Hilton Hotels Case Analysis

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.

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 demographics, psychographics, and location the following four segments have been identified: Economy, Business Class, Luxury, and Recreation and Entertainment. Hilton Hotels has recognized this trend and according to Jerry Tarasofsky (2007) of Hotel News Resource, "you can start by dividing your customer base into groups of individuals that are similar in specific ways, such as age, gender, interests, and purpose of visit. Once you have segmented your visitors, you can target specific groups such as business travelers or convention planners to maximize your marketing dollars towards the more valuable segments."

Market Needs

Hilton has discovered an increasing need in the market to combine the gaming industry with the hotel industry. "While gaming accounted for about 34 percent of Hilton's overall sales in the early 1990s, its four casinos contributed nearly two-thirds of Hilton's operating earnings" (McDonald, 1998, p. 1). The contribution of gaming to Hilton's operating earnings demonstrated this increasing need for consumers to have gaming and hotel stay combined into one service. In addition, Hilton surveyed its customers to help determine additional market needs and expectations. "Hilton's research highlighted the need for a product development approach that would enable customers to match their needs easily against a specially adapted style or area of hotel service" (McDonald, 1998, p. 3). As a result, Hilton created the "Hilton Promise that every Hilton employee would give superior and distinctive service, which guests would remember and for which they would return" (McDonald, 1998, p, 3). As the market needs continue to shift, so do Hilton's strategies.

Market Trends

The hotel industry market has demonstrated a trend of incorporating gaming (such as casinos) and entertainment into the services offered by the hotel. For example, Hilton has now expanded its facilities to include casinos and shows in various parts of the world. "The adopted approach was to consider different service clusters that combined, would provide key benefits to customers" (McDonald, 1998, p. 3). Since gaming and entertainment are two very different activities, Hilton must be careful when strategizing to ensure that the offered activities are complimentary. Although the cost of entertainment is a significant expense for hotels, "the cost of providing entertainment is justified by its effectiveness in attracting people to the gaming tables and machines" (McDonald, 1998, p. 4). The market is also demonstrating a trend of hotels becoming a one-stop-shop. For example, hotels are not only including room stay but also gaming, entertainment, shopping, comedy clubs, lounges, nail and hair salons and other activities and amenities desired by consumers. This trend is demonstrating the evolution of hotels into destination resorts.

Market Growth

The market has demonstrated an increase in growth over the last decade. Sales for Hilton have also demonstrated a steady increase, particularly once the hotels expanded to include gaming and entertainment. "Competition for the gaming dollar is intense, and the degree of investment needed to be successful is high. Hilton has had to put more than $6 million into renovating the Las Vegas Hilton to keep up with such rivals as the Mirage and the Excalibur" (McDonald, 1998, p. 3). In addition, the hotel market has demonstrated a consistently high occupancy rate, particularly the Hilton hotels. In 1994, "Hilton hotels showed system-wide occupancy of 70 percent, a three-point increase over 1993, while the U.S. hotel industry as a whole had occupancy of 65 percent. Equally as important as the increase in occupancy was the significant improvement in average daily rate. For the year, that rate jumped 7 percent over (the) last year" (McDonald, 1998, p. 3). These statistics demonstrates an overall market growth in the hotel and gaming industry in recent years.

SWOT Analysis

Strengths:

1. Name recognition, brand loyalty - The Hilton name is known around the world

2. Innovators - Hilton has been on the leading edge of introducing many new products or services in the hotel industry

3. Customer service and quality hotels

4. Hilton International and Hilton Hotels joining forces to become one corporation