Evaluation of Hilton's Partnership with Country Garden Hotels in China

This report evaluates Hilton's strategic decision to partner with Country Garden Hotels in China. It begins with an executive summary and introduction, outlining the partnership's objectives. The core of the report involves a strategic analysis, including a SWOT analysis to identify strengths (e.g., Hilton's expansion in China), weaknesses (e.g., cultural differences), opportunities (e.g., resort business), and threats (e.g., economic downturn). Porter's Five Forces are applied to assess the industry's competitive landscape. The report also examines other critical issues, such as leadership and organizational culture clashes between the two companies. The report recommends a common program that integrates both cultures and a focus on building brand image before further expansion. The conclusion summarizes the analysis and reinforces the recommendations for sustainable growth, supported by relevant references.

BUSINESS DECISION
MAKING
FOR
MANAGEMENT

1
Executive Summary
This report will highlight the partnership between the Hilton and Country Garden. It was
found that both the company has enhanced their strength due to this partnership. This
decision’s strength lies in the fact that it has given Hilton’s expansion a boost in China. Its
weakness is that both the companies have different organisational culture. They have
opportunities in the business of resorts. They are facing threats related to poor world’s
economic health. Porter’s five forces show that industry’s health is good but the threat of
competition is very high. It is recommended in the last section that they must design a
common minimum program that includes each other culture.

2
Content
s
Introduction...........................................................................................................................................3
About the partnership............................................................................................................................3
Strategic analysis of the decision...........................................................................................................3
SWOT analysis..................................................................................................................................3
Porter’s five forces............................................................................................................................4
Other issues.......................................................................................................................................5
Recommendation...................................................................................................................................5
Conclusion.............................................................................................................................................6
References.............................................................................................................................................7

3
Introduction
In today’s time, in order to gain competitive advantage over the rivals, hotels like Hilton
makes partnerships with different companies in different parts of the world. This enhances
their potential to face challenges that confronts their business model. In any partnership there
are several challenges and it is crucial that effective evaluation of the decision making
process is being done so as to understand the challenges that they might face while being
together (Shen and Zheng, 2010). An evaluation is also necessary for understanding the
changes that is required in his partnership. This report will analyse the decision of Hilton
hotel to partner with Country garden hotel in China with the help of the strategic tools.
About the partnership
Hilton partnered with Chinese property developer Country Garden Hotel Group for managing
many of the country garden hotel properties mainly under the Double Tree by Hilton and
Hilton Garden Inn brands. I the beginning Country Garden’s six hotels have either started
operating as the Hilton-branded properties or was added to the pipeline of the hotels in the
group (Ciston, 2018). Through this deal some of the new hotels that they opened because of
the deal are the DoubleTree by Hilton Guangzhou Zengcheng, DoubleTree by Hilton Hainan
Lingshui and the Hilton Zhenzhou Xinyang. In collaboration this group started the Hilton
Foshan and Hilton Wuhan Optics Valley in the country.
Strategic analysis of the decision
SWOT analysis
For analysing the decision making of the group the strategic tool that can be beneficial for the
company is SWOT analysis.
Strengths
 This fastened the pace Hilton hotel’s expansion in China. It can be understood in
terms of the fact that there are around 470 hotels are operating in China under the
brand name of Hilton and approx. 226 hotels that is under the construction (Hilton,
2018).

4
 This partnership helped Hilton in understanding the Chinese culture of hospitality
which could have been a difficult task for the Hilton as country garden provided their
experience and knowledge about the market.
 This partnership provided new resources and staffing that helps them in improving the
quality of their operations.
Weaknesses
 Hilton does not have experience of running such a large numbers of business units in
any other country under partnership.
 Since the organisation culture between the two companies is highly different hence
there is higher chance of lack of coordination (Gu, Ryan and Yu, 2012).
Opportunities
 They have opportunities to open more numbers of resorts and the tourism in China is
expected to increase at much faster rate (Guillet, Zhang and Gao, 2011).
 They also have opportunities in the south China region where many new cities are
going to come up.
Threats
 The decreasing health of economy in many parts of the world is showing the decline
in the number of foreign visitors.
 The trade war between U.S. and China will be going to have impact on the operations
of the group especially in terms of stakeholder management (Investing.com, 2019).
Porter’s five forces
In order to understand the external impact from the industry, the strategic tool that can be
utilised is porter’s five forces.
 Bargaining power of suppliers: There are large numbers of suppliers available in
China and at the same time Hilton also have international suppliers that are known for
their quality hence the overall bargaining power of the suppliers is on the lower side.
 Bargaining power of customers: There are large numbers of hospitality options
available with the company and hence the overall bargaining power of the consumers
is on the higher side as they have larger numbers of options to select from. People

5
also want to get treated according to the Chinese culture hence this decision will pay
off or not is a question mark.
 Threat of competition: With the competitors like Vienna hotels, Shangri-la hotels and
resorts, Jinling hotels and resort corp. the competition in the Chinese hospitality
industry has gone to cut throat level. This has enhanced the threat of competition to
much higher levels (Sito, 2015).
 Threat of new entrants: Matching the standards of Hilton require huge capital
investment but in the environment where political decisions are supporting the
tourism industry there is quite larger chance that more numbers of hotel groups are
coming to this nation hence making the threat of new entrant to be on the higher side.
 Threat of substitution: There are many substitute services available in the Chinese
market and these substitute products are available at lower cost. In the time of
economic slowdown in different parts of the world this decision of partnership can
face higher threat of substitution.
Other issues
Among the several issues that this partnership can face some of the issues that confronts this
partnership are leadership and organisational culture. Since the management and the
operational methodology of both the firms are different hence it is quite obvious that issues
related to the leadership will arise. This will have impact on the decisions to follow as the
leadership of both the firms might not agree upon the same cause (Huang, et al. 2012). On the
other hand there is difference in the organisational culture which will also have impact on the
decision making to follow and at the same time can act as a barrier in the operations. For
instance promoting team culture is the priority of the Hilton while the Country garden focuses
on individual performances. Apart from this both organisations working style is different
hence in the long term they have problems in working according to each other’s demands.
Country garden also do not have so much experience in the hospitality as that of Hilton hence
the chances of conflict might arise in the long term.
All these factors such that in spite of the many challenges that might confront the partnership
between both the companies it is expected that the partnership will pay off.

6
Recommendation
After evaluating the decision making related business partnership it can be recommended that
both the firms make a common minimum programme where Chinese culture and hospitality
needs of the Chinese market needs to be put at the centre. This is essential to avoid any
conflict in the future and also to ensure that Chinese people will enjoy the standards of Hilton
in the Chinese environment. I think the decision of opening such a large numbers of hotels at
once is a poor decision as the business environment is changing and it is going to have impact
on the tourism and leisure activities within China (Huimin and Ryan, 2011). It is
recommended that Hilton now does not focus on opening new hotels and should concentrate
on building the image within the Chinese market and once they are able to gain control of the
market, they should concentrate on expansion more into the emerging cities. This will ensure
sustainable growth of the company.
Conclusion
From the above based report, it can be concluded that Hilton hotel’s decision to make
partnership with Country garden in China has given them with enough strength to make fast
expansion within China. Since the cultural background of both the companies are different
and there is change in the business environment in terms of economic and political condition
of the world hence this decision might face different challenges. For this it is recommended
that the company makes a common minimum program and a new leadership structure that
can govern the partnership so that they can remain with each other for the long term without
any significant conflicts.

7
References
Ciston, 2018. Country Garden Hotels Group and Hilton In Strategic Partnership. [online]
available at: https://www.prnewswire.com/news-releases/country-garden-hotels-group-and-
hilton-in-strategic-partnership-300658738.html. [Accessed on 12th July 2019]
Gu, H., Ryan, C. and Yu, L., 2012. The changing structure of the Chinese hotel industry:
1980–2012. Tourism Management Perspectives, 4, pp.56-63.
Guillet, B.D., Zhang, H.Q. and Gao, B.W., 2011. Interpreting the mind of multinational hotel
investors: Future trends and implications in China. International Journal of Hospitality
Management, 30(2), pp.222-232.
Hilton, 2018. Hilton and Country Garden Announce Strategic Partnership. [online] available
at: https://newsroom.hilton.com/corporate/news/hilton-and-country-garden-announce-
strategic-partnership. [Accessed on 12th July 2019]
Huang, Y., Mesak, H.I., Hsu, M.K. and Qu, H., 2012. Dynamic efficiency assessment of the
Chinese hotel industry. Journal of Business Research, 65(1), pp.59-67.
Huimin, G. and Ryan, C., 2011. Ethics and corporate social responsibility–An analysis of the
views of Chinese hotel managers. International Journal of Hospitality Management, 30(4),
pp.875-885.
Investing.com, 2019. Hilton (HLT) Partners With Country Garden To Expand In China.
[online] available at: https://www.investing.com/analysis/hilton-hlt-partners-with-country-
garden-to-expand-in-china-200321956. [Accessed on 12th July 2019]
Shen, H. and Zheng, L., 2010. Environmental management and sustainable development in
the hotel industry: a case study from China. International journal of environment and
sustainable development, 9(1), p.194.
Sito, P. 2015. International Hotels expand in China to build up their brand. [online] available
at: https://www.scmp.com/business/companies/article/1889249/international-hotels-expand-
china-build-their-brand. [Accessed on 12th July 2019]