Hilton Case Study

Hilton Case Study

After staving off two major takeover attempts in the 1990's, Hilton Hotels Corporations (HHC) decided to adjust its overall strategy and become more aggressive in its business operations. Although already a force in the hotel industry with a strategic focus in three areas: hotel ownership, managing and franchising, and timeshare; Hilton Hotels decided to shift more resources into gaming, resort operations and the mid-priced segment of the hotel industry (hotel-online.com 2006). This change in strategic direction dictated that the organization redirect its marketing objectives as well. Traditionally, the firm had focused on place, product and promotion, by establishing the finest hotels in the most attractive, convenient and sometimes expensive places in the world. In the new millennium, particularly after the attacks on September 11th, Hilton has gone after the mid-priced client and the more affluent lodging clientele.

One of HHC's strategic decisions was to continue to be a major player in the gaming industry. In the early 1990's, the Las Vegas Hilton and Flamingo Hilton provided up to 44 percent of the firm's income (Handbook of Texas 2001). With profit soaring more competition was sure to come and it did in the form of hotels like the Mirage and Excalibur. In order to compete with the news kids on the block, HHC had to do major renovations and modernization. HHC decided to invest in upgrading its gaming properties and upping the ante in providing a holistic gaming experience to lure customers from other establishments. The gaming experience would now include activities such as fine dining, shopping, golfing, and high end resort amenities. HHC also decided to segment the market along price lines by offering multiple hotel choices for different categories of gamers. For example, the Flamingo Hilton would accommodate the mid-priced or non-high roller and the Las Vegas Hilton would accommodate the high rollers. Hilton also established gaming hotels in Australia and Turkey and riverboat casinos in Kansas City and New Orleans.

Today, Hilton Hotels Corporation is recognized internationally as a preeminent hospitality company. The company develops, owns, manages or franchises approximately 2,300 hotels, resorts and vacation ownership properties. Its portfolio includes many of the world's best known and most highly regarded hotel brands, including Hilton(®), Conrad®, Doubletree®, Embassy Suites Hotels®, Hampton Inn®, Hampton Inn & Suites®, Hilton Garden Inn®, Hilton Grand Vacations Company®, and Homewood Suites by Hilton®,

SWOT Analysis

HHC, 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 Hotel Corporation (HHC) is a well established organization and industry leader in the hotel, hospitality and gaming industry

* HHC is well diversified across the industry with hotels in the high end, business and mid-priced classes in their product mix

* HHC also possesses solid integration features such as owning the companies that manufacture its furniture and has invested in online reservation travel enterprises

Weaknesses

* HHC 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

* HHC 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.

Opportunities

* HHC should offer an array of distinctive and specialized services to the high end guests and high rollers such as

o Wedding planning & hosting

o Spas that specialize in personal services

 Personal trainers

 Masseuses

 Chefs and dieticians (personalized menu)

* HHC should look to expand into or acquire a cruise line

o A cruise ship is little more than a hotel that floats this would essentially match what it currently does with its leased properties (http://www.hotelonline.com)

 Gaming activities would escape regulation, etc.

* Take advantage of emerging markets, especially with business class and mid-priced markets

* Continue to expand its time share holdings. This will help spread the risk to clients, while ensuring that clients will return repeatedly

* Hilton must continue to expand its promotional activities to reach younger clients who may not be familiar with their stellar reputation

Threats

* HHC must be careful not overextend its efforts to mix entertainment and gaming

Also the extension of credit and other side effects of gaming can slowly but surely nibble away profits

* September 11th was a major blow to the hotel industry. A similar event could result in another down turn.

Trends, Growth, Competition, and Demographic

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 (La Forgia 2005).

Although HHC has had much success in the gaming industry it must continue to seek new opportunities that will emerge such as the Gulf Coast, on tribal lands and in foreign nations such as Australia (http://www.hotelonline.com 1998). However, some traditional gaming centers, such as Las Vegas, may prove too costly for further expansion.

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