
With this mission statement, the company has a vision to fill the universe with the warmth and
light of hospitality by provides best and exceptional experiences- every time, every hotel and
every guest. The vision of Hilton Hotels is focused on innovating and improving its services and
products, so it can offer its customers the best the in the industry. Both the vision and mission
statement of the company are emphasized on offering best quality services to its potential
customers (Ahsan, Qazi & Syed, 2014). It is helping Hilton in retaining the existing customers
and attracting new customers.
The business of Hilton is based major core values, such as; leadership, teamwork, integrity and
ownership.
Segmentation, Targeting and Positioning
An organization can segment the market on the basis of different characteristics, like;
demographic, psychographic, behavioral, geographic etc. Targeting a market segment allows
Hilton to emphasize on fulfilling the needs and expectations of customers. By targeting the
demographic segment, the organization is primarily looking at the income and socio-economic
status of the people. This is because this organization is offering premium pricing and luxury
products and services to the customers. It is not considering other factors, like; race, age,
religion, gender etc. The target customers of the demographic segment include business
travellers, high income leisure travelers and families (Anwar, 2016).
The positioning statement of Hilton hotels is “prime location and high-standard living”. It shows
the intention behind its marketing and targeting concepts. This positioning statement of the
organization shows that company only targets the high income people for offering luxuries hotel
experiences.
Competitors in Market
In hospitality industry, there are so many leading players, who cover large and considerable
market share in the sector. Hilton Hotels competes with many international and global players,
like; Hyatt Corporation, Starwood Hotels and Resorts, Marriot International, Intercontinental

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Hotels etc. The organization has a robust presence in United States and it is also expanding its
business operations in other countries through mergers and acquisitions (Băcanu, 2010). Thus,
the strategic position in the hospitality sector is better than its competitors. It indicates that if the
company expands its business operations in more new countries, then it will be beneficial for its
growth and success.
Analysis of SWOT
SWOT analysis is a significant tool of strategic analysis, which an organization can adopt for
analyzing the factors in its internal and external environment. Internal factors include strengths
and weaknesses of the organization. External factors include opportunities and threats, which
exist in the external environment of the business and impact the growth of an organization
(Bordean, Borza & Segura, 2017).
Strengths
Strengths are the positive factors and individual attributes. It offers a considerable market and
competitive advantage. Strength is a significant power and part of the hospitality organizations.
Strong Brand Image:
Hilton Hotels has a good brand reputation in all over the world. It is very well-established in
hotel and hospitality industry. It has high brand recognitions due to its technology innovation,
which it uses to enhance the guest experiences and continuously update the business systems and
processes (Bordean, Borza, NIstor & Mitra, 2010).
Strong supply-chain:
Hilton Hotels has a strong supply chain system that helps the organization in obtaining
appropriate resources from its potential suppliers and trying to eliminate the weaknesses.
Strong Management:
At Hilton Hotels, the management is very effective and strong that assist the organization in
approaching its potential by using its strengths and avoiding the weaknesses.
Utilization of better technology:
As stated above, the organization is adopting different technology innovations, which improve its
services and products, offered to the customers. These great technology innovations enable them

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in fulfilling the needs and wants of their possible customers in an effective way that the
competitors can’t do and copy (Bordean, 2010).
Brand Recognition and customer Loyalty:
Hilton has a good reputation and their name is well known. Hilton is a leader in the hotel
industry. It's good to make their product, their packaging and their tangibles look different to
those of their competitors, it is essential to make them support their brand values. Moreover, the
customers are loyal to them, so that they are targeting only one segment, i.e. high income level
people.
Diversification of services:
Hilton Group is not only hotels but also more than it. This group generates the profits and
revenues from entertainment and gaming. It is involved in more than one industry. It has an
advantage of drawing from one segment of its business if another segment becomes less
profitable. Both the businesses serve different needs of customers.
Weaknesses
Weaknesses of an organization are the negative aspects, which may impact the growth of
organization. The weaknesses of Hilton Hotels are given below;
Limited Market Share:
Hilton Hotels have limited market share regardless good brand reputation. The business
operations are influenced internationally because of different government procedures and
policies (Evans, 2015).
Downturn in global economy:
Hilton Hotel may be focused making it weaker to a recession in international economy and other
world-wide disasters, which could restrict international travel, like; terrorist strike and bird flu.
Workers’ strikes
Hilton Hotels may be weaker to the workers’ strikes and crash down on workers, who are
undocumented in United States. Most of its possessions are in the United States.
Opportunities

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Opportunities are the factors in external environment which may include different situations at a
time that provide a positive result (Galliers & Leidner, 2014). The opportunities for Hilton
Hotels are given below;
Technology Revolution:
As discussed above, Hilton Hotels is already utilizing innovative technology in its business
operations. Adopting new and up-to-date technology in the hotels will helps in providing
customer service. It can assist the hotel in marketing themselves to new customer base.
Growth in Emerging Markets:
Expanding business in new and emerging market is also beneficial for hotel organization. The
organization can emerge its business operations in different country markets all over the world,
where it does not have its hotels, for instance; China and India (Hill, Jones & Schilling, 2014).
Going Green
In today’s world, people are very much concerned about environment related things. If the
organization goes green by assisting the environment, then it can attract more guests to stay at
hotels. Number of guests will increase and operations prices will decline. By this, Hilton can
save more money, thus still they will be generating profitability (Mauri, 2016).
Threats
Threats are other external factors, which organization may face in operating its business in
competitive environment and these may impact the performance of business operations. The
potential threats for Hilton Hotels are stated below;
Competition:
Competition is one of the major threats for any hospitality organization, like; Hilton Hotels. As
new hotels are entering in the industry, so this hotel company will have intense competition,
which they should pay close attention (Mok, Sparks & Kadampully, 2013). The management
should consider the amenities and prices of other competitors.
Political and Economic Instability:
Political and economic instability can pose threat for Hilton Hotels. When economy is down, it
will decrease the customers, which will in turn decrease the income of hotels. For hotels, it is

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very important to stay up-to-date with the current new about politics and economy all over the
world.
Global Hospitality Markets
Global hospitality market plays an important and robust role in the global economy.
The primary base of hotel and hospitality industry is shaped upon customer and guests services
that work as a component, which is shared by each and every segment of hospitality business.
According to World Trade Market Report, 2016, hospitality industry is a global industry that is
fast growing and it incorporates one new job every 2.5 seconds. The report shows that global
hospitality market is growing at 4.3% per year and it contributes 7$ trillion yearly to the total
World Domestic Gross Product. The figures show that the tourists’ population has been doubled
in past 20 years and it is expected to double in next twenty years (Colliers International, 2013).
Global hospitality market is very much beneficial for overall improvement of the people and
economy of any country. It offers career opportunities, employment, growth and many
opportunities for getting success via different positions, like; housekeeping, event planning, and
front office workers and some other mainstream jobs in marketing, sales and finance.
There are some considerable reasons, which are behind the growth and success of international
hospitality industry. These reasons are, like; demographics, technology, globalization etc.
There are so many countries, which have emerging markets and form a part of WTM industry
and UNWTO Tourism Highlights. The nations already have established hospitality markets.
Hilton is expanding its business operations in an emerging market, i.e. Egypt. Egypt is very
beautiful and attractive tourist destination, so it will be good that company expands its business
in this country (Morden, 2016). Although, Hilton Hotel is already situated in the country, but due
to increased demand of hotel service, the company is going to establish a new hotel property in
the country.
Background to Emerging markets
Egypt is one of the most favorite tourist destinations for most of the visitors. There are several
tourist places in the country, which attract most of the customer base. With its central location
that is surrounded by the Red Seas, warm weather, Mediterranean and its historic monuments
and background, the country always had an arrival tourists and visitors (Morschett, Schramm-
Klein & Zentes, 2015).

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It increases the profit and area of hotel and hospitality industry. For Egypt, the largest source
market is Europe in 2016, with more than 8 million tourists, which cover 70% of the total
tourists reaching to the country. In addition, Russia is the most important county for the visitors
in Egypt. It is enhancing the business operations of the hotel organizations in the country. The
major hospitality players in the country are, such as; Hilton, Starwood Hotels, Iberhotel, Marriot
International etc. In this country, most of the branded and luxurious hotel properties are in
Hurghada, Sharm El Sheikh and Cairo. Egypt is a tourism based economy, so it will be
beneficial for Hilton to open more hotels in the countries, especially in Cairo. In this country,
UNWTO is also carrying out its follow-up mission for promotion and development of historic
and religious destinations (Nickson, 2013). UNWTO is offering technical assistance to this
tourism -based economy.
PEST of selected emerging market and the global market
PEST analysis is a strategic tool for analyzing the external factors, which an organization should
consider in expanding its business in new and emerging market (Cunill, 2017). It includes
different factors, like; political factors, economic factors, social factors and technological factors.
These factors impact the growth of company in new market. PEST analysis for Hilton Hotels is
stated below;
Political Factors
Tourism and hospitality industry is the major earner of foreign currency for Egypt country.
Globally, political factors have a huge impact on hotel organization, like; Hilton Hotels. Political
stability is always positive for hotel and tourism industry. The political system in Egypt is stable,
so it will be good for hotel organization to survive and grow in the country. The political system
of Egypt receives a strong financial assistance from United State and it has strong links with
other emerging economies, like; China and Russia (Nieves & Quintana, 2016). There are many
European and Asia Pacific hotel organizations, which are performing very well due to relative
political stability in the country. Thus, this expansion in Egypt will be profitable for the Hilton
Hotels also. Furthermore, the adoption of new policies and procedures may impact the business
of hotels. It may be slightly difficult for the organization.

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Economic Factors
Egypt is the tourism-based economy, so this type of business expansion will be beneficial for any
hospitality organization, like; Hilton Hotels. Economic factors are the major factors behind the
increased demand in the hospitality sector globally. Egypt has various economic changes and
improvements to attract the foreign direct investment and for growth of its GDP. Hospitality
sector is one of the top sectors of Egypt (Peppard and Ward, 2016). The people from different
developed economies reach to Egypt tourist destinations, so it will good for Hilton. From them,
most of the people are from high income level group, i.e. the target market for Hilton Group.
Conditions of economy influence the purchasing power of tourists.
Social Factors
Like economic factors, social factors also build the hospitality and tourism industry. There are so
many social factors, which may impact the growth of Hilton Hotels in Egypt. Tastes and
preferences of consumers are shifting in recent years. They want to stay in the private
accommodations. By this business expansion, the organization can offer employment
opportunities to the Egyptian population. It will help in understanding the culture, language and
society of the country (Phillips & Moutinho, 2014). It will not be easy to understand the cultural
differences in new market.
Technological Factors
Egypt is already a technology advanced country, so it is very easy for Hilton Hotels to adopt new
and innovative technologies in its business systems and processes (Eid, 2016). It is shaping a
better guest experience at any points. In today’s modern world, people are actively engaged in
using internet and social media sites, which can be profitable for Hilton. Egypt is one of the most
attractive tourist destinations, so people try to find the best deals before having a final booking.
So, Hilton can offer discount coupons to its customers. Organization can use the information
technology to cater the guests in a better way (Ryan, 2015). The labor in the country is skilled, so
it will be easy to implement and adopt technology changes in the organization.

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Micro Environmental Analysis
There are some micro-environmental factors, which may be faced by Hilton Hotels in new
merging market. These factors are stated below;
Competitors:
With this business expansion, Hilton Hotel carriers a good a brand reputation and recognition
that is making it very difficult for any other small firm to enter in the Egyptian market. Thus,
threat of competitors is very low in Egypt hospitality market. In this country, the organization
can provide loyalty program, so that the guests can earn the points. These points can be
redeemed and different rewards are given, like; rental cars, air tickets etc.
Suppliers:
In the micro environment, suppliers influence the brand reputation and profit of company. It is
very important to create strong relationships with the suppliers. The supply management team of
this organization develops relationships to find the sustainable products. In this country, the
organization can develop a sustainable buying policy to motivate the suppliers to become more
sustainable (Reuters, 2017).
Customers:
Hilton Hotels is more than a hotel and provides a wide range of services to its potential
customers. In Egypt, it will offer family package to the event spaces, entertainment and gaming
zone and other events. It will target the customers, who are looking for the weekend break,
tourism, entertainment, relaxed trip, leisure and purpose of business travel.
Market Growth Strategy to be adopted and to be implemented (using
strategic model and frameworks) within the entering market
Porter’s generic strategies
In the business expansion in this country, Hilton Hotel is implementing and adopting different
generic strategies for market growth. Strategies for the organization are stated below;

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Differentiation Strategy
In the process of entering to emerging market, Hilton Hotels will implement the differentiation
strategy. It is clearly in the competitive scope by its number of hotel properties all over the
world, its innovation, expansion and global regulation. In this country, Hilton wishes to
differentiate itself from other competitors by targeting a new luxury market segment. By
pursuing differentiation strategy, Hilton will offer the best quality experiences to guests, which
attract both the personal and business travellers (Salem, 2014).
Cost Leadership strategy
Hilton Hotels will adopt a best cost provider strategy as market growth strategy. Under this
strategy, it will offer the customers value for their money by satisfying their needs and
expectations, while offering comparatively low costs than its competitors. It will balance both
the differentiation and low cost strategy. In Egypt, Hilton Hotels will fulfill the needs of guests
by offering different services, like; comfortable stay-suites and affordable hotel rooms (Wang,
Wang, Chung & Chung, 2015). These strategies will assist the organization in growing its
business in new and emerging market.
Ansoff Matrix
Ansoff Matrix includes four strategies, but Hilton Hotels is implementing only three strategies in
new market;
Product Development

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This strategy is about upgrading the products and services of the organization in emerging
market. This strategy will assist Hilton Hotels in competing with the leading players in new
market. With this business expansion, Hilton can add new services in its hotel plan, like; more
games, fun activities for children, gym and spa etc.
Market Penetration
Hilton Hotels is not a new organization in the country and it has some particular business
operations in the industry from many years (Cunill, 2017). So, the market driver of penetration
will not impact the strategic position of the organization. Under this strategy, the company will
consider the political and legal risks in the market. It should be aware about different risk factors.
Market Development
Due to increased demand of hotel services, Hilton is establishing its new hotel in Egypt. It will
enable the company to enhance its customer base and increase the business across the global
borders. It is implementing the model that is cost effective, so it will assist in market
capitalization.
Justification, implementation of the strategy and moving forward
There are so many reasons behind this that Hilton Hotels is adopting and implementing the
differentiation and cost leadership strategy. The organization is implementing differentiation
strategy for handling the costs risks and communication risks (Salem, 2014). It is very costly to
create a new brand, so it will use market research to know about the new service design and
concepts. To decrease the costs, Hilton takes advantage from economy of scale in buying,
marketing, finance etc. It needs a heavy investment, when an organization launches new products
and services in the market. Hilton will use loyalty program and other methods to promote its new
complementary services.
At the global level, the costs of Hilton’s services are higher than its competitors. It limits its
target segment and expansion of services. So, Hilton will implement a cost effective strategy to
target a middle level income group (Solberg & Durrieu, 2008). It will assist the organization in
increasing its customer base. In Egypt, it will develop it products and market for increasing its
presence in other countries, where it does not own its hotel property. Implementation of these
strategies is justifiable for the situation of Hilton Hotels. In addition, these strategies will assist
the organization in moving forward in new country market.

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Conclusion
From the above analysis, it can be concluded that Hilton Hotels has good opportunities to
maintain its business and popularity in all over the world. This business expansion to Egypt will
assist the organization to become well-known and top-ranked hotel organization in the world.
The market conditions in the country are appropriate for the organization for entering to this new
market. The organization will have various opportunities in this new market. Hilton is
implementing effective growth strategies to expand its business in Egypt, which will enhance its
business operations and revenues of the organization. In today’s business environment, advanced
and enhanced technologies can enhance the business processes and systems of Hilton Hotels.
Above report indicates that Hilton hotel is already a well-established organization in hospitality
industry. This business expansion will provide it better recognition and rapid business growth.

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References
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Wang, Y. C., Wang, Y. C., Chung, Y., & Chung, Y. (2015). Hotel brand portfolio
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Appendix:
Logo of Hilton Hotels:
Hospitality players in Egypt:
Tourists in Egypt