Analysis of Financial Performance Between Hilton and Marriott Hotels

This report undertakes a comprehensive financial analysis comparing the performance of Hilton Hotel and Marriott International. The study begins with an acknowledgement and a summary of the financial analysis, highlighting the importance of continuous financial assessment for sustained market growth. The report delves into the competitive landscape of the hotel industry, particularly focusing on Hilton and Marriott, which are global brands with significant presence. It examines the impact of the global liquidity and housing crisis on the sector and addresses the strategies employed by Marriott, including expansion plans and cost reduction measures. The report includes an analysis of the financial statements of both companies from 2017-2019, including income statements, balance sheets, and cash flow statements. The methodology includes a 5 Forces analysis to assess the competitive environment and a value chain analysis of Hilton's primary activities. The literature review covers key accounting principles and concepts like the business entity concept and going concern concept. The report evaluates the business models of both hotels and critically assesses their financial performance, including their current ratios and liabilities. The objective is to analyze the competitive environment, primary activities, business models, and financial performance of Hilton and Marriott from 2017 to 2019.

Accounting & Finance

Acknowledgement
I would like to express my special thanks of gratitude to my teacher “ “for their able
guidance and support in completing my Dissertation.
I would also like to extend my gratitude to the Dean Ma’am/Sir “ ” for providing me with all
the facility that was required.
DATE:

SUMMARY
Financial analysis includes utilising financial data in order to assess the performance of
organisation as well as make recommendations regarding the way it can enhance going forward.
Analysing financial position and performance of company on continuous basis is very necessary
today in order to grow and sustain in market for long term. Hilton Hotel is one of the leading full
service hotel and resort and is a global brand which around 584 hotel and resort properties in 94
Nations and territories across six continents. On the other hand, Marriott International, Inc. is a
pioneer in the global real estate industry. With over 3,000 properties in 68 countries and
countless performance donations, they are renowned and renowned as a brand. The global
liquidity and housing crisis has hit the pub and housing sector hard due to the sharp decline in
business and leisure travel. Despite the volatile decline in productivity over consecutive years,
Marriott plans to launch two new brands in 2010, a dual presence in Europe by 2015, and be able
to generate incremental revenues while reducing building-level costs. The attached report
addresses these critical trends. It also deals with the openings that Marriott and Hilton needs to
make extra profits based on their characteristics by expanding their expansion plans in the mid-
range pub share to take advantage of the busiest development speed and using minimal effort,
high improvements to enable stay rates deteriorate and make a constant assessment of economic
conditions as the world gradually emerges from this financial recession. The findings show that
Hotel has maintained its financial position, but it still requires to work on its current ration; as
liabilities are more compared to current assets.

Contents
Acknowledgement...........................................................................................................................2
SUMMARY.....................................................................................................................................3
Contents...........................................................................................................................................4
Title: “To analyse financial position and performance between Hilton Hotel and Marriot Hotel”.6
Chapter 1: INTRODUCTION..........................................................................................................6
1.1 Research Objective...........................................................................................................7
CHAPTER 2 - LITERATURE REVIEW........................................................................................8
Porter’sFive Forces............................................................................................................11
Competition in the Industry..............................................................................................11
Potential of New Entrants Into an Industry.....................................................................11
Power of Suppliers..............................................................................................................12
Power of Customers...........................................................................................................12
Threat of Substitutes..........................................................................................................12
Value Chain Analysis of primary activities of Hilton Hotel...........................................13
To evaluate the business model of Marriott and Hilton hotel........................................15
CHAPTER 3 - Research Methodology..........................................................................................16
CHAPTER 4 - Analysis................................................................................................................19
Financial performance of Hilton & Marriott 2017 -2019...............................................21
REFERENCES..............................................................................................................................24
APPENDIX....................................................................................................................................26
Hilton Worldwide Holdings Financial Statements 2017 – 2019..........................................26

HILTON WORLDWIDE HOLDINGS INC. CONSOLIDATED STATEMENTS OF
OPERATIONS.....................................................................................................................27
Income Statement of Marriot International, 2017 – 2019....................................................28
MARRIOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME
Fiscal Years 2019, 2018, and 2017......................................................................................28

Title: “To analyse financial position and performance between Hilton Hotel
and Marriot Hotel”
Chapter 1: INTRODUCTION
Accounting is defined as the method of reporting of financial transactions relating to a company
The mainly includes the review, examination and disclosure to managers, authorities and
taxation entities about company transactions. The reporting financial reports are a succinct
description of the accounting activities, which indicates the expenses, financial status and
working capital of a business. Finance is a word for matters involving money and wealth
management, development and research (Cockcroft, 2018). It may be categorized loosely into
three categories: public affairs, industrial and personal finance. Public financing covers revenue
schemes, government spending, budgeting practices, strategy and tools for stability, debt
problems, among other financial considerations. Corporate financing includes the administration
of a company's properties, obligations, sales and debts. Personal finance describes all adult or
family financial choices and practices involving budgeting, taxes, mortgage plans, investments
and pension preparation.
The main rationale regarding writing this research to better understand the importance of
finance and accounting for large company like “Hilton and Marriot”. This is because proper
accounting helps to record each and every business transaction within accurate books and
financial statement which further support to make best decision for growth and expansion of
business operation. Accounting plays a critical role in operating a company as it lets you monitor

profits and spending, maintain regulatory enforcement, as well as provide creditors, managers,
and government with detailed financial details that can be used when making an investment
decision (Smith, 2018). Hilton and Marriot financial statements represent results of activities and
also the financial status. That is to say, they help user to understand financially what's going on
with the respective company.
About Hilton and Marriot
Hilton Worldwide Holdings Inc. is a US-based massive company which operates and performs a
large range of hotels & restaurants, previously called Hilton Hotels Corporation. The business is
now headed by Christopher, J. Nassetta, and was established by Conrad Hilton in May 1919.It
has 18 labels in different business units, namely Conrad Hotels & Resorts, Hilton Canopy. The
spin-offs for Park resorts and hotels including Hilton Grand Holidays were concluded in January
2017 (Crookes, 2018). As early as 2018 the firm became a completely autonomous, publicly-
traded corporation (as in the pre-buy-out day, much as in the exact days) following the sale of the
black rock as well as the HNA group. In 2019, nearly 97 % of Hilton-based branded bedrooms
were operated by individual firms or operators. While owning Hilton in 2007–13, the Blackstone
Group pursued the strategy of increasing the availability of Hilton primarily by way of
franchising agreements, even when Hilton was actually operating relatively few new houses.
About Marriott:
Marriott International is an American company that runs and handles a strong inventory of hotel
industry and connected accommodation services. Marriott International, Inc. It was developed by
J. The business is now headed by Willard Marriott, its parent, Bill Marriott, CEO, and Arne

Sorenson, Chairman and chief executive officer. The world's biggest hotel chain is Marriott
International. Marriott International was founded in 1993 when the Marriott Group, Marriott and
Host Marriott Company, was split into two entities. In 1995, Marriott became the world's largest
hotel business to give guests the possibility of booking online through MARSHA (Marriott's
automated pricing structure for hotel accommodations) introduction of the product (Carnegie,
2019).
1.1 Research Objective
1. Analyse the competitive environment by undertaking a 5 Forces analysis of Hilton.
2. Analyse the primary activities of Hilton’s Value Chain.
3. Assess Hilton hotels Business model to see if it is fit for purpose.
4. Critically evaluate the financial performance of Hilton & Marriott 2017 -2019.

CHAPTER 2 - LITERATURE REVIEW
According to Accountants all around the world will rely on some fundamental criteria on
which accounting philosophy and practice is centered becoming together including accounting
standards and values. They are known as a wide collection of standards that are intended to
include simple framing functions for financial reports. The value of these ideas and values
consists in the fact that they will be relevant to the whole Financial accounting cycle because
they influence explicitly the manner the financial results are structured (Ng, 2018). Some of the
main concepts are discussed underneath which is implemented by company in their day to day
functioning:
Business Entity Concept: Under this principle, the company is considered to be independent
and entirely different from its owners (including staff, officials, shareholders and those affiliated
with it). According to this principle, it was proposed that corporate relations would not be
combined with the personal activities of individuals or other related staff members. As such, this
definition helps provide an accurate impression of a commercial entity's financial conditions.
The management was provided by the shareholders and borrowers with the requisite funds.
Management’s role was to appropriately utilize both money and financial statements intended to
decide whether the management conducted this management feature more efficiently. Through
this stewardship role the root of this term can be identified (Stewart, 2018).
Going Concern Concept: That definition means that the company entity requires a continuation
or even the existence of respective company will be maintained or expanded forever, that is, the
usual corporate cycle is to maintain the corporation and not to break or liquidate. In other terms,

an organization is used as a tool available added benefit to the goods or facilities used. The
business' performance or loss is calculated by the discrepancy among its production profit (sale /
services) and its operating cost (Gulin, 2019).
As per the viewpoint of Ball, Li and Shivakumar, (2015), Accounting principles include
all facets of the accounting of a company, including properties, liabilities, profits, expenditure
and representation among shareholders. Including income identification, inventory definition,
depreciation permissible methodologies, what is depreciated, lease designations and unpaid stock
estimation, the accounting principle is broad. Accounting requirements for integrity in
government are expected by the body, with the goal of guarantees that institutions are relying
mostly on the central focus of accountability in determining whether to send outsiders
information. This method of public disclosure is especially essential for public bodies, such as
government and private entities. The laws and regulations and requirements that comprise
commonly agreed financial reporting are selected in the context of the company.
According to Robinson, (2020), Policy regulators set out accounting requirements that
must be followed by all businesses. This is also good for the owner or company owner and also
for consumers or partners, as it guards against theft in businesses. It also helps promote openness
across company transactions which will ultimately contribute to improved sector performance.
Accounting guidelines provided by the FASB and the IASB would help protect a corporation or
business costs related to judicial action instituted against Hilton and Marriot as per the law.
Though there are numerous proposals to address the problem, financial statements disclose
issues across regional boundaries that company managers will not neglect the weaknesses like

reciprocity and restitution. Universal accountings principles are used to minimize variability in
accounting, but the substantive gaps are while monitoring companies and public statements.
To a degree, it will be simpler to implement accounting principles comparison of annual
reporting by various firms in the specific areas as well as different businesses of the same Place.
Nonetheless, variations in this region should be noted institutions, customs and legal structures
are developed from one country to other discrepancies of accounting practices in different
regions. IASB provides an overview of the possible consequences of the upcoming IFRS or big
change. The study should also aim to determine the potential impact of the new IFRS on: The
financial results of those submitting IFRSs, the probable enforcement costs for standard setters,
the costs of research for consumers (such as the costs of collecting data, determining whether the
data have been evaluated and modifying data as part).
The primary aim of financial management is to properly manage the annual accounts of
an entity, popularly known as financial documents, over a particular time. The three major
accounting statements are the revenue statement, the balance sheet and the cash flow analysis.
The annual records of the company have many functions beneficial for internal and external
interested stakeholders. They provide the owners and loan borrowers with valuable details,
which will help to increase investor value. The annual statements are used by executives
primarily to monitor both the company's existing affairs and its potential plans.
As per the perspective of Macve, (2015), the purpose of financial reporting has different
advantage for different related parties to the company such as:
● Managers need Financial Statements to handle the businesses' finances by an evaluation
of their financial success and status and significant decisions.

● Shareholders utilize audited financials to evaluate their investment risk / return in the
business, as well as to make judgments on profit will increase on their review.
● Forward-looking creditors use financial results to determine the feasibility of investing
within company. Future dividends dependent on earnings disclosure in the earnings statement
may be expected by creditors. In fact, from the annual report the costs involved with the
transaction will be measured. For e.g., higher risk can be seen in decreasing earnings.
● Consequently, annual statements establish a framework for future investor's investment
choices.
● Bank organizations (e.g. banks) should use Financial Reports of Hilton and Marriot to
determine if a company will obtain a loan or credit. Credit firms assess a firm's financial stability
and decide the risk of a debt obligation. An appropriate fund position and liquidity will
accompany any choice to loan.
● Providers use financial records to measure a company's credit worthiness and to decide
how to offer trust for products. Suppliers will realize if they are going to be reimbursed. Credit
limits are determined on the basis of the key financial appraisal of consumers.
In order to guarantee the consistent delivery of future products, consumers start utilizing
Financial Statements. It is highly relevant when a company depends on a professional product
manufacturer (About Hilton Hotel CRM. 2020).
Porter’sFive Forces
Porter's five-force model gives the strength to 5 distinct market competitions which decide long-
term competitiveness and competitiveness whenever taken together. Porter’s design had a larger

effect on the market policy than any other hypothesis and the recent work could have significant
impacts on global competitiveness. Collectively, the five factors influence costs, the investment
required for competition, market share, future income, profitability and the scale of business. The
core to an industry’s performance, and therefore the importance to the template, is to examine
the evolving conditions and simultaneous motion between and beyond the five powers (De
Villiers, 2017). The main impact of this model is that the 5 factors of Porter decide the
competitive performance of a company that affects business. The bargaining position of
purchasers and manufacturers, however, influences the willingness of a small business to raise
sales and control costs. Of example, if many vendors make the same commodity available, then
customers make negotiating power across each supplier. When, however, there is only one
manufacturer for a single product, the manufacturer would have the negotiating power of its
clients. Barriers to low entry encourage new business while barriers to high entry prevent it. For
instance, starting another home-cleaning company is easy but it is significantly more
complicated to launch a production plant (O'Brien, 2018). Competition in the market is expected
to be higher as many firms fight for the same consumers, so strong competition contributes to
lower costs so income.
4.2.1 Competition in the Industry
The first of the 5 Forces represents the amount and willingness of the rivals to overtake a product
in the marketplace. The quantity of rivals, along with the amount of comparable goods and
services is that they sell, if anything a company's strength. Suppliers and consumers expect
competition from a supplier because they can deliver a great product or cheaper costs (Bressler,
2018).

4.2.2 Potential of New Entrants Into an Industry
The control of an organization is also influenced by the influence of new industry entrants. The
less efforts and money it takes for a rival to reach the business of a corporation and being a
successful competitor and the effectively the role of an existing company will be undermined
(Kumar, 2018).
4.2.3 Power of Suppliers
The very next element in the analysis of the five powers deals with how quickly suppliers can
push up supply costs. It is decided by the amount of suppliers of a product or service’s main
inputs, how special such components are as well as what it would cost a company to turn to
another manufacturer. The fewer distributors to an industry, therefore more reliance a sector will
have on a manufacturer (McCoy, 2019) (About Hilton Hotel. 2020).
.
Figure 1: Porter’s 5 forces model, 2020

4.2.4 Power of Customers
Each of the five powers is the willingness of consumers to push rates down, or their maximum
power. However, many clients or consumers a company has, how important each client is, even
what it will cost a business to attract more clients or competitors for its product. A bigger and
larger pool of consumers means that every other consumer has the leverage to bargain for
cheaper cost and greater negotiations (Mason, 2019).
4.2.5 Threat of Substitutes
The last of the five powers is based on replacements. Replacing goods or services that may be
used instead of the products or services provided by a business poses a hazard. Companies
manufacturing goods or services that do not have similar alternatives would have the leverage to
lift rates and lock in advantageous terms (Al-Dalabih, 2017)
Merits
One of the benefits of Porter's model has been that it lets the business gage the competitiveness
existing throughout the industry wherein the business operates and if the business produces in the
market wherein competitiveness is weak then it can have market share which leads the company
to earn huge returns.
● Sectors involving large investments are difficult as if the business has made investments
it could not undo and the analyst will recognise certain sectors where the danger of alternatives is
a challenge to new entrants (ter Bogt, 2019)
Whenever the company operates in that where the negotiating power of suppliers and also the
negotiating power of is worse than the corporation has two advantages, since on the other hand

the Hotels can obtain factors of production at affordable prices, because if the providers are
much more they remain competitive with each other.
Demerits
The greatest downside of the porter five forces framework though is that it takes into
consideration above-mentioned variables and it excludes certain variables that influence the
world in which the business works. For example, suppose a company operates in that business
sector where all 5 barriers to entry, product lines are negligible, suppliers have low bargaining
power (Kwilinski, 2019)
Another issue with the Porter 5 Forces System is that no business can suit exactly
throughout the context that you can't assume a particular industry to get all the good points, and
so for the business, whether it goes through porter review to locate the correct industry which
can be seen in this research while comparing 2 Hotels (Cheung, 2018).
Value Chain Analysis of primary activities of Hilton Hotel
According to TARVER (2019) a value chain is a combination of systems a company or
organization uses to make money. In other words, the value chain is made up of various
subsystems used to create a product or service. This includes start-up and shutdown processes.
Porter divides the value chain into five main activities. Then we break it down into 4 activities
that will help you support your core business. It can be said that a value chain is a combination of
systems a company or organization uses to make money. In other words, the value chain is made
up of various subsystems used to create a product or service. This is used to analysis the function
in business and perform task in effective way (Li, 2020). This is related to use above analysis

that there are number of function which can be used in order to analysis value in business firm.
This include number of function which are based on logistics Operations, Outbound logistics,
Marketing and sales and Service. This are related to achieving business function.
To evaluate the business model of Marriott and Hilton hotel
Hilton Worldwide (NYSE: HLT) is indeed a world's leading accommodation group,
containing upwards of 4,660 hotels and share operated, franchised, purchased and leased with
almost 765,000 bedrooms in 102 states and regions. Hilton Abroad was already committed to
continuing its legacy of offering outstanding guest interactions for 96 years. Hilton Hotels &
Resorts, Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Curio
the business segments of 13 globe luxury companies contain best services which provide
customers their actual value of money. An award-winning client referral bonus, Hilton
Honour’s®, is also operated by the company. Representatives of Hilton Honour’s that book
online via preferred Hilton networks have welfare benefits such as preferential rates, flexible
payment Wi-Fi, and also digital facilities currently only available thru the business Hilton
HHonors application, whereby members of HHonors may verify, pick their space, and use a
Digital Key for enter their bedroom (Bolívar, 2018).
The franchiser is Marriott International, Inc. The franchise owner is indeed a hotel and
associated lodging facility manager and franchise owner nationwide. Marriott hotels are resorts
which appeal to locals and tourists with full service. The accommodations span from around 100
to 2,000 guest rooms and suites in number. The hotels offer a number of options for food and
drink, one per or even more cafes and meeting rooms, conference rooms, dining, and banquet
facilities. The franchisor brands appeal to a wide variety of clients, including full-service

premium and top hotels, best in tropical, lengthened hotel rooms, and hotels with select services
(Chik, 2017). The labels of the group are including: Bulgari, The Ritz-Carlton and The Bellagio
Reserve, W, Version, JW Marriott, The Luxury Range, Marriott, Sofitel, Le Méridien,
Renaissance Hotels, Sheraton, Delta Hotel rooms by Marriott, Marriott Executive Apartments,
Marriott Holiday Club, Design Logo Hotels, Loyalty Portfolio, Concept Hotels, Gaylord Hotels,
Courtyard, and Sheraton Four Corners.

CHAPTER 3 - Research Methodology
Research is carried out to boost an individual's awareness and is called scientific approach
of collecting knowledge on a given subject or problem. Thus, to do this, the investigator utilizes
different techniques and approaches that take into account their expertise and understanding.
Methodology of research is one approach which can come to a final decision through the
implementation of this researcher (Çalıyurt, 2019). This is defined as a systemic methodology
that entails ways of doing a study. In turn, the Research method gives researchers guidelines for
validating evidence or creating new concepts.
Qualitative research:
This method concentrates primarily on person-centered and optimistic perspective and can
therefore be shown to be focused on human values, perceptions, behaviours and performance.
This analysis is founded completely and defines the interactions between different factors
i.e. crucial in assessing the qualitative research is regarded as a form of study that is primarily
exploration (Machera, 2017)
Quantitative Survey:
There could be several cases where the gathered evidence and knowledge are in a descriptive
way therefore quantitative analysis is done first to measure the issues which can be interpreted in
graphical form later. That is more comprehensive and well organized compared to qualitative
study. This can involve web polls, face-to-face conferences, discussions over the phone, etc.
Sample group may be tiny, moderate or huge (Hilton Value Chain Analysis, 2016).
.

The quantitative analysis approach has been adopted to undertake this work, since it essentially
consists of different types of standardized questions that can be further translated into numerical
solutions. In addition, it is easier to describe and evaluate the financial performance of both
Hilton and Marriott Hotel.
Research Data
In general, there have been different sorts of main and secondary study capital. Current can be
gathered by interviews, questionnaires, surveys etc. First-hand and credible data acquired not
used by every other investigator (Bryan, 2017). Whereas secondary materials are obtained from
books, magazines, newspapers, the internet, etc. They are used for intelligent study purposes.
Researchers may then use one of these depending on the subject of the study.
Primary Data: Primary data is data which the researcher developed for the first time from direct
efforts and knowledge, primarily to resolve his research issue. It is often recognized as raw
numbers, or first hand. The primary analysis of information is very costly, because the work is
carried out by the institution or department itself, which needs capital such as funding and
personnel. The researchers closely manage and supervise the data gathering (Babich, 2018).
These would be the data obtained from other primary sources, i.e. a medium where the
information is analysed. They are obtained by a researcher or organization for the 1 time with the
help of statistical analysis.
In the context of above research, the primary source of data collection has not been used because
the performance of Hilton and Marriot cannot be collected for the first time as a researcher by

any form of primary method. In addition, it will take much longer time, require more resources
and funds, need skilled workers for collection and sometimes lead to wrong conclusions which
may further lead to misleading decisions (Cai, 2021).
Secondary Data: These were the information gathered from certain secondary sources, i.e. the
origin of the collection of information that are used by another entity and obtained by one
individual. It simply means the primary data was gathered and have been utilised as secondary
data by others. Secondary data means second-hand knowledge that is still being gathered and
documented for a reason by someone other than the individual, not relevant to the present study
problem (Sahut, 2018). It is the freely accessible type of data obtained from diverse sources such
as censuses, official documents, firm's internal records, surveys, journals, journal articles, blogs,
etc.
Pros
This is cheap and avoids some time and cost. Time can be conserve by using this method. This
helps to render primary data analysis more accurate because, through secondary sources, they
were able to determine what the holes and limitations are and what necessary data requires to be
gathered. It allows us to grasp the issue deeper and it offers a framework for analysis of the data
which the researcher collects (Bressler, Beware the mental pitfalls: Confirmation bias in
Accounting, 2018)
Cons

Secondary data often works inside the marketing conditions of study and the subsidiary
authentication process isn't really documented. Data might become obsolete which makes it
difficult to make effective decisions.
In addition to the above research, the data regarding performance of both Hotels have been
collected by reviewing the latest year financial statements (Safriliana, 2018)

CHAPTER 4 - Analysis
As per the above provided literature review, it can be analysed that porter's five force
analysis model help in analysing the competitiveness of industry. It involves 5 factors including
bargaining power of suppliers, bargaining power of buyers, rivalry in industry, threat of
substitute products and threat of new entrants. The analysis of these factors are provided below:
4.1 Porter's five force analysis model
4.1.1 Threat of New Entrants
The hotel industry is characterized through to high proportion of fixed cost and high
capital cost. As the industry is very large and many competitors available in the market, there are
high chances of entry of new entrants in the market. However, in order to enter into the industry,
high investment is required to compete with the leading hotels like Hilton hotel and Marriott
International (Lin, 2019). Thus, it can be said that the threat of new entrants is low. Hilton Hotel
provide innovative products and services to customers which assist it in improving its
performance in the industry. As, the products and services of Hotel are of high quality and it
attracts large number of customers towards it, this results into high revenues which improve its
financial performance in the market (Maffei, 2021).
4.1.2 Bargaining power of buyers
It is the force which depicts the pressure that consumers exert on hotel to get high quality
goods and services at affordable prices. This force impacts the ability of Hilton hotel to attain its
business objectives. Strong power to bargain lowest down the profitability of company and
makes a sector more competitive (Porter’s five forces model. 2020). In the hospitality industry,
there are many competitors exist in the market like Marriott, due to which the bargaining power

of buyers is high. As consumers are often look for best, they want to buy good offerings
available at minimum price. This puts a pressure on Hilton Hotel and its profitability in long
(Reepu, 2019). However, it continuously innovating new products which will not be provided by
other competitors. This assist Hilton in attracting new customers and improving profitability
which in turn improving the financial performance of Hilton hotel in the market and provide it
with competitive advantage over the rivals.
4.1.3 Bargaining power of suppliers
The bargaining power of suppliers of Hilton Hotel is low as it purchases from over 4000
suppliers all over the world and because of lack of uniqueness of services and products supplied,
the power of suppliers is low (Chen, 2018). Apart from this, this power is also low for Marriott
International as there are many suppliers available in the market from which it can get its
products. However, the significance of order volume for the hotel suppliers is paramount as well
as there is no supply switching cost for hotels on most cases. In context of Hilton Hotel, it run its
supplier diversity program which make sure purchasing from and development of socially
diverse suppliers. This administers an additional competitive advantage for socially diverse
suppliers in comparison to other group of suppliers (Hilorme, 2019)
4.1.4 Rivalry among existing firms
The rivalry is fierce for Hilton hotel and resorts as there are many competitors operating in
market including Marriott, Westin, Hyatt Regency, Sheraton, Radisson Blu etc. However,
because of huge investments in various aspects during last few years, Hilton Hotel enjoy growth
in its income as compared to other competitors like Marriott. The net income of the hotel in one
quarter of year 2016 grew by around 106.67%, which is faster than average growth of

competitors because company has unique image in market that become reason to get competitive
advantage in broad manner (Marriott Corporate finance. 2020).
. Thus, it depicts that the financial position and the financial performance of Hilton Hotel
is good in the market and it earn huge profits and revenues which makes it one of the leading
hotel all over the world (Abdullah, 2018)
Figure 2: Income growth differences between Hilton Worldwide and its competitors
4.1.5 Threat to substitute products
Availability of substitute product makes the rivalry environment challenging for all the
players existing in the industry. High threat of substitute depicts that consumers can utilize
alternative products and services in order to mitigate their needs. In context of Hilton Hotel,
direct substitute for staying in it includes individuals staying in homes of relatives and friends
and individuals renting apartments for some time. However, it is time consuming to make these
arrangements and is related to great deal of hassle (Khalimon, 2017). Apart from this, technology
fueled indirect substitution is also facing by hotel industry like video conferencing, since this
kind of communication can eliminate requirement to travel to other place and stay in hotel.

Figure 3: Hilton Porter's Five Forces
The analysis of all the above mentioned five forces in context of Hilton Hotel, strategies can
acquire a full picture of what influence the profitability of hotel in lodging industry (Profitability
of Hilton Hotel. 2019).
. It can also determine game changing trends early and help the hotel to exploit emerging
opportunities (Mustafa, 2018). By having proper understanding of all the five forces, the
manager of Hilton hotel and Marriott Hotel can shape those factors in their favor.
4.2 Value Chain Analysis
Key activities in Michael Porter's value chain are logistics, operations, outbound
logistics, marketing and sales and services (Value chain analysis of Hilton hotel. 2021). The
activities of the five groups are aimed at generating higher revenue by creating value that
exceeds the cost of carrying out these activities (L.R., 2018).
There are five main core activities in value chain of Hilton Hotel which are discussed below:
4.2.1 Primary Activities:

Inbound logistics - It depicts highly sophisticated system which make sure smooth
operations and activities in around 572 hotels and resorts in 85 Nations all around the
world (Habib, 2020). The procurement group of Hilton aggregates buying in National
contracts for its different brands, and allow local providers. The inbound logistics and
supply chain management of Hilton is unique in a manner that it deals directly with
suppliers and then negotiate markups with distributors who handle delivery and
warehousing. This practice of Hilton Hotel is significant source of value for its business
since it allows control of entire supply chain.
Figure 4: Industry Value Chin Analysis
Operations - There are three segments by which Hilton Hotel operate its business
worldwide. These three segments are provided below -

 Ownership segment - It consists of around 146 hotels along with 59,463 rooms that are
leased or owned by Hilton all over the world. Time share segment - It involves 45 properties including 7152 units. It is engaged in in
marketing as well as selling timeshare intervals, providing consumer financing and
operating timeshare membership clubs and timeshare resorts.
 Management and franchise segment - This segment involves around 4419 hotels along
with 691887 rooms which are owned through third parties as well as managed through
Hilton all over the world. The hotel also licenses its franchisees (Hodgson, 2020)
There are four geographical segments among which the operations of Hilton are divided
including America, middle East and Africa, Europe and Asia Pacific. The key sources of value
for business operations of Hilton involves high level of service standard, high level of integration
of information, service personalization and communication technologies into different aspects of
provision of service (Value chain analysis. 2021).
4.2.2 Outbound logistics - It involves the activities needed to deliver final products to
customers. The outbound logistics of Hilton Hotel is related to set of competitive advantages like
high standard service provision, transport services provision to customers who moving out of the
hotel (Hilton Value Chain Analysis, 2016).
4.2.3 Marketing and sales - This is the primary activity or practice of Hilton Hotel which rely
upon application of different elements of marketing communication mix in a unified way. The
hotel employs around 700 sales professionals all over the world and the team is allocated with
task or responsibility of soliciting bookings from leisure and business travelers, conventions and
travel agencies. The Honors program of Hilton adds value to its marketing and sales operations
to greater extent. It encourages customers to visit the hotel again since they get points that lead to

free room nights and perks during stay involving room upgrade and free Wi-Fi. Currently, there
are over 50 million Hilton Honors members all over the world.
4.2.4 Service - This is the last primary activity of value chain of Hilton Hotel. High quality
service is the key factor which provides a hotel with competitive advantage. The customer
service team of Hotel are fluent in over 10 languages and services can be reached through
Twitter and the issues associated with customer travel are addressed by social media team 24/7.
Financial performance of Hilton & Marriott 2017 -2019
As per the financial statement of Hilton & Marriott Hotels, the total assets turnover has
reduced from 0.96 to 0.88 and 0.84 in respective three years and the main reason of such
reduction in under performance of company other operational activity due to which the value of
fixed assets has also decreased. In addition, the equity turnover proportion of Marriott Hotel have
increased from 6.17 (2017), 9.33 in (2018) and 29.83 in (2019) the huge growth in equity of
company is due to more interest of external shareholder to invest in hotel equity so that reliable
and higher results can be gained in financial year. Profitability ratios are really a type of financial
measures which are used across time to measure the ability of a company to produce profits
compared to its sales, operational expenses, balance sheet or stockholders' equity statement using
statistics from a given time period. It mainly demonstrates how quickly an organization produces
shareholder income and interest (Gerrans, 2019). On the other side, the return on equity have
increased in all year such as it was 30.17 in 2017, 64.04 in 2018 and 86.95 in 2019 and the
reason is investment of company in better and reliable investment which make profitable return
in future.

Hilton Hotel has held its leverage rates at about US$ 6.60B over the last year, consisting
of short as well as long-term leverage. HLT reportedly has US$ 570.00 million left in cash
equivalents and short-term deposits at this comfortable level of leverage, ready to inject into the
sector. In comparison, during the same time, HLT generated US$ 924.00 M in operational cash
flow, which results in an operating capital to a debt ratio of 14.00 per cent, suggesting that
HLT’s liabilities is not adequately covered by gross profit. As an option to return on investment,
this ratio may also be a measure of operating performance. In the case of HLT it will produce
0.14x cash out of its debt estate. High amount of HLT debt shows scope for growth. In
comparison, its working capital position of only about a quarter of liabilities implies operational
performance may also be a concern (Merigó, 2017). Beyond this, the poor visibility poses
questions over how new asset allocation strategies are being adequately applied for the big-cap.
From the financial statement, Hilton has expanded its recognized as the largest most
successful hotel brand. It is the largest independent premium pricing firm, the overall value of all
its core brands within in the Hotels 50 list has outpaced Marriott's. Hilton's brand recognition
development (up 17 per cent to US$ 7.4 billion) was primarily supported by high income
increase over the past year, establishing the industry's leading position. While, Marriott
experienced a brand equity decline (down 8 percent to US$ 5.0 billion) as well as its brand
power decreased from AAA- to AA+. Throughout the North American industry, Marriott already
faced many obstacles, from malware allegations to on-going issues with his reward programs. At
the very same period, the cumulative valuation of Marriott brand names inside the rating dropped
by 30 per cent, slowly giving to Hilton's core brands to hold the status among the most profitable
throughout the globe. The brand equity of Hilton in the top 50 rankings is spread throughout six
brands, up from five in 2018, both heavily exploiting this year's powerful Hilton brand identity

and each showing steady growth. Hilton has consistently committed to its aggressive growth plan
and the organization continues to grow expected in the following year with millions of additional
bedrooms and resorts in the system (ter Bogt, Institution situated rationality and agency in
management accounting, 2019).
Many businesses commonly pursue a higher ratio of interest, since this typically shows
the Marriott Hotel does better by producing sales, earnings, and cash flow. The proportions are
most effective when measured against related firms or in conjunction with earlier accounting
cycles. The net profit margin for Hilton hotel has increased from year 2017 (0.53) to 1.574 in
2019, as hotel have started focusing to reduce the operating expenses and increase sales for the
period. However, the proportion is lower than the profitability ratio of Marriott hotel that define
financial performance of Hilton in smaller as compared to Marriott (Kozmenkova, 2017)

CHAPTER 5 – CONCLUSION
As per the above mentioned report, it has been concluded that it is very significant for
organisations to analyse its financial position and financial performance in order to stay ahead in
the market from their competitors. After going through overall discussion it has been concluded
that, for a business firm it is important to analyse their financial position on timely basis as per
the requirement. So that, better outcomes will gain as well as business firm will able to
accomplish their predetermined goals and objectives. Data analysis is the process which help in
examining, resorting, changing and reframing of collected data with the only aim to make
sensible and accurate information which also support to make valuable decision and increasing
the profitability and productivity of company. In the context of determining and analysis the
financial performance and position of Hilton and Marriot the data is collected form the annual
report of recent three years. In the context of both hotels porter 5 forces model is being used in a
way such factors decide the composition of a market and the level of rivalry within the market.
The less lucrative it is the more economic pressures within the market. A company with low
entry barriers or along few buyers and distributors but lots of alternative products and rivals will
be considered highly competitive and therefore not so attractive due to its lower profitability. In
addition to this, companies have to check their financial data on daily basis as per the
requirement which include balance sheet, cash flow as well as Profit and loss account. With the
assistance of this business firm will able to determine inflow and outflow of cash, profit and loss
of company as well as assets and liability.

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APPENDIX
Hilton Worldwide Holdings Financial Statements 2017 – 2019

HILTON WORLDWIDE HOLDINGS INC. CONSOLIDATED STATEMENTS OF
OPERATIONS

Income Statement of Marriot International, 2017 – 2019

MARRIOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME
Fiscal Years 2019, 2018, and 2017