Hilton Hotels Case Study One Situation Analysis

Hilton Hotels Case Study One Situation Analysis

Week Three

Catherine Seeley

University of Phoenix

MKT / 551

Marketing Management

TRGRAD24

Marlene Deatherage

April 17, 2006

Introduction

The scope of this situation analysis will be to cover key issues and opportunities for the Hilton Hotels. The Four P's marketing strategy will be recommended, and discussed. The utilization and implementation of the SWOT analysis will be incorporated throughout the discussion. Information will be provided from the use of secondary resources for support of opportunities for the Hilton Hotels.

During the early 1990's, the Hilton Hotels decided to move heavily into gambling. This was a result of after two major takeover attempts (Hilton Hotels, 1998). The decision to change the business operations of the Hilton Hotels was viewed as an aggressive business operation (Hilton Hotels, 1998). Before the 1990's, the Hilton Hotels Corporation owned, managed and franchised hotels, casino-hotels and inns. Additionally, the Hilton Hotels sold furnishings, equipment and supplies to hotels, motels, and inns (Hilton Hotels, 1998). They also operated a computerized reservation system for the hotel industry (Hilton Hotels, 1998).

SWOT Analysis

Strengths

Brand Recognition - Hilton has a good reputation and their name is well

known. Hilton is a leader in the hotel industry.

Diversification of Products - 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.

Conducting business in more than one place - 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 their losses.

Weaknesses

The Hilton Hotels Operating Management underestimated their customers needs based on information given to them by their employees. There needed to be more consideration given to the cultural demographics, and values of their gaming customers. In addition, there needed to be more consideration given to the domestic and global customers that enjoyed the hotel services. Assuming that if the majority of the Hilton Hotel customers feel comfortable with the hotel service environment that would lead to additional guest satisfaction and new business, could lead to inaccuracies (Hilton, 1994). There appeared to be an inadequate level of innovation of fundamental growth planning for the Hilton Hotels Corporation. 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).

The United Kingdom has a controlling proprietary stance with their ownership of their Hilton Hotels at 55 percent. This is an over concentration of the net assets by the European region which encompasses 84.5 percent of the total assets of the Hilton Hotels Corporation (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. In addition, the launching of new hotel services aimed at particular markets would be beneficial and another opportunity (Data Monitor, 2005).

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. Along with competition form known hotel chains, independent hotels are making their mark and are in competition for potential customers.

Slow down in Tourism rate has decreased since the September 11th, disaster and the onset of natural disasters such as the recent hurricanes present a huge problem