Strategic Management for the International Hospitality Industry

This report explores strategic management in the international hospitality industry, focusing on the case of Hilton hotel. It discusses the company's history, analyzes the external environment using Porter's five-force model, conducts a SWOT analysis, and examines Hilton's corporate and business level strategies. The report also explores competitive advantage and sustainability, the impact of mergers and acquisitions, and the importance of leadership and entrepreneurship. It concludes with recommendations for Hilton hotel.

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Strategic management for the International Hospitality industry
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5/31/2019

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Executive summary
The report purpose was to develop strategic plan, assess and effective strategic implementation
once the external and internal environment of the company is being analyzed. The Hilton group
was founded in 1919 that is 99 years of its journey has been a successful growing journey with
more than 570 hotels across the globe. The threat of new entrant for Hilton hotel is quite low; the
threat of substitutes for hotel Hilton is medium. Nevertheless, bargaining power of suppliers is
low in nature. The key competitors of the Hilton hotel group are Shangri la hotel, and Radisson
hotel group. The key vision of the company is to provide luxury to the customers and memorable
experience at their hotels. The key corporate-level strategy for the Hilton hotel group is
“Aggressive growth strategy.”
The key business level strategies of Hilton hotel are service differentiation, international
expansion, function level strategy, distribution strategy, employee retention, and target market.
Competitive advantage and sustainability of Hilton hotel include digital hospitality, guest privacy
and experience, and personalization. After analyzing the strategies of Hilton hotel, some of the
recommendations to the hotel include sales promotion activities, price differentiation,
technological updating, and localization.

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Contents
Executive summary.........................................................................................................................1
Introduction......................................................................................................................................3
Hotel Hilton history.........................................................................................................................3
Porter’s five-force model.................................................................................................................4
SWOT analysis................................................................................................................................5
Hilton strategy.................................................................................................................................6
Corporate level strategy...............................................................................................................6
Business level strategy.................................................................................................................6
Functional level strategy..................................................................................................................7
Competitive advantage and sustainability.......................................................................................8
Impacts of mergers and acquisitions, international strategy and alliances......................................9
Strategic implementation and Importance of leadership and entrepreneurship...............................9
Organizational structure, controls and corporate governance.......................................................10
Recommendation...........................................................................................................................10
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

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Introduction
Strategic management is a key element in an organization that includes the development and
implementation of key goals and actions to be taken by a company and its management team. It
includes rapid planning, controlling, monitoring, and assessing all the key activities in an
enterprise to accomplish its objectives and goals as per the planning. The report purpose is to
develop strategic plan and assess and effective strategic implementation once the external and
internal environment of the company is being analyzed. For better understanding, an
organizational case would be considered of hospitality industry (Betton, 2017).
Hotel Hilton history
Hilton hotel is one of the global leaders in the hospitality industry considering the innovation as
the key to enhance the customer experience at Hilton hotel and resort. The Hilton group was
founded in 1919 that is 99 years of its journey has been a successful growing journey with more
than 570 hotels across the globe. The company is based in the United States with headquarters in
McLean. It is one of the popular brands and largest hotel group across the globe. The company is
known for targeting leisure and business travelers with the locational strategy of areas near
airports, city centers, and vacation destinations across the globe. The company has been
introducing additional services rapidly to keep the customer attracted and retain the existing
customers (3.hilton, 2019).
Moreover, the overview of its key strategy is the global mind of the hotel with the integration of
local heart. It reflects that the company is providing the services, and amenities or international
experience to the customer but has also been considering the localization of the nation to keep
the customer touched to their culture and enjoy the heritage as well (Jaworski, 2018).

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Figure 1: (Source: (hilton, 2019)
Porter’s five-force model
For analyzing the external business environment of the Hilton hotel, the hospitality industry
needs to be analyzed. This would be done through a strategic framework that is Porter's five-
force model that would assess the impact of key five industrial forces that would affect the
strategic decision of the Hilton hotel group. The five forces are
1. The threat of new entrant
The threat of new entrant for the Hilton hotel is quite low. The reason being the investment in the
hotel groups are very huge and need time to position the new brand in the industry at the global
presence (Robson & Zeriti, 2014).
2. Threat of substitutes
The threat of substitutes for hotel Hilton is medium. The reason being the local hotels,
guesthouse and other accommodation facilities could be the alternative to the resorts of Hilton.
However getting the excellent services like Hilton through these substitutes is not practically
possible, which decreases the threat of substitute to Hilton (Chari & Feng, 2018).
3. Bargaining power of buyers

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The Hilton hotel group is offering a good range of good and services but the competition is high
in the industry that makes the bargaining power to neither to higher level nor too low level in
hands of customers.
4. Bargaining power of suppliers
Bargaining power of suppliers is low in nature. The reason is that the company key suppliers
would be suppliers of food and beverages raw material, which are large in number associating
with the hotel group this makes this force less influencing (Chiang et al., 2016).
5. Rivalry among the industry
This is one of the major forces as per this framework and the threat of the competition is high in
the hospitality industry. The key competitors of the Hilton hotel group are Shangri la hotel, and
Radisson hotel group. The competition is very close as the reason being these are the direct
competitors with same target customers and strategy to be followed that is focused over
enhancing the services of the hotel (Chang et al., 2017).
SWOT analysis
For analyzing the internal environment of Hilton hotel, SWOT analysis that is another strategic
tool would be applied. The four measures to be evaluated for Hilton hotel include
1. Strengths of Hilton hotel
 Strong global presence
 Brand name and image
 Innovation strategy
 High customer satisfaction (Chang et al., 2017)
2. The weakness of Hilton hotel
 Single income group is targeted
3. Opportunities for hotel Hilton

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 Customer service innovation
 Technological advancement (Muller & Nagle, 2017)
4. Threats of hotel Hilton
 The threat of close competition
 The threat of political system around the globe
 Stagnated growth of the hospitality industry (twitter, 2019)
Hilton strategy
Corporate level strategy
The corporate level strategy is the top level strategy formulated by top management that is the
CEO or directors of the group. The key vision of the company is to provide luxury to the
customers and memorable experience at their hotels. The key corporate-level strategy for the
Hilton hotel group is “Aggressive growth strategy.” The company aggressive growth strategy
will be responsible for the increase in hotel groups will direct the managers to work for the
growth of the company with the development of various strategies and tactics around the globe.
This would include working towards the maximization of the revenue of the organization and
increase maximum profit to the shareholders of the group (Aksoy, 2018).
Business level strategy
The business level strategy is the key strategy that will be responsible for the action to be taken
regarding the vision provided by the top management. This includes the development of
strategies related to conducting business, which is generally framed to gain competitive
advantage and is formulated by top and middle level managers. The key business level strategies
of Hilton hotel are
1. Service differentiation
The company initial strategy is product and service differentiation. Through this, the company
would be implementing the tactics like increase in the level of experience of the customer
through enhancing the services to be provided to the customers. Moreover, the company would
increase are the comfort level of the customer through digital use of technology like online

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booking, handling the booking and other conversation and understanding customer preference
through a click of mouse or mobile. Other than this the company initiates to generate new ideas
to enhance the service and increase the level of the services like providing specialized rooms
with Jacuzzi, Pool area facilities and privacy could be another service to improve the overall
experience of the customer (Bruns, 2013).
2. International expansion
This one of the key business level strategy of the company that will be implemented to
accomplish corporate level strategy as well. This includes the investment decision of the
company in expanding hotel group to nations which are not been tapped by the Hilton group yet.
For instance, in the past few years the company has opened the first hotel in Bangladesh and by
now the hotel group has tapped most of the nations in various regions around the globe. This
helps the organization to increase the global presence (Chatzoglou & Chatzoudes, 2018).
Functional level strategy
Function level strategy is to implement the above developed strategy by the functional
departments and their respective managers at the lower level. This would include short term
strategies of the company and tactics to increase the revenue of the company at a functional
level. For instance, this level of strategy would include the development of marketing tactics to
reach out the maximum customers and operational strategies to make the tactics implemented
appropriately.
1. Distribution strategy – Hilton hotel distribution strategy includes the placing of the hotel
in areas that are most convenient to the customers in order to make the location as a key
competitive advantage of the company. For instance, see facing in vacation destinations,
or near the airports to target business travelers (hilton, 2019).
2. Employee retention – Hilton other tactic is to enhance the human resource of the
company, as they are responsible for providing excellent services to the customer while
interacting with customers directly. The company provides employee benefits, training,
and development in order to retain their employees (Betton, 2017).

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3. Target market – Hilton hotel group is targeting not only the leisure travelers but the
business related travelers as well. For then they are also providing the services of event
and meeting (Solman, 2017).
Competitive advantage and sustainability
Through the above developed strategy the main objective of the company is to gain competitive
advantage and sustainable business activities. The key competitive advantage of Hilton hotel
includes
 Digital hospitality
Hilton hotel has been working forward towards implementation of the digital use of
technology making the Digital experience of the customer more convenient and
satisfying. Through the digital experience strategies, Hilton has worked towards booking
channels, loyalty programs, customer data management, personalization through
understanding the customer perspective, and through providing mobile services. These
facilities and services have increased the level of experience to the customers. Moreover
the technology in the hotels is also implemented in the form of décor that is the lightening
system that would be switched on when the customers are entering to save the energy and
make the business more sustainable (Quirke, 2017).

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Figure 2:(Source: (tripadvisor, 2019)
 Personalization – The personalized customer experience has also helped the organization
to increase the customer satisfaction experience.
 Guest privacy and experience has been taking due care by hotel Hilton. Privacy is the key
elements that the customers are looking for privacy when they are staying at the hotel
(facebook, 2019).
Impacts of mergers and acquisitions, international strategy and alliances
Through the help of acquisition and mergers, the Hilton hotel has included other brands to the
list of the group that is enhancing the group portfolio like Doubletree hotels, embassy suites,
Hilton garden inn and many more. Moreover, other strategic alliance as if vacation ownership
business has been able the Hilton hotel group that is through Hilton conference centers to serve
the conference industry (thepalladiumgroup, 2019).
Strategic implementation and Importance of leadership and
entrepreneurship
Considering the founder of Hilton hotel group, Conrad Hilton is referring as the Innkeeper of the
globe was a visionary leader. A visionary leader is the one who provides direction to the

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company and the values of the individual are the key element to conduct business and grow the
business to a large extent. Conrad has been able to expand the business to such a high level
through his efficient vision and ability to lead to the group. The leadership and entrepreneurial
skills of Conrad have made a hotel to grow to more than 500 hotels around the globe. Through
this it can be reflected the impact of efficient leadership through the success level of an
organization (3.hilton, 2019).
Another form of leadership skills at Hilton hotel group were Christopher J. Nassetta; CEO and
president of Hilton hotel who has been recognized and awarded as the CEO of the year in 2014
for his motivational leadership style and rigorous approach by Washington business journal.
Another effective approach of leadership was hands on approach (chiefoutsiders, 2018). For
instance, immersion initiative has been the success factor for the Hilton hotel. This initiative was
responsible for corporate managers to spend three days at the front office to know the customers
directly (hilton, 2019).
Therefore, it can be said that the leadership style and leadership skills are responsible for key
decision making in an organization and effective implementation of the strategies.
Organizational structure, controls and corporate governance
The hierarchical organization structure of hotel Hilton has helped the organization to control the
function and corporate governance of the company. The business and divisional has divided into
ownership division that includes more than 146 hotels. Moreover, the franchise and management
division includes 4419 hotels. The third division includes the timeshare division that includes 45
properties (ir.hilton, 2019).
Recommendation
After analyzing the strategies of Hilton hotel, some of the recommendations to the hotel includes
 Price differentiation – The Company has been able to target only the high-income group,
which are the only limitation found for the Hilton group. The company has premium
pricing strategies that lack the middle-income group. The recommended strategy of the

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company would be initiating another brand name of the hotel to provide a bit budget
friendly to target middle-income group as well (Chu & Liu, 2017).
 Sales promotion activities – The Company may include sales promotion for attracting
major customer from the middle-income group as well. This may include providing the
discounting prices for the hotel for a specific unseasonal time where the sales of the
services are very low for that particular region. However, the effective prices may be
attractive to the middle-income group customers and make them visits the place in that
season (Jaworski, 2018).
 Technological updating – It has been observed that the technology is changing at the high
rate, which reflects that Hilton hotel must be looking for technological innovation rapidly
and continuously updating the technology to provide globalized experience to the
customers visiting hotel every time.
 Localization – The company must provide the heritage feeling of the place where the
hotel is been situated, especially in the hotels located at a vacation destination. This could
be providing a separate area for the guest to enjoy and feel the heritage and localization
of the nation they are visiting. This would also be accomplishing the mission of the
company (Schlegelmilch, 2016).

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Conclusion
Hilton hotel is one of the global leaders in the hospitality industry considering the innovation as
the key to enhance the customer experience at Hilton hotel and resort. A key strategy is the
global mind of the hotel with the integration of local heart. The threat of new entrant for Hilton
hotel is quite low; the threat of substitutes for hotel Hilton is medium. Bargaining power of
suppliers is low in nature. The key competitors of the Hilton hotel group are Shangri la hotel, and
Radisson hotel group.
The key corporate level strategy for the Hilton hotel group is “aggressive growth strategy.” The
key business level strategies of Hilton hotel are service differentiation, international expansion,
function level strategy, distribution strategy, employee retention, and target market. Competitive
advantage and sustainability of Hilton hotel include digital hospitality, guest privacy and
experience, and personalization. Considering the founder of Hilton hotel group, Conrad Hilton is
referring as the innkeeper of the globe was a visionary leader. A visionary leader is the one who
provides direction to the company and the values of the individual are the key element to conduct
business and grow the business to a large extent. The hierarchical organization structure of hotel
Hilton has helped the organization to control the function and corporate governance of the
company.

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