Hilton Hotels Case Study One Situation Analysis Company Overview Hilton Worldwide a leading global hospitality company.

The company is mainly engaged in the lodging sector and retains a chain of hotels from luxurious full-service hotels and resorts to extended stay suites and mid priced hotels. It is owned by private equity firm The Blackstone Group. Hilton operates as one of the worlds largest hoteliers with a lodging empire that includes 3,600 hotels and resorts in nearly 81 countries such as, in the United States, Riyadh, China, New Zealand, Greece, Sardinia, the United Kingdom, Malaysia, Venezuela and internationally.

I.

POINT OF VIEW

II.

TIME CONTEXT

III.

STATEMENT OF THE PROBLEM

IV.

OBJECTIVES

The purpose of this case analysis is to address the key marketing issue for the Hilton Hotels. The marketing strategies Hilton should pursue in the hotel and gaming markets will be discussed and recommendations will be made. In addition, the use and implementation of the SWOT analysis will be incorporated throughout the discussion. Information will be provided from the case study and the use of secondary resources for support of the marketing strategies recommended for the Hilton Hotels. V. AREAS OF CONSIDERATION Hilton Hotel Corporation, like all major hotel corporations, is continuing to recover from the events of September 11th. This tragic human event also delivered a financially devastating blow to the travel industry as a whole and to the hotel industry in particular. In order to fully recover and thrive in the coming years, HHC must assess its overall all strengths and weaknesses as it moves forward through the new millennium. The following SWOT Analysis sheds some light on some of the pitfalls and opportunities that await the Hilton Hotels Corporation. Strengths Hilton has a good reputation and their name is well known.

Hilton is more than hotels. They also generate revenue from gaming and entertainment. By being involved in more than one industry, Hilton has a benefit of drawing from one part of its business if another part becomes less lucrative. Gaming and entertainment (as well as hotels) serve different customers' needs. While this diversity does not automatically insure success, it does help the company to balance out its profits across three areas of the business. Hilton Hotels has establishments in Las Vegas, Lake Tahoe (Nevada) and across the world in such places as Queensland, Australia; Istanbul, Turkey. The company also has gaming establishments in New Orleans, GA and Windsor, Ontario, Canada. If Hilton had its hotels in only one place, such as New Orleans before the flood, their business could be devastated by one environmental hazard. By having the business spread across the world, they are also counting on more than one economy. If the hotels in Australia weren't' doing well, they could count on the US and Turkey, etc to generate profits to help even out Hilton Hotel Corporation is a well-established organization and industry leader in the hotel, hospitality and gaming industry. Hilton Hotel Corporation is well diversified across the industry with hotels in the high end, business and mid-priced classes in their product mix. Hilton Hotel Corporation also possesses solid integration features such as owning the companies that manufacture its furniture and has invested in online reservation travel enterprises.

Weaknesses Hilton may be two narrowly focused making it vulnerable to a downturn in the global economy and other world-wide catastrophes that could limit global travel such as the bird-flu and a significant terrorist strike. Hilton may be vulnerable to workers strikes and crack down on undocumented workers in the U.S. Most of its holdings are in the U.S. There is an unbalanced revenue mix that is unequally spread across Hilton's operating segments. For example the gaming activities accounted for 85.1 percent of total revenues, hotel revenues contributed 14.9 percent during 2004 (Data Monitor, 2005). When the economies of scale are in recession, this could impact the profitability of the Hilton Corporation. The lack of geographic spread in the Hilton's revenues is a major weakness for the corporation. For instance, there is a copious magnitude in the

European market, more specifically the United Kingdom. This region accounted for 86.6 percent of Hilton's total revenues. Since the slowing of the economy, this has affected Hilton. In contrast, the American and Asian markets comprise approximately 1.7 percent of total revenues (Data Monitor, 2005). Opportunities The Hilton Hotel's Corporation should utilize marketing information on research for new demographics to place facilities at these locations. One prime example would be expanding into China or India. There is currently limited exposure in China by Hilton and this region is expected to grow at twice the rate of the balance of the world. The Indian cities are growing, consumer travel is increasing and there is increased demand for brand experience in India. Hilton's capital structure could be changed by disposal of assets in the global market such as the United Kingdom hotels. The proceeds from the sell of these types of assets could total great dollar amounts in recapturing the total assets owned by Hilton Hotels Corporation. Launching of new hotel services aimed at particular markets would be beneficial and another opportunity (Data Monitor, 2005). HHC should offer an array of distinctive and specialized services to the highend guests and high rollers such as Wedding planning & hosting Spas that specialize in personal services Personal trainers HHC should look to expand into or acquire a cruise line. A cruise ship is little more than a hotel that floats this would essentially match what it currently does with its leased properties. Wedding planning and hosting Gaming activities would escape regulations, etc. Take advantage of emerging markets especially with business class and midpriced markets Development of sustainable hospitality

Threats In dealing with current issues involving the Hilton Hotel, many negative aspects also revolve around the competitive edge in today's global marketing war such issues as intense competition from other hospitality industries that

have made their mark in worldwide enterprise similar to the Hotel Hilton. Hotel Hilton must be careful not to overextend its effort to mix entertainment and gaming, also the extension of credit and other side effects can slowly surely but surely decrease profits. September 11th was a major blow to the hotel industry. A similar event could result in another dowturn.

By studying national and regional industry trends, HHC will be able to take advantage of opportunities that will enable growth while identifying threats that may affect profitability. Growth in the hotel and hospitality industry will include a continued focus on gaming, international expansion and using all media to promote its products to potential customers. One recommended strategy for Hilton is to emphasize the importance of family in all its hotels, including the gaming and casino locations. Las Vegas has spent millions to attract families by adding childrens attractions as well as the traditional casinos for the adults. Most of the hotels have at least a small area dedicated to arcade games. However, some hotels have elaborate arcades, game areas, and child-care centers intended for those traveling with children (Hilton Hotels Corporation, 2007). Hilton needs to ensure they are right in the middle of this demographic of parents traveling with children. While the focus can still be on the high dollars that are tossed around in the casinos by the parents, it will be critical that the hotel have the facilities available that will attract parents with children to stay at the property. Since there is a greater demand and vacation time has become one of the few times that families are able to spend quality time together, Hilton must capitalize on this market segment. VI. ASSUMPTION

VII.

ALTERNATIVE COURSE OF ACTION

Hilton segmentation strategies One should start by saying that Hilton currently is one of the largest global hotel and entertainment companies. Hilton has presence in over 50 different countries and is well known for its Hilton hotels. In order to diversify its business activities and benefit from growing gambling and entertainment business, Hilton engaged in gambling business and opened several hotels in Nevada (Las Vegas and Reno) let alone in other states. In order to succeed in the new market, Hilton needs to properly assess the segmentation and positioning strategy for Hilton as one will find out later in the paper. Segmentation is the process of dividing the desired market into groups based upon

important consumer characteristics attributable to the given market. In other words, a reasonable marketer in order not to spread resources too thin by randomly searching clients for their goods/services should divide customers into several groups and focus on the groups to market the goods/services to. The Market segmentation for any product as well as Hilton gambling can be done based on the following characteristics: Geographic. This strategy focuses on local preferences, nature, and geographic location. For instance if in the marketer found out that in the South or West, where the majority of the USA elderly goes to retire, then the Hilton starts to present services for exactly that group namely recreational hotels and gambling for the elderly. Demographic. This strategy speaks about personal characteristics of age, gender, income, affiliations, education, marital status, ethnic and/or religious background, family life cycle; etc. In other words, young kids that no chance of getting on to use Hilton gambling facilities compared to adults, thus Hilton focuses on delivering the message through mass media to the target group. Behavioral segmentation strategy for Hilton as well as other products is based on buyer behavior in acquiring the product and considers the usage occasions (pleasure, business), rates (weekly, monthly), loyalty (Hilton or Mirage, or Mandarine) etc. Psychographics is the strategy directly connected to the Demographic and Behavioral strategies that attempts to answer the question of why customers buy Hiltons services. There are several answers: 1. Lifestyle. People who travel would prefer Hiltons hotels to be located near major airports /in every city and possess similar services. 2. Personality. The Users of Hilton are self-conscientious, fun-loving people with long-term planning horizons 3. Social Class. Virtually any social class can use at least some services from Hilton Group, although it appears that Hilton prefers to serve the upper middle class and the upper class to use Hiltons services. 4. Decision making. Who makes the decision regarding the flights entertainment, the family budget and gambling? Customers and Segmentation The customers of Hilton are primary families/tourists 70%, Business travelers - 20%, others - 10%. Overall in the entertainment/hotel industry the individual customers take up the major part of the total market with tourists taking up over 60% of the non-business travelers. The majority of travelers (70%) are people aged 25-45 years of age, thus, one should

assume that the gift shop sales of merchandise should be directed towards this group. The current trends show that the market for entertainment and gambling is constantly growing, so Hilton will likely to start to reap the profits rather soon.

VIII.

ANALYSIS OF COURSE OF ACTION

The advantages of segmentation strategy over general appeal strategy in my personal opinion are the following: The individual customer needs are better met New Ideas are promoted Winsome marketing mix strategy is developed Efficient allocation of corporate resources based upon attractiveness of individual segments IX. RECOMMENDATION/FINAL DECISION

X.

PLAN OF ACTION

Market Summary Hilton Hotels is one of the market leaders in the hotel and gaming industry in the United States. Hilton is a well-known and distinguished name in fine hotels across the United States and worldwide. In 1999, Hilton expanded aggressively by acquiring the Promus Hotel Corporation, Hampton Inn and Suites, Doubletree Hotels, Embassy Suites Hotels, and Homewood Suites. Hilton Hotels Corporation has grown to become the world's most recognized and most successful hotel company (Hilton Innovation, 2007). With the 2006 acquisition of Hilton International, Hilton Hotels Corporation became a global force with more than 2,800 hotels in more than 80 countries throughout the world (2007). Market Demographics

The demographics for a diverse company such as Hilton offer a wide variety of customers. Hilton's target market includes the everyday business traveler, families on vacation, leisure travelers, and the convention business segment. After the events of September 11, the hotel industry has seen changing demographics and lifestyle changes that have had a major impact on the U.S. traveler. Many travelers have different priorities when traveling to include visiting theme parks, beaches, shopping, dining, or other entertainment. The age of the traveler and their marital status and number of children can have a large impact on the vacation destinations of the consumer. There has been a greater breakdown of the hotel industry and according to demographic

SWOTStrengths. Hilton already is in the hotel businesses, so will not envisage any problems regarding accommodation in the new gambling + hotel places. Hilton has a recognized brand name so does not need to engage in unneeded expenditure associated with less known brands and necessity to create theme parks/theme hotels. Weaknesses. Hilton relies mostly on the US markets for revenues, knowledge and data obtained by the company. Hiltons profits are tied to the USA economy Opportunities. Cooperate with major gambling companies if Hilton wants an update on most popular slot machines and card games. Hilton should penetrate the third world countries of Russia and Ukraine as well as South America and establish the corporate chain. After a while, open entertainment/gambling place, too. Threats. Hilton does not have experience dealing with gambling and entertainment so there is a threat that Hilton will not survive the competition. Target Market is the conclusion that can be derived from the segmentation strategies. Formally it represents the most likely buyers of the Hilton services that we are marketing. From what we have researched regarding the Hilton services one can say that the target market for such services is rather large and is growing. The age group for our various services ranges from 21 to 70 years for gambling/entertainment1, middle class people of conscientious nature, who also like active life, health, and freedom. Positioning equals Segmentation plus Differentiation. In order to successfully market the product one needs to slot the product in the mind of the consumer. The Hilton services have to possess distinctive quality and affordable price to satisfy the clients from virtually all strata of society not only in the USA but also internationally. Critical Success Factors of Hilton. Critical success factors of the Hilton are key areas which can be identified from conducting a SWOT (internal environment), PEST (external environment) and Porters Five Forces model.1. WEAKNESSES the biggest

weakness that needs addressing is a limited number of Hiltons gaming facilities located primarily in Las Vegas..2. OPPORTUNITIES the area that presents the most opportunities is the Eastern Europe that is currently not as competitive as the western European markets for entertainment and gambling. POLITICAL the current political system supports Hilton and its industry. There do exist numerous requirements with respect to hotel, gambling and entertaining industries yet Hilton confirms to all the requirements. ECONOMIC the current US and global economy is supportive of the hotel, hospitality, gambling and entertainments industries, yet one needs to cover additional markets in order to protect oneself from the economic declines in highly correlated European markets. SOCIAL The social system supports hotel/entertainment industry as the business and leisure travel is the norm. TECHNICAL Hilton utilizes the help from the outside construction companies to create a new facility. The company utilizes sophisticated software to keep track of customers and technology. Hilton can even book rooms in a real time mode and even receive payment via credit cards while online. COMPETITOR ANALYSIS Mirage, MGM, Mandalay, and Luxor the main competitors for hotel/entertainment industry that currently attempt to cover or already covered the same geographic routes and areas currently covered by Hilton. It appears that larger institutions neglect smaller towns and distinct interests of customers. These are Hiltons critical success factors which this hospitality/entertainment company needs to pursue in order to be a success. One needs to input the Critical Success Factors in the corporate strategy of Hilton in order to make use of them.1. All industry participants must adhere to the various financial security and safety requirements (Political) in order to keep the license for gambling and hotel services..2. All industry participants must remain competitive and remain within the certain cost brackets if they want to remain successful and profitable.3. All industry participants must constantly explore the new markets to assure a proper niche placement for their services. Core competencies of Hilton were analyzed in Hilton and shown in the essay below: add significant value to entertainment, gambling, hotel services perceived by endusers because of promotion, learning the new expertise, customer support, phones, etc. are difficult to duplicate by the competition because for the other hotels it poses high costs than for Hilton that is able to provide that service. Also the coverage of smaller towns and villages across North America and presence of Hilton in over 50 countries allows Hilton to remain competitive because of its structure. work in a wide variety of markets. Certainly it works in over 50 different countries worldwide. It should also work well in the third world countries and in other countries around the globe.

From the information obtained from the case study and other sources, one can assume that Hilton is qualified enough to create individual business activities that would be partially sponsored in school. So, yes, Hilton should pursue the formation of entertainment and gambling facilities in New York, LA, and other larger metropolitan areas in order to diversify its services and gain new ground for conducting business.