Business Strategy Report: Analysis of Hilton Hotel's Strategic Plan

This report provides a comprehensive analysis of Hilton Hotel's business strategy. It begins with an introduction to hospitality business strategy and then delves into a PESTEL analysis, examining political, economic, social, technological, environmental, and legal factors influencing Hilton's operations. A SWOT analysis is also conducted to assess the company's strengths, weaknesses, opportunities, and threats. Furthermore, the report applies Porter's Five Forces model to evaluate the competitive environment. The main body of the report includes an application of various theories, concepts, and models to interpret and devise a strategic plan for Hilton Hotel. Finally, the report concludes with recommendations and a strategic management plan for the organization, incorporating the findings from the analyses.

Hospitality Business Strategy
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INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
PART A...........................................................................................................................................3
1. PESTEL or SWOT analysis of the organization.....................................................................3
2. Applying competitive environment by using Porter’s Five Forces model..............................7
PART B...........................................................................................................................................9
1. Applying a range of theories, concepts and models, interpret and devise strategic planning
for a selected hospitality organisation.........................................................................................9
2. Recommendations..................................................................................................................10
3. Strategic management plan....................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13
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INTRODUCTION
The Hospitality Business Strategy is defined as the practice taken by management to build
the vision and purpose of an organization that helps in providing competitive (Acuña-Carvajal
And et.al., 2019). It is of the utmost importance for the managers of an organization to employ
and select potential candidates with specialized skills to improve the efficiency of their
workforce in order to complete the target within a specific duration. For the better understanding,
Hilton Hotel & Resort selected which is popularly known as Hilton Hotel.
This research analyzes the effect of macro-environmental influences on hospitality industry
operations. It also explores the internal climate and its operational capacities by applying correct
frameworks. In addition, it covers the competitive forces which affect the organization or
evaluate the range of theories and concepts and develop strategic plan in context of selected
hospitality organization.
MAIN BODY
PART A
1. PESTEL or SWOT analysis of the organization
PESTEL analysis:
PESTEL model includes the gathering and gathering of data on external influences that
have or could have an effect on business. This analysis used by the organisation top identifies
external factors such as political, cultural, social and technical variables that may influence its
effectiveness and activities. Hilton Hotel implements this strategy to evaluate external factors
and make operational strategies accordingly.
Political: In this factor, political stability is essential to have in whatever the industry they
relate, it is a basic requirement for performance. In the hotel sector in particular, the number of
guests, including tourists and business passengers, can be affected by international
considerations in both various ways (Hwang and Kim, 2019). Dangers or threats of acts of crime
are more likely to decrease the number of tourists in London and the United Kingdom with
adverse impacts on Hilton’s success in this specific region. Hilton Hotel is regularly involved in
campaigning in required to be able to control the government forces on the company to a certain
degree. As seen in the chart below, over USD 1.5 million has also been invested by the
organization on lobbying activities in the last four years.
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Economic: The domestic and international circumstance, variables and events impacting
the situation are key factors affecting the business of Hilton Hotels & Resorts. In the United
Kingdom across the 2012 Olympic season, virtually all accommodations were packed and
occupied completely during the entire duration. Even so the situation was wholly separate after
the Olympic Games were over. The Hilton Hotel Group reported revenue of around $9.45 billion
in 2019, up from the previous year's $8.91 billion 2018. The currency rate of the UK against the
other world currencies and rate of inflation in the UK are essential factors that could affect the
achievement of Hilton in the region.
Social: In the UK market, it contains a range of globally established names and chains.
Hilton Hotel is one of the strong brand which has advantages of attracting customers and of
cooperating with other firms and charitable organisations. The short-term market can attract the
aging population of the United Kingdom as well as a growing amount of older person
households. It means, company need to target young generation to maximise their sales but also
encourage the facilities they offer for older population.
Technological: Digital marketing is one of the trending mode of promotion and it is also
beneficial for customers to book rooms and hospitality organizations offers all types of
information regarding Hilton hotels (Hwang and Lee, 2019). It also including recommendations
created by previous clients which are beneficial for potential customers. Social networking
introduces a great way for Hilton hotel to connect with its visitors. Users share their hospitality
experience on internet platforms such as TripAdvisor, facebook and twitter. Unless the Hilton
hotel is active and ready through all these popular websites, it could not only create brand
awareness but it also brings new clients.
Environmental: Change in the climate is one of the major factors which affect the
hospitality organization. In context of Hilton Hotel, because of Iceland's volcanic ash, most of
the flights are delayed and airports are closed. Hotel industries are immediately affected by the
situation. This factor affects the Hilton hotel in terms of profit margin, so managers need to
formulate such strategies which make organization able to face such situations. Due to COVID-
19 situation, entire hotels or resorts of country is locked which cause the huge loss for hospitality
industry.
Legal: It is appropriate for hotels to comply with environmental regulations and legislation
and to reduce the potential impact on the environment of hospitality industry. In addition, in the
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UK there are several Visa restriction rules which affect the visitors to visit UK and these
countries included USA and EU nations. International tourist plays essential role in the growth of
Hilton Hotel’s profitability and demand of their services.
Above discussed PESTEL analysis help the organization to evaluate external factors and
ensure that these will impact positively or negatively. Because it further helps the manager’s
actions that depend on it. Managers of Hilton Hotel try to grab the opportunity to expand their
operations and profit margin.
SWOT Analysis:
It is a strategy formulation method used by the managers of the organization to analyze
their inner strength over weak spot (Ivanov and Webster, 2019). This is achieved by Hilton Hotel
management to reduce the manageable risk of operation and to build resources and prospects for
growth in the global economy.
Strengths: Hilton Hotel is among the best performance monitoring and assessment
frameworks in the hotel industry, making this one of the best hospitality services technologically
possible. Managers and workers prefer it as it is related to pay increases and promotions, training
and development opportunities, etc. It has a reputation for providing a variety of perks to its
temporary and permanent staff, such as the Transportation Program, the Retirement Package, the
reward points program, the Employee Appreciation Program, the Employee Buying Program,
etc. Over the years, a strong brand name has seen the growth of a well-known investment of
hotel brands with multiple awards such as Waldorf Astoria Hotels & Resorts and many more.
About 50 million travelers are part of Hilton’s loyalty subscription scheme spanning 13 brands in
more than 5,000 hotels worldwide.
Weakness: Credit card targeted malware compromised Hilton's cash register and
they had to pay a fine of $ 700,000 (£ 525,000) for misuse of credit card records in 2017. This
indicates the hotel's vulnerability in the battle against virus attacks. Blackstone Group LP, an
investment banking sponsor who purchases discounted shares through a block trade, had already
agreed to sell off all its shareholdings in the Hilton Group, approximately equal to 15 million
shares. That could be good for Blackstone, as they're selling three times what they cost 11 years
ago, but not really beneficial for Hilton. One of the main weaknesses of Hilton Hotels are that
shareholders are putting out their shares and other one is Malwares.
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Opportunities: Collaborations, partnership and joint ventures around the world with
Indian, Chinese and Japanese promise Hilton an interesting reward (Kandampully, Zhang and
Jaakkola, 2018). The New Ad Strategy 'Avoid Searching' for even more direct consumer
bookings is focused on telling consumers that perhaps the lowest rates for Hilton hotels are from
their own pages instead of from Expedia or Booking.com. Hilton has been building double-
branded resorts for 10 years and there are significant opportunities. The new trend includes co-
branding with non-competitors or particular hotel owners.
Threats: Shanghai Hotels, Hyatt Hotels Corporation, Intercontinental Hotel Company,
Marriott International, Wyndham Worldwide Corporation, etc. are the major regional rivals.
Hilton Hotel paid Starwood $ 75 million in cash and another $ 75 million in hotel management
agreements after a case in which Hilton managers were accused of stealing classified information
relating to Starwood’s popular W chain. Many such cases have been going on for many years, an
inconvenience for creditors.
VRIO Model:
This framework plays a very important role in the organization of strategic decision-
making that focuses on the appropriate use of limited resources in order to be competitive with
rivalries.
Resources Valuable Rare Inimitable Organized
Brand Image    
Financial resources    
Technology    
Customer relationship    
Patent    
Valuable: In context of hospitality sector, Hilton Hotel’s manager focus on the resources
which are valuable for the organization such as brand image, financial resources, customer
relation, patent and technology. They formulate strategies through evaluating all the aspects
which helps in providing better competition which maximise the overall efficiency as well as
effectiveness.
Rare: In this aspect, financial resources found to be rate which only possessed by the few
organizations and Hilton is one of them (Mariani And et.al., 2018). In addition, patent is not for
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everyone, it provide the single authority to the Hilton to perform without any interference. They
also provide rare customer services which help in satisfy their guest regarding their services.
Inimitable: In this framework, brand image or financial resources can’t imitable by their
competitors but technology and customer relationship can be. These components can affect the
Hilton hotel, so managers need to focus on that and try not to imitable this as well.
Organized: Managers of Hilton Hotel maintain effective relation with their customers
which helps in generating future opportunities as well as make them loyal customers for the
organization. In addition, effective uses of financial resources are beneficial which helps in
maximising profitability as well as efficiency.
From the VRIO analysis, Hilton Hotel has been recognized that financial resources and
brand image include sustainable competitive advantages. Patent rights are a source of lost
comparative advantages.
2. Applying competitive environment by using Porter’s Five Forces model
Porter Five Forces is frameworks which are used to take competitive advantage through
evaluating existing competition in the market. This approach reflects on how Hilton Hotel can
create a sustainable strategic edge in the housing market. Hilton hotel's managers can not only
utilize Porter Five Forces to establish a competitive role in the hosting market, and can also
pursue profitable prospects in the services sector of world in general.
Threats of new entrants: Lodging new competitors add creativity, innovative ways of just
doing business which put some pressure on Hilton Hotel through reduced pricing approach, cost
reductions which new product ideas for consumers. Hilton Hotel must manage all of these
difficulties and make strong obstacles to safeguard its competitive advantage. Hotels are tackling
this danger by introducing new services (Okumus And et.al., 2019). New services are not just to
introduce new clients but also give old users a choice to use Hilton Hotel's servicers. Maintaining
economies of scale is to reduce the fixed costs of the organization. Creating capability and saving
heavily in research and development. In hospitality sector, there are various large organizations
available which is already well established, so new business are avoid to enter because of huge
competition. Threats of new entrants are low in context of Hilton Hotel.
Bargaining power of suppliers: Suppliers in a leading position which can minimize the
profits that can be received by Hilton Hotel in the marketplace. Effective or powerful suppliers in
the services sector utilize their bargaining power to obtain high rates for their products & raw
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material in this market. The power of suppliers has increased bargaining power which reduces
the overall profitability of the hospitality industry. Organizations need to develop an efficient
supply chain with the multiple suppliers. Commercial attractiveness and growth potential
depends on the company. Some of the principles Hilton should take from Wal-Mart and Nike to
improve third party production.
Bargaining power of Buyers: Buyers have huge negotiation power because they want to
purchase best accessible items by charging the lowest possible price. This has placed pressure on
Hilton's productivity in the long term. The higher the consumer's purchasing power and the
greater their willingness to demand increased discounts and deals. Creating a broad customer
base would help to will the purchasing power of people in 2 directions and provide the company
with an ability to simplify the selling and manufacturing process through introducing new
services. Clients also demand discounts and incentives on existing goods, meaning that while
Hilton hotel wants to produce innovative brands, the purchasing power of purchasers can be
reduced.
Threat of Substitute Products: If service or product serves on the basis of specific
consumer expectations in different ways, the competitiveness of the business suffers a lot. The
threats of substitutes or service is definitely high a way to promote products different from the
current offerings of the industry. Hilton Hotel can address this condition by becoming a service-
oriented corporation instead of just a product oriented. By knowing basic expectations of the
consumer rather than what the customer is buying. In addition, by improving consumer
transaction cost.
Rivalry among Existing Firms: The competition between the current players in the market
is strong, thus pushing down costs and raising the overall competitiveness of the industry. Hilton
Hotel operates in a highly competitive accommodation sector (Peters, Kallmuenzer and Buhalis,
2019). This rivalry has a impact on the general long-term competitiveness of the company.
Managers of Hilton Hotel can address this situation by making a few changes, building a scale so
it can better compete and collaborate with rivals to boost the market size instead of just compete
in small market.
Through evaluating the Porter's five competitive factors, Hilton Hotel strategists will obtain
a full understanding of the effect of the Lodge market on the competitiveness of the company.
They could really define game changing trends early on but can react appropriately quickly to
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take advantage of emerging opportunities. By comprehending the Porter Five Forces in
considerable detail, Hilton hotel's managers can influence these forces to their advantage.
PART B
1. Applying a range of theories, concepts and models, interpret and devise strategic planning for
a selected hospitality organisation
There are many different models and theories that are indicated in the company to improve
the strategic goals and objectives of the organization by improving its competitive strategy to
communicate with rivalries.
Ansoff Model: This framework is also known as the Product-Market Matrix incorporated by
Igor Ansoff (Roma, Panniello and Nigro, 2019). It is also the matrix followed by the managers to
analyze the plan of growth for sustainability in the market. This formula is applied by Hilton
Hotel to identify the independent and dependent risks that need to be calculated and evaluated
successfully in required persuading them into high returns in the future.
Market penetration: This approach explains the goal of management of a company to
maximize profitability by selling their existing services and products on the current market. The
managers of Hilton Hotels further demonstrate the increase in their market share by improving
their assistance and commitment to current customers.
Market development: It is a way for management which depend on expanding their
business to different locations in order to create brand awareness and positional awareness. The
manager's of Hilton Hotels target several market into small groups in order to comply with their
cultural identity, population situations, etc. The whole results in meeting customer needs by
supplying them with a wide range of facilities to fulfil their wishes with a greater satisfaction.
Product Development: It indicates the ability of manager's to develop additional
distinguishable goods or services which really encourage a lot of customers to buy products (Sun
and Lee, 2018). Managers of Hilton Hotel have to done huge investment on research &
development to identify potential opportunity to expand their reach or get growth in the
hospitality market.
Diversification: This is the method by which management are attempting to expand market
share by introducing new services in the new market. It is the most demanding strategy that
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implemented by the managers of the organization for the growth of product line and in
marketplace. The manager's of Hilton Hotel could use this approach to introduce some
transformation by launching a new product with their innovative products that enhance
marketing advantages to survive the international market.
From the ansoff matrix, it described that above Hilton Hotels and Resorts management
prioritize market development as they strive to extend their company at different locations in
order to increase brand visibility and positioning.
2. Recommendations
It has been recommended that, manager’s of Hilton Hotel should review the customer’s
feedback and done appropriate improvement accordingly. In order to maximise their customer
reach, they should focus on other class people as well through reducing their price structure for
them. Also identify the needs of customers in the different markets to expand their operations.
3. Strategic management plan
Basis Explanation
Vision Is to fulfil the world with light and warmth hospitality services and
become the leading organization in this sector.
Mission Is to become first choice of tourist, satisfy their staff members
along with customer satisfaction (Teng, 2018).
Objectives One of the main objectives of Hilton Hotel is to maximise number
of loyal customers and achieve highest profit margin that is 15% in
the next financial year that is 2020.
Marketing Strategy Managers of Hilton Hotel has marketing strategy where they wants
to increase number of customers by offering several facilities
which are as follow:
They focus on positioning the hotel where they offer excellent
services to satisfy their customers.
In the next financial year that is 2021, marketing strategy is to
increase customer base by 10% by using market development
strategy.
To maximise the profit margin up-to 12% in the next financial year
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through focusing of different market to attract more customers.
Tactic Tactics are characterized as the mechanism through which
management of a company create different strategies to accomplish
short-term objectives (Twumasi, 2019). Hilton Hotel managers are
applying a few of these strategies such as:
Create a Global distribution system (GDS) where Hilton Hotels
conduct their commercial operations through with a computerized
distribution system that enables airlines, hotels, travel agents,
rental car, etc.
Online Travel Agencies (OTA) where manager's of Hilton Hotel
should focus on maximising number of customers through the
development of online websites and charging travel agents with
hotel characteristics to allow clients to support them.
Customers Manager’s of Hilton Hotel can classify their potential customers
with the help of STP analysis which are as follow:
Segmentation: Management of Hilton Hotel divide the entire
market into small sections, in order to identify the customer’s need
and desires to fulfil. They target the location near by airports or
tourist places.
Target: Hilton Hotel mostly targets the people who pursue luxury
lifestyle because they charge premium price for that. Basically they
target high class people who can afford these luxury services.
Positioning: They done their product positing through offering
customise facilities, luxury services, effective CRM etc.
CONCLUSION
On the above discussion, it has been observed that hospitality organizations should
formulate effective business strategy to achieve their business goals & objectives. There are
several frameworks which help the managers to formulate strategies and identify the potential
opportunities to mitigate the threats. In addition, with the help of strategic plan business able to
gain several opportunities expand their operations.
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REFERENCES
Books & Journals
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