Service Management Strategies: Analysis of Hilton Hotel Success

This report analyzes the service management strategies employed by Hilton Hotel in the competitive hospitality industry. It examines the company's background, target market, and the challenges it faces, including competition and evolving customer demands. The report identifies service characteristics such as heterogeneity, intangibility, inseparability, perishability, and ownership, and discusses image and service strategies used by Hilton. It also addresses challenges related to demotivated staff, technology, and resource management. Recommendations are provided to improve service strategy and address identified gaps, with a focus on monitoring customer satisfaction. The analysis concludes with key findings and suggestions for maintaining Hilton's competitive edge.

Running Header: Service Management
Service Management
Lovejeet Singh
1430556

2
Executive Summary
This report consist of different ways in which hospitality industry adapt new strategies and
services to manage the system. These new changes are implemented because of increasing
competition in the following industry. Service management is important because it will allow the
company to imrove the efficiency of the ongoing operations and reduce their cost. Performance
level can be increased with the help of system management and also competitive advantage can
be achieved. According to some researchs, system management can make the operations
successful and efficient. Hilton hotel can use many different strategies as mentioned in this
report in order to maintain their position in the market.

3
Contents
Introduction......................................................................................................................................4
Background of the company............................................................................................................4
Service starategy..............................................................................................................................4
Target Market Analysis...................................................................................................................5
Analyse and explain.........................................................................................................................7
Recommendations to improve on the Service Strategy...................................................................9
Recommendations to overcome for the chosen gaps.......................................................................9
Monitoring Service satisfaction of the customers of Hilton hotel...................................................9
Summary of key finding issues........................................................................................................9
Conclusion.....................................................................................................................................10
Bibliography..................................................................................................................................11

4
Introduction
Service management and quality of service is very important especially in hospitality industry as
it helps to set standards of services offered to the customers (Erdem and Jiang, 2016). This paper
is the analysis and discussing the services management strartegy of Hilton Hotel.The service
strategy for Hilton Hotel is to provide the best quality services to keep its customers. Quality
management is a factor that is controlled by the organization that aims at meeting quality
standards.
Background of the company
Hilton Hotel & Resort is a global hotel chain brand under the flagship name Hilton. By the end
of 2017, Travel magazine reported that the brand operated more than 570 hotels in over 85
countries. They are among the oldest group of hotels operating in 6 continents where the
properties are managed by, owned by or franchised by independent hotel operators. Founded in
1919 by Conrad Hilton, the group of hotels targets both business and leisure travelers. It also has
a loyalty program ‘Hilton Honors’, where some of its loyal customers are offered services at
discounted rates(Komppula, 2014).
HILTON WORLDWIDE HOLDINGS INC (HLT) CashFlowFlag INCOME
STATEMENT
Fiscal year ends in December. USD in millions
except per share data.
2013-
12
2014-
12
2015-
12
2016-
12
2017-
12
TT
M
Revenue 9735
1050
2
1127
2
1166
3 9140
953
3
Cost of revenue 3877 4019 4065 4048 1286
136
3
Gross profit 5858 6483 7207 7615 7854
817
0
Operating expenses
Sales, General and administrative 748 491 611 616 434 429
Other operating expenses 4001 4282 4823 5158 6048
622
5
Total operating expenses 4749 4773 5434 5774 6482
665
4
Operating income 1109 1710 1773 1841 1372
151
6
Interest Expense 620 618 575 587 408 411
Other income (expense) 209 55 298 1 -34 28

5
Income before taxes 698 1147 1496 1255 930
113
3
Provision for income taxes 238 465 80 891 -334
-
312
Net income from continuing operations 460 682 1416 364 1264
144
5
Other -45 -9 -12 -16 -5 -5
Net income 415 673 1404 348 1259
144
0
Net income available to common shareholders 415 673 1404 348 1259
144
0
Earnings per share
Basic 1.35 2.04 4.26 1.06 3.88 4.5
Diluted 1.35 2.04 4.26 1.05 3.85
4.4
6
Weighted average shares outstanding
Basic 308 328 329 329 324 314
Diluted 308 329 330 330 327 318
EBITDA 1921 2393 2763 2528 1685
188
3
On the basis of the above presented data it is observed that there is a decline in the sales figure of
Hilton and company needs to do something for the same. And as its high time the business entity
should make implementation of some development strategies for providing boost to the sales and
thus enhance the overall performance.

6
Service Gap Model of Hilton
Customer Personal
Neeeeds
Translation into
delivery
Execution of Delivery
Customer Perceptions forservices
Customer Interpretation of
communication
Service Gap
Delivery Gap
Percieved Service Standard Gap
Customer Needs and
Expectations Past Experience
Word-Of-Mouth
Communications

7
Target Market Analysis
 Geographic
Hilton hotel is expanded worldwide with more than 570 hotels and resorts in around 85
countries. This shows a huge expansion of the organisation in terms of the geographical
factor (Kandampully, Zhang and Jaakkola, 2018). Hilton targets both on national as well
as international consumer group. The targeting and segmenting depends on the location
of the hotels. The main strategy used by the Hilton hotel is to establish the hotel on such a
location which is popular and caters a large amount of tourists or travellers.
Geographical segmentation allows the organisation to expand their business. The main
target of the Hilton hotel is to cater in such a location where many tourists visit mostly.
 Demographic
Hilton hotel mostly targets those customers which can easily afford the hotel for instance
middle and senior aged persons which mainly belong to upper social class and has a high
income (Lancaster and Massingham, 2017). Those individuals who are looking for a
luxurious stay are mainly targeted by the company. Hilton hotels are very particular when
it comes to providing the luxurious services and charges a premium price in return of
their services. Therefore it becomes very important for the company to target that part of
the population which are highly interested in luxurious lifestyle.
 Psychographic
Hilton hotels provide the consumers with a high level of luxury. Hilton is famous for it’s
luxurious experience. Therefore it mainly focuses on those customers who pursue a
luxurious lifestyle and want such kind of hotels for the stay. Psychographic factors
determine the thinking, behavinag and feeling ability of a person (Strobl, Bauer and
Matzler, 2018). That is why Hilton mainly targets those individuals who are really
ambitious and who wants to show off their high status in society by staying in such
luxurious hotels. Since Hilton provides it’s services at a premium price and a luxurious
experience that is why it targets those who really want this special factor in their life.

8
Hilton hotel has the following five service characteristics:
1. Heterogeneity- Hilton hotel tries to provide similar kind of services in all of its
branches to maintain their standards but still there is heterogeneity in service provided to
the guests as it varies from staff to staff . It creates a gap between customer expected
services and the perceived services. Since Hilton provides high touch service, it becomes
hard to standardised the level of service provided to the guests as the employee’s working
in Hilton are from different cultural background and nationality. To overcome that
Hilton Hotel regularly provide service training to their staff to create a homogeneous
environment. The service gap can be resolved by focusing on the needs of the customers
and fulfilling all their expectations.
2. Intangibility- Services cannot be seen or touched,so is it considered intangible because
guests have to be present there to actually experience it. Hilon service strategy aims at
providing world class facilities to their guest to provide them an overall execelling
experience to build a strong customer base.
3. Inseparability- During a service the production and consumption happens at the same
time,so it is considered as inseparable.The services offered by the Hilton hotel to the
guests starts as soon as the guest arrives at the hotel. It might indicate to the knowledge
gap which occurs betweenconsumer expectation and the management perception. Only if
the company try to meet the wrong needs of the customer which does not even exist.
4. Perishability- Services are perishable because it cannot be stored for selling or using it
for the later.So, Hilton should use effective service and marketing strategies to try to sell
as much as possible services to the guests and keep the balance of the demand and supply
taking care of all the customers requirements.
5. Ownership – Customers cannot own any service or place even if they pay for the service.
They can only experience it for a specific time period.

9
Service starategy
1. Image strategy
Image strategy is very important for any company in order to create an attractive image of
the company or the organization (Komppula, 2014). Hilton hotel present itself in front of the
customers in such a way, that it looks stylish and efficient in terms of the hospitality
industry. The current image strategy used by Hilton hotel using different platforms to
advertise about the hotel and it’s services. Many different social media platforms are being
used by the company in order to gain a large audience and customer base. Many different
events and shows are organized in which different celebrities promote the brand. To
strengthen the image game, Hilton hotel is using different innovation in order to provide the
customers with the best services all over the globe and satisfy them in every possible way. In
order to include more and more customers in this organisation, Hilton is trying to provide
different services for all kind of people with all kind of budget. This strategy makes Hilton,
very convenient for each and every one. Hilton hotel while advertising try to convey their
story to the audience in such a way that shows the main aim and direction of the
organisation. In this way people will feel more connected to the brand.
2. Service strategy
Hilton is one of very popular name in the hospitality industry and to maintain the status, the
company provides High Touch service to the customers in a very efficient manner. This
organisation is very keen on satisfying all the needs and requirements of the customers and
provide them a best experience. Hilton hotel provide different kind of services such as,
clubs, restaurants, transportation, accommodation, and many other services(Smith and
Wong, 2016). A great staff team makes everything possible therefore Hilton is very famous
for it’s hospitality. Hilton also organizes many other services such babysitting, beauty salon,
meeting rooms, office rental, video conferencing etc.. Hilton serves many different people
from different culture and to make the stay convenient for them, Hilton also has a
multilingual staff. Even for businessmen, those who deals with cash, Hilton also provide
safety deposit box services. All these different makes the journey very easy for the people.

10
Safety and quality levels of all the services are checked and ensured before providing any
kind of services to the customers to maintain their standards.
Analyse and explain
Challenges they face as a company
Hilton is a great brand but it also face several challenges such as, competition, demotivated staff,
technology, focusing on single individual etc. As a company, Hilton needs to focus on their
performance level but sometimes due to bad feedback or any complaint, the employees feel so
demotivated (Lin, Shen, Hengel and Reid, 2016). There might be some issues regarding the
proper scheduling of the work due to lack of participation and staff turnover. Hilton is a large
group therefore sometimes it is very difficult to manage and overlook each and every resources.
This indicates the gap between management perception and the service quality specification in
which the company fails to maintain and update all the service management functionalities
(Dolnicar and Leisch, 2017).
Challenges they face in relation to their competitors
There are so many different brands which creates a huge amount of competition for the Hilton
hotels (Kowalkowski and Ulaga, 2017). For instance, Mariott, Hyatt and Intercontinental hotel
groups and many more. Among all these hotel groups, Mariott is one of the biggest and toughest
competitor for the Hilton. Since the Mariott hotel strives hard to maintain all it’s services in an
efficient manner and the service standard are very high.
The gap between consumer expectation and management perception can cause the competition
because if the consumer needs are not fulfilled then they will choose other brand causing high
competition level.

11
Positioning Map of Hilton
Challenges they face as customers’ behaviour and demands change.
Customers are a very important part for any orgnaisation. Customers can be very demanding
sometimes. It is a really big challenge for the companies to cater all the needs of the customers in
the most efficient manner (Huang and Rust, 2017). The major challenges faced by the Hilton
because of the customers are mainly, continous services, bothering the staff, fluctuations in
demands, rude behavior etc. Customers can be very moody and demanding which puts a lot of
pressure on the hotel staff to fulfil all their demands and the orders. Any kind of mistake even if
it is a little one can irritate the customers and they take out all the anger on the employees which
demotivated the employee. Sometime due to network connection the servers are down which can
create a communication error between the hotel staff and the customers. Due to which customers
can be angry. Also the customers compares the hotel in which they are staying to the other hotels
and demand a bargain wherever possible.

12
This indicates the Gap between the customers expected service and the perceived service. If the
quality services are not delivered then the customers feel disappointed which causes a gap.
Recommendations to improve on the Service Strategy
1. First challenge is to overcome the challenges faced by Hilton as a company. For that
Hilton can hire a great team for proper Resource Management.
2. To handle the challenges that occurs because of the competition, Hilton should work on
those features in which they lack. They should train and educate there staff regularly to
keep them aware of changing trends and service strategies in the hospitality industry.
Hilton is High touch but they started to be high tech as well. Hilton is the first to
introduce Smart Robot concierge named connie and providing guests with digital room
key. Soon this will be adopted by other hotel chains but in the meantime Hilton is
constantly doing market analysis about what new services to introduce to always gain a
competitive edge in the market. Monitoring the competitors is also important.
3. To resolve the issues related to customers it is important that the management of Hilton
Hotel should constantly update their knowledge about the target market’s new needs and
requirements. If the customers are satisfied then the competitive advantage can be
achieved. Motivating the employee’s is also necessary to help them to work effectively
in the workplace.
.
Monitoring Service satisfaction of the customers of Hilton hotel
To monitor the service satisfaction, the Hilton group can use several strategies such as, analyzing
all type of complaints, creating focus group etc. Analyzing and focusing on all the complaints of