Strategic Planning for the Hospitality Industry: Hilton Hotel Analysis

This report provides a comprehensive analysis of strategic planning within the hospitality industry, focusing on the case of Hilton Hotel. It begins by exploring various strategic options available to Hilton, including franchising, management contracts, joint ventures, and mergers and acquisitions, evaluating their potential benefits and drawbacks. The report then delves into the factors that affect strategy implementation, such as leadership, structural design, information and control systems, and human resources, examining how each element can either facilitate or hinder the successful execution of strategic plans. Finally, the report analyzes and evaluates different performance metrics, such as the balanced scorecard, used by Hilton to assess its operations, identify areas for improvement, and make informed decisions to achieve its business goals. Overall, the report offers valuable insights into the complexities of strategic planning within the hospitality sector and provides a practical framework for understanding and addressing the challenges faced by global hotel chains like Hilton.

Strategic Planning for the
Hospitality Industry

Table of Contents
INTRODUCTION...........................................................................................................................3
BODY..............................................................................................................................................3
1. Strategic Options for Hilton Hotel..........................................................................................3
2. Analysis of factors that affect strategy implementation of Hilton Hotel................................5
3. Analysis and evaluation of different performance metrics for Hilton Hotel..........................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic planning refers to methods used to creates different strategies for an
organisation, so that they are able to utilise their resources in an effective manner. Management
comes together to ascertain visions and create goals that have to be achieved (Phillips and
Moutinho, 2014). They make steps that have to be followed by the organisation's employees, so
that they can create proper strategies. They are implemented in a systematic manner, which helps
organisation in working effectively and efficiently. Hilton Hotel is a famous hotel company that
operates globally within the hospitality industry. It was founded in 1919 and has been offering
many services to customers in different parts of the world. There are around 500 hotels and
resorts that are operated by them. Their management has to perform certain activities, so that
they are able to create strategies through proper planning. This assignment will study the
different types of strategic options that Hilton Hotel can use and critical analysis of different
factors that can affect implementation of created strategies will be done. It will also analyse
various performance metrics of Hilton Hotel.
BODY
1. Strategic Options for Hilton Hotel
Strategic planning at Hilton Hotel is considered to be a difficult task due to analysis of
various factors (Strategic Planning, 2018). They operate in different countries and management
has to ensure that they pick best strategic option for the organisation.
Franchising
Franchising refers to the act of expanding a business to different countries by providing a
license to the individual that is interested in purchasing and operating business. This strategic
option is commonly used in the hospitality industry and has proved to be very successful. Hilton
Hotel has used this strategy for the purpose of growing their organisation (Lopes,2016).
Franchise has helped this organisation to set up business in more countries. There are about 70%
rooms of Hilton Hotel that have been franchised to operators and companies. This allows hotels
to have the freedom of running operations and they do not have to provide payments for
maintenance and other overhead costs. Hilton Hotel has strict rules and policies when they
provides licenses to other businesses (Sehitoglu, Ross and Köseoglu, 2017). There are regular
inspections done to ensure that franchisee are properly performing business operations.

Franchises help in increasing the country's economic scale as well as Hilton Hotel's brand name.
Systematic research on market is done before handing over their company's operations. They
analyse competition and certain strategies that can be used to overcome it (Bertozzi, Ali and Gul,
2017). Overall, franchising has been effective for Hilton Hotel and they regularly adopt this
strategic option for their business.
There are some other famous strategic options that can be used by Hilton Hotel, if they
feel like their current strategies are not helping them in a success manner. These include the
following:
Management Contracts
These are arrangements done by certain organisations within the hospitality industry, in
which managers are given the responsibility to manage daily operations and are provided with
compensation. These contracts are made for the purpose of running business in different parts of
the world, without having to manage all properties independently (Sun and Lee, 2018). Owners
cannot look after many hotels that they have established and they require a person that has the
skills and competence to efficiently operate business activities. This strategic option can be an
effective one, if Hilton Hotel prefers to choose it, as the main management will be able to divide
operations and focus on how they can all work together, so that profits are maximised (Claveria,
Monte and Torra, 2015). However, these managers can leave their jobs without any notice and
this can cause many issues for the organisation.
Joint Ventures
Joint venture is another strategic option which includes investments of 2 companies that
come together and perform operational activities. This means that they share ownership, losses
and profits that arise within the organisation. They have to mutually makes decisions that can
affect the organisation. There are however, many risks present in joint ventures as conflicts can
arise leading to may disputes between the owners (Falk, 2016). Hilton Hotel can opt for this
strategic option, of they feel that it can help them in gaining success. With investments from
various owners, they will be able to grow and expand in an efficient manner. This is only
suitable for those organisations that have low funds and require more people to participate in the
business (Sehitoglu, Ross and Köseoglu, 2017). When and if Hilton Hotel feels that they
shortage of financial resources, they can choose this strategic option.
Mergers and Acquisitions

Mergers is a process in which owners of different organisations come together to become
a single company, while acquisitions is done when one enterprise purchases the other and gains
full ownership. This is done when a company's owner feels that they no longer want to manage
their business and are ready to hand it over to someone else (Strobl and Kronenberg, 2016). This
generally happens in the hospitality sector, when shareholders do not want to continue operations
and there merge with another organisation, so that they can continue to serve customers. They
already have established themselves and simply shutting down is not a good option (Harrington
and et.al., 2014). Hilton Hotel can use this strategy to acquire a different organisation in which
they see potential or can gain the opportunity to merge with another company, so that they are
able to expand and grow.
2. Analysis of factors that affect strategy implementation of Hilton Hotel
Hilton hotel has been successfully operating their business in the hospitality industry for
many years but there are some factors that can impact them while implementing certain
strategies that management has created (Claveria, Monte and Torra, 2015). It is important to
analyse such factors, as it will enable them to achieve goals and objectives.
Leadership
Hilton Hotel has a management team that trains their leaders in such a way that they are
able to guide and teach employees to effectively achieve organisational goals. It is important for
leaders to meet and discuss strategical plans with managers, so that they can understand their
roles and responsibilities (Gannon, Roper and Doherty, 2015). If leadership of an organisation is
not proper, many problems can arise in the future. There are certain policies and programs that
only leaders can understand and identify the types of strategies required for achieving goals
(Harrington and et.al., 2014). Hospitality industry requires capable leadership, as employees
need regular guidance to work in an efficient manner. Leaders also monitor performance to
ascertain the work done, so that they can make changes in decisions and implement new ones.
They have to communicate with employees and managers, which enables them prioritise
objectives. Therefore, a good leadership system within an organisation can positively affect
strategies that are to be implemented. Strategic HRM of Hilton is a group of business and its
main aim is to ensure that individual needs are easily met. Thus, because service quality is
central to this, a policy of human resource initiative called “Esprit” has been developed that leads
in embracing the key principles of employee recognition, respect and reward.

Structural design
Structural design refers to the structure of the organisation in which different departments
are made and tasks are delegated accordingly, so that goals can be achieved. This helps
companies in effectively dividing areas and ensuring that there is flexibility among each
department (Sehitoglu, Ross and Köseoglu, 2017). Hilton hotel has a formal organisational
design and there are many departments within the organisation. They have created individual
units in which managers and leaders are present. This includes the hotel line, where work
regarding to bookings, room services and housekeeping are done. The restaurant department
ensures that there is a systematic method of getting tasks done regarding to food, tables and other
such services (Claveria, Monte and Torra, 2015). The structural design can have an impact on
Hilton Hotel's strategies as their implementation can only be successful when a proper structural
design is created and followed. An improper and ineffective organisational structure. Hotel
Hilton follows hierarchical structure because it has massive size of business that mainly
comprises 13 brands serving 140 million guests in 2015 alone. This structure must be effective
and designed properly because ineffectivity can cause many issues within the organisation and
lead to decrease in profits.
Information and control systems
Information systems refers to a method that is used to evaluate performances of
employees and resources that are used in an organisation. This program helps in monitoring and
determining how effectively and efficiently work is done. Hilton Hotel has adopted proper
strategies that are used for evaluation of management and this has helped them in continuously
making improvements in the organisation (Evans, 2015). While control of information refers to
procedures and policies that are adopted to ensure that data within the company is safe and
properly utilised. It is important to keep data and information secure, so that there are minimum
breaches. Therefore, Hilton Hotel can get severely affected if they are unable to create proper
strategies and implement them (Sun and Lee, 2018). There are many issues that can arise due to
inadequate strategies and this can lead to lack of achievement of goals. Hilton hotel develops
OnQ Property Management System (PMS) that features room key coding, employee/staff
scheduling and management, wake-up call scheduling, property ownership and rental
information, work order tracking, maintenance management, and build portals to communicate
with outside staff and ownership partners.

Human resources
Human resources are the individuals that are present within an organisation that work
towards achieving their goals. They are trained and skilled employees that are responsible for
getting work done in an effective and efficient manner. Hilton Hotel has many human resources
that they have recruited and selected competent individuals so that they all come together to
optimally utilise available resources and bring out the best results (Greiner and et.al., 2014.).
Human resources are an integral part of any organisation and they can impact implementation of
certain strategies created by management. Employees may not always be in favour of new
policies and strategies that are introduced and if they do not accept these plans, it can cause
decrease in profits and overall revenues of the company (Claveria, Monte and Torra, 2015).
Therefore, it is important to consult human resources, so that the organisation can unanimously
make decisions that will be beneficial for themselves as well as their employees.
3. Analysis and evaluation of different performance metrics for Hilton Hotel
Hilton Hotel needs to analyse and evaluate their management and organisation
performance so that they are able to ascertain how strategies can be made and implemented,
along with ways to make improvements (Gannon, Roper and Doherty, 2015). Management will
be able to make better decisions and opt different methods through which they can achieve goals.
Given below are techniques that can be used to conduct an analysis and evaluate performance at
Hilton Hotel.
The balance scorecard
Hilton Hotel regularly uses this method of evaluation by analysing different areas such as
finance, customer, learning, growth and business process. They are able to identify areas of
weaknesses, so that provisions can be made for improving their business functions (Phillips and
Moutinho, 2014). Management uses this scorecard to collect data by calculating revenues of
rooms and restaurants. They monitor this information and ascertain how much profits they have
generated. They can also evaluate customer satisfaction by conducting surveys with the use of
balance scorecard. This will help them in understanding what measures they have to adopt to
ensure that they succeed and gain even more customers in the future (Gannon, Roper and
Doherty, 2015). It will also aid Hilton Hotel in increasing their operational efficiency and
effectiveness as well as stay ahead of the competition.

Hospitality industry has to look out for maintenance costs, quality and other
contingencies that may arise (Bertozzi, Ali and Gul, 2017). They can have a huge impact in the
organisation and cause losses if not taken care of. Balance scorecard can help Hilton Hotel is
evaluating quality of their hotel rooms and restaurants, so that they can create proper strategies
that can be implemented by management. It will help them to maintain their properties and
ascertain resources that are needed, which can significantly help them in achieving
organisational goals (Chan and Hsu, 2016). Hilton has to maintain the balance between four
critically important perspectives in their company that includes finance, customers, internal
process and also people. They must look after all this factors that affects the growth of a
company to a larger extent. Finally, this method of performance metrics can analyse learning
and growth of employees, so that management can make decisions on the type of changes that
are needed to ensure that workers perform tasks in an effective and efficient manner
Critical success factors
Critical success factors is considered to be an element, that is required in organisations as
it helps in accomplishing targets and goals. This is a measurement technique that is used multiple
times within the hospitality industry as it helps in effectively performing tasks and earning good
revenues. It consists of different activities and procedures that are done, so that effective
decisions can be made (Claveria, Monte and Torra, 2015). It also helps in creating high quality
services for customers, which will allow organisations to attain success and stay ahead even in
tough competitions. Hilton Hotel can adopt this method of performance metrics, as it can help
them in understanding what techniques will be most suitable for creating and implementing
strategies. This can significantly help them in expanding and growing their business as well.
They will be able to maintain flexibility while managing work and attending to customers, which
will lead to achievement of organisational goals (Strobl and Kronenberg, 2016). It also provides
them a global outlook of how they can compete with other famous hotels and what strategies
they can adopt so that maximisation of profits can be done. This factors will later helps in
achieving high brand name and image and also location will be proved perfect due to this. The
cited company will also have to manage the quality as per the requirements of customers. This
will later leads in attracting large number of customers. Hilton also has to maintain their nature
of flexibility to increase the customer loyal base.
Key performance indicators

Key performance indicators is a method of measuring performance in a numerical
manner, to ascertain whether or not, organisational goals are being achieved (Chan and Hsu,
2016). Companies will have to understand their goals and missions, customers and operations,
so that they can create a standard through which evaluation can be done. Once they are aware
about the organisational objectives, they can collect data and analyse them so that an outcome
can be achieved (12 Essential KPIs for the Hospitality Industry, 2018). This will help them to
manage financial, employees performance and customer satisfaction within the organisation and
use different methods through which goals can be met with. Hilton Hotel can use this method, so
that they can enhance their overall performance in every department. They must also monitor
and benchmark performance of different departments in hotel. Average room rate measure the
average rate of the room available. Further, revenue per available room is a classic and also
regarded as one that has the most important financial calculation for any hotel to see how much
revenue they have made within a certain period of time.
CONCLUSION
This assignment can conclude that strategical planning is an integral part of any
organisation, especially in the hospitality industry. Hilton Hotel is known for its exceptional
services and properties all over the world. It is important for them to analyse certain strategic
option so that they can choose best alternatives for ensuring success. They have used franchising
as a method through which they can grow and expand. There are other ways, such as
management contracts, joint ventures, mergers and acquisitions, which can be used by Hilton
Hotel, if they want to select more effective options for growth and development. This
organisation can be impacted by different factors, when management creates certain strategies.
These include leadership, structural design, information and control systems as well as human
resources.
Hilton Hotel can use different methods through which they can measure their
organisation's performance and make necessary improvements. These include balance scorecard,
that is most commonly used in the hospitality industry. It allows management to assess different
aspects by gathering required information through the help of surveys that are conducted on a
regular basis. They can also use key performance indicators to determine their areas of
weaknesses and make required improvements, so that goals can be effectively achieved. Critical

success factors can also help Hilton Hotel in evaluating overall organisational performance and
make proper decisions, so that they can continue to succeed in this industry.

REFERENCES
Books and Journals
Bertozzi, F., Ali, C.M. and Gul, F.A., 2017. Porter’s five generic strategies; A case study from
the hospitality industry. International Journal For Research In Mechanical & Civil
Engineering (ISSN: 2208-2727). 3(2). pp.09-23.
Chan, E.S. and Hsu, C.H., 2016. Environmental management research in
hospitality. International Journal of Contemporary Hospitality Management. 28(5).
pp.886-923.
Claveria, O., Monte, E. and Torra, S., 2015. A new forecasting approach for the hospitality
industry. International Journal of Contemporary Hospitality Management. 27(7).
pp.1520-1538.
Evans, N., 2015. Strategic management for tourism, hospitality and events. Routledge.
Falk, M., 2016. A gravity model of foreign direct investment in the hospitality
industry. Tourism Management. 55. pp.225-237.
Gannon, J.M., Roper, A. and Doherty, L., 2015. Strategic human resource management:
Insights from the international hotel industry. International Journal of Hospitality
Management. 47. pp.65-75.
Greiner, R. and etla.., 2014. Scenario modelling to support industry strategic planning and
decision making. Environmental Modelling & Software. 55. pp.120-131.
J. Harrington, R. and et.al., 2014. Strategic management research in hospitality and tourism:
past, present and future. International Journal of Contemporary Hospitality
Management. 26(5). pp.778-808.
Lopes, M., 2016. The hospitality industry (Doctoral dissertation).
Phillips, P. and Moutinho, L., 2014. Critical review of strategic planning research in hospitality
and tourism. Annals of Tourism Research. 48. pp.96-120.
Sehitoglu, Y., Ross, G. and Köseoglu, M.A., 2017. Business ethics research in the hospitality
industry: topics, methods and trends. International Journal of Bibliometrics in Business
and Management. 1(1). pp.80-96.
Strobl, A. and Kronenberg, C., 2016. Entrepreneurial networks across the business life cycle:
the case of Alpine hospitality entrepreneurs. International Journal of Contemporary
Hospitality Management. 28(6). pp.1177-1203.

Sun, K.A. and Lee, S., 2018. Effects of franchising on industry competition: The moderating
role of the hospitality industry. International Journal of Hospitality Management. 68.
pp.80-88.
Online
12 Essential KPIs for the Hospitality Industry. 2018. [Online]. Available through:
<https://www.verdant.co/blog/12-essential-kpis-hospitality-industry/>
Strategic Planning. 2018. [Online]. Available through:
<https://searchcio.techtarget.com/definition/strategic-planning>