FINAL PROJECT

STRATEGIC MANAGEMENT
Hilton Hotel and Resorts
Monday, May 23' 2011

Team Members,
Namra Malik (fa07 BBA 094) Maryam Khan (fa07 BBA 056) Ahad Humayun (fa07 BBA 008) M. Jawad Shahnawaz (fa07 BBA 078) M. Azfar Khan (fa07 BBA 069) Naqi Husnain (fa07 BBA 095)

COMSATS ² Institute of Information Technology, Islamabad
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Introduction
The most recognized name in the industry, Hilton Hotels stands as the stylish, forward thinking global leader of hospitality. Today Hilton welcomes guests in more countries than any other full-service hotel brand, with more than 530 hotels and resorts in 76 countries across six continents. From inaugural balls and Hollywood award galas to business events and days to remember, Hilton is where the world makes history, closes the deal, toasts special occasions and gets away from it all.

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External Analysis 3 .Strategic Analysis .

Market Size and Growth Rate With more than 3. As a benchmark. Market Size.64%) and Starwood (5. Feb 18.4.42%. during the worst of the hotel industry recession. with some months gaining ground while others reduce those gains. the six-month growth rate hit negative 23. hotel business activity. is a composite indicator that gauges business activity in the U. the road to recovery for the hotel industry is going to be a bumpy one. the Hotel Industry's Pulse index.1. As we noted in October. which was last March.4 percent after a stronger reading of 98. chief economist of e-forecasting. which historically has signaled turning points in U. which a person with a low-medium income may not be able to afford. The probability of business improvement decreased slightly in January to 96. Embassy Suites.4 percent was recorded in December.2 billion in 2006 at a compounded annual growth rate (CAGR) of 16. the same as the 38-year average annual growth rate of the industry's gross domestic product.8 percent in December. similar to a GDP measure. This compares with a long-term annual growth rate of 3.8 billion in 2002 to USD 8. Home2 Suites by Hilton and Hilton Grand Vacations. Hilton Hotels & Resorts." said Evangelos Simos. Doubletree. Conrad. our trusted portfolio of hotel brands includes the Waldorf Astoria.S. The index is set to equal 100 in 2000. Hilton Garden Inn.44%) Customers for the hotel industry include tourists as well as business travelers. HIP's six-month growth rate. Homewood Suites by Hilton. people with high income are more likely to stay in an upscale luxury hotel.com in conjunction with Smith Travel Research announced HIP declined in January after improving 2.4 percent in December. Hilton primarily focuses on high-income/upscale group and business travelers.S.2 percent. For example. 2010 Economic research firm e-forecasting.9 percent compared with negative 3. Hampton Inn & Suites.com.4. This month's reading leaves the industry nearly flat for the first month of the year. which is considerably higher than the CAGR achieved by its competitors such as Marriott (7. The latest monthly change brought the index to a reading of 82. 4 . improved from the previous month with a reading of negative 1. Tourists may be further categorized into low-medium income groups and high-income groups as the income of a person will determine the kind of hotel he/she chooses. HIP.600 hotels in 76 countries. Growth Rate The revenues for the company increased from USD 3. hotel industry in real-time.

the company was acquired by private equity firm The Blackstone Group for $20 billion plus $6 billion in debt. wars. The total price of $26 billion is a record for the hotel industry. if they are forced to spend more on airfare. The company s largest unit is Hampton Inn & Suites. but Hilton also owns and manages properties in 77 countries. with more than 1. Thus.8 billion in 2002 to USD 8.The demand from low-medium income customers is primarily affected by an increase in airfares. In addition to these factors. business travelers will be affected by an economic slowdown as that would have a direct impact on the volume of business. Most Hilton properties are located in the U. which is considerably higher than the CAGR achieved by its competitors such as Marriott (7.750 others. On the other hand. and Conrad names. which has a negative impact on the hotel and tourism industry in the affected area. The swanky Waldorf-Astoria Hotel in New York and the Palmer House in Chicago are its crown jewels. Conrad Hilton picked up a little something extra on the way to buy a bank in Cisco. In 1919.44%). the outbreak of Severe Acute Respiratory Syndrome (SARS).600 locations. With events such as 9/11.64%) and Starwood (5. Competitors y y y y y Starwood Hotels Choice Hotels Internationals InterContinental Hotels Marriot International Orient-Express Hotels 2. people either stop traveling to those respective countries or choose alternative destinations for travel. In 2007. As Hilton s customers belong to the high-income group or are business travelers.42%. Position in the Life Cycle Growth The revenues for the company increased from USD 3. Texas the Mobley Hotel. and the tsunami. such as acts of terrorism. Hampton Inn. Today. Embassy Suites. the invasion of Afghanistan.. their ability to spend on a hotel room. Homewood Suites.2 billion in 2006 at a compounded annual growth rate (CAGR) of 16. the company owns or has stakes in about 110 properties and leases or manages more than 2. These customers generally have a fixed budget for their vacations. The company also manages properties under the Doubletree. 5 . the impact of an economic slowdown will be more significant for the company.S. certain events. and outbreak of contagious diseases have a severe impact on the demand from all customer segments. resort or other services declines. Blackstone already owns the La Quinta and Suites and LXR Luxury Resorts & Hotels chains.

Hilton already has a strong presence in the U. alleging that secret documents were stolen from Starwood to develop the Denizen Brand. Quality Inn. only a month after the announcement. Sleep Inn. restaurants. Hilton acquired the U. Out of the nearly 4. The Denizen brand plans to round out Hilton s luxury portfolio. the Middle East.400 hotels under the Comfort Inn. The company franchises over 5. and Asia and new Starwood hotels are being built in developing countries like China. including Intercontinental Hotels and Resorts. The company owns and operates luxury hotels. with 590.361 rooms in over 100 countries around the world. Hilton announced the launch of a new brand of hotels catering to the globally conscious modern travelers of the world. Cambria Suites.St. Rodeway Inn. Crowne Plaza Hotels and Resorts. However. 358-room golf resort and spa in Thailand. with 397 in Europe. rival Starwood Hotels fired a lawsuit at Hilton. and Element Choice Hotels Internationals is a worldwide franchisor of hotels and the nation s first hotel chain.K-based Hilton International in February 2006 to establish a footprint in the U. Africa. Clarion. Westin. and residences across the world. Destination Properties. The Luxury Collection. to manage a newly built. and Suburban Extended Stay brands throughout the US and more than 40 countries and territories. EconoLodge. Four Points.000 hotels bearing IHG brands. retreats. which are based as a percentage of gross room revenue of its franchised hotels InterContinental Hotels is the largest hotel company by number of rooms. tourist trains. hence its competitors are few in number but are large and widespread. Holiday Inn. It operates a diverse portfolio of brands across multiple economic segments.In March 2009. It also signed a multi-year agreement with a leading resort real estate developer in Thailand. IHG makes most of its money by franchising hotels.S and is expanding its global operations through acquisitions. 3. Mainstay Suites. and river cruises in over 25 countries. Hilton denies the allegations but still faces federal scrutiny. The company manages franchises that operate under its various brand names . which is focused on the luxury market. many operated only seasonally. Comfort Suites. Starwood Hotels owns and operates luxury hotels. called Denizen Hotels. Le Méridien. Orient-Express Hotels is a hotel and leisure group. it owns only 18. Aloft. Sheraton. Choice generates a majority of its revenue from royalty fees. Regis. target luxury travelers 6 . W. Approximately half of Starwood's hotels are outside of North America.K. Number of Rivals Since Hilton is a luxury hotel. For example. and Holiday Inn Express. OEH's hotels.

A.43 153. CA and NEW YORK.935 501 Marriott 2. 2007 Hilton Hotels Corporation and The Blackstone Group today announced the completion of the previously announced merger of Hilton with an affiliate of The Blackstone Group's real estate and corporate private equity funds.61 N.A. for each share of common stock that they own immediately prior to the effective time of the Merger.A.5 74. Comparison to Competitors Starwood Number of Hotels Number of Rooms (Thousands) Geographical Presence (Countries) Occupancy (Percent) Average Daily Rate (USD) RevPAR (USD) 871 266 Hilton 2. Pursuant to the terms of the merger agreement. NY. As a result of the merger. Inc.4 N.600 538 100 78 68 100 71.832 514 Intercontinental 3. 7 .56 115.2 72.46 114. without interest.50 in cash. holders of Hilton's common stock will receive $47. October 24. Hilton's common stock will cease to trade on the New York Stock Exchange at the close of market today and will be delisted.Marriott International. 136. Consolidation 1943 First coast to coast hotel chain in the US through acquisition of Roosevelt and the Plaza in NY BEVERLY HILLS.99 N. 191.33 82. (Marriott) is a worldwide operator and franchiser of hotels and related lodging facilities The following table compares Hilton s performance to its competitors in 2006.

3 billion in 2006. Pace of Technology Change Hilton Hotels has launched a new mobile Web application giving iPhone users accessibility to the hotel chain's Internet features. wireless access throughout all guest rooms and public spaces. event planners.Hilton has been involved in purchasing small and medium-sized hotels since 1970. wider bandwidth. Says Chairman J. Hilton primarily focuses on high-income/upscale group and business travelers. We know you like a king-size bed. Tourists may be further categorized into low-medium income groups and high-income groups as the income of a person will determine the kind of hotel he/she chooses. which a person with a low-medium income may not be able to afford. What makes such velvet-glove treatment possible is Marriott International Inc. and hotel owners. Jones.'s use of customer management software from Siebel Systems Inc.: ''It's a big competitive advantage to be able to greet a customer with: 'Mr. for GBP 3. Buyers Needs and Requirements Customers for the hotel industry include tourists as well as business travelers. This made Hilton the biggest lodging company in the world. welcome back to Marriott.. The new mobile services for German and British users. so that its reps can anticipate and respond more quickly to their needs. The software lets Marriott pull together information about its customers from different departments. were launched in conjunction with Dublin-based Mobile Travel Technologies Ltd. y y y y y y y Price Location Luxury/service Amenities Loyalty programs Family friendly Ambience/local flavor 5. We know you need a rental car. Marriott Jr. including the ability to book from the iPhone. as 8 .S. people with high income are more likely to stay in an upscale luxury hotel. The company acquired Hilton International.'' Sheraton Grande Sukhumvit (Starwood Hotels) has blazed a trail among Bangkok hotels as a leader in technological advancement and convenience-featuring the fastest possible internet connections. primarily for the purpose of expanding operations in the U. Users can access and change bookings and view hotel images and information.W. based in Bethesda. 4. the lodging assets of Hilton Group Plc. Md. is counting on such technology to gain an edge with guests. For example. It starts with reservations. (SEBL) The hotel chain.

Hilton s proprietary hotel management system.) in a hotel room. Hilton develops and operates timeshare resorts through Hilton Grand Vacations Company. After more than 90 years. and more recently. Product Innovation Hilton remains synonymous with hotel because of its innovative approach to products. Whether becoming the first hotel to install televisions in guest rooms or the first hotel in the world to earn both LEED and Green Seal environmental certifications. System 21®. light. 9 . regional offices and Hilton s world headquarters. the hotel has garnered several technology awards since 1996. first to offer express check-out. Vertical Integration Hilton s primary business segments include hotels (ownership and managing & franchising) and timeshare operations (an arrangement under which a purchaser receives the right to use an accommodation or amenities or both for a specified period).S. Hilton Sales Worldwide even individual Hilton properties. which provides on-site management services to Hilton Grand Vacations Club resorts. first TV remote control.well as state-of-the-art business and meeting facilities. 8. and never more so than today when the need for instant. Hilton's expertise and insight of global travel remains unmatched. such as Hilton Reservations Worldwide. chair. first hotel brand to open licensed Starbucks stores in hotels. Marriott included the first workspace (desk. coast-to-coast hotel chain. 7. Degree of Product Differentiation Hilton has always been on the forefront of technical innovation. based on intense research around the needs of the guests. amenities and service. a holistic approach to designing public spaces. individual Hilton hotels always lead the way. This enables the company to earn revenues without incurring any additional costs to purchase real estate and construct hotels. with special emphasis on the lobby. This strategy further enables the company to concentrate its efforts towards building a strong brand instead of buying real estate. launched the first airport hotel. Hilton is also increasingly relying on the franchisee-based model for growth. Hilton also introduced the iphone application. provides true competitive leverage by linking all of Hilton s customer sources together. Hilton developed the concept of franchising hotels. introduced the first multi-hotel reservation system and became the first U. Among its industry firsts. 6. For its farsighted approach. etc. accurate information is crucial to every hotel s bottom line. airline Global Distribution Systems.

joint ventures and mergers. Since it was located near an airport. In the hospitality industry economies of scope can originate from strategic alliances. Marriott s Hot Shoppe No. The new mobile services for German and British users. 8 became the home of his next innovation. but in host countries aswel. Users can access and change bookings and view hotel images and information. This strategy further enables the company to concentrate its efforts towards building a strong brand instead of buying real estate. consider a hospitality company that forms a strategic alliance with a car rental company. This enables the company to earn revenues without incurring any additional costs to purchase real estate and construct hotels. The business is spread over 76 countries around the globe. The brand and its team members support a variety of philanthropic activities and they encourage guests to join their efforts. Hilton appreciates its role as a global citizen and values the communities it serves. Economies of Scale It is through franchising that Hilton gains economies of scale through cost reduction. Hilton is also increasingly relying on the franchisee-based model for growth. The Hilton HHonors Giving Back program makes it easy for members to convert HHonors points into assistance for others. Scope of Competitive Rivalry Hilton operates internationally. y y y y y Lodging Leisure Extended Stay & Business Suite Hotels Mid-Priced Hotels & Motels Upscale & Luxury Hotels 10. were launched in conjunction with Dublin-based Mobile Travel Technologies Ltd. Reservation 10 . It was the launch of an entire new industry. Industries where Hilton and its competitors compete and get advantages not only in their home country.Hilton Hotels has launched a new mobile Web application giving iPhone users accessibility to the hotel chain's Internet features. As part of this alliance. For example. With that came Marriott s idea to sell pre-boxed meals directly to airlines. In 1937. 9. and Marriott was soon selling lunches to more than 20 flights a day from that one airport. Marriott noticed that airline passengers would often stop off to his store and buy lunch to eat on board. the companies use the same central reservation system (CRS) to support both hotel and car reservations. Consequently. including the ability to book from the iPhone.

cost of hotel rooms and generate a joint reservation system and a general cost reduction in reservation transactions. In 1993 only two mergers occurred in American hospitality Industry, and their total value was about $30million.

11. Experience and Learning Curve Effects

y y y y y y y y y y y y y y

1925 the first hotel formally named Dallas Hilton in Texas 1927 first hotel with cold running water and air conditioning in public rooms (Waco Hilton) 1943 first coast to coast hotel chain in the US through acquisition of Roosevelt and the Plaza in NY 1947 First hotel to install televisions in guest rooms (Roosevelt Hilton) 1949 Hilton International is born when Carbie Hilton in Puerto Rico, the first Hilton outside the U.S open 1955 First central reservation office is established (HILCRON) 1959 Hilton opens its first airport hotel (San Francisco Airport Hotel) and the pioneers the airport hotel concept 1965 First upscale lodging company to develop concept of hotel franchise 1973 first centralized reservation service using computer technology (HILTRON) 1987 First guest loyalty program introduced (HHonors) 1995 Hilton enters cyberspace as its first website, www.hilton.com, launches 2002 first collection of premium resorts and exotic vacation experiences introduced (Hilton Worldwide Resorts) 2009 Hilton launches its first application for mobile devices 2010 Hilton Hotels and Resorts operate in 76 countries, more than any other fullservice hotel brand

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PESTEL ANALYSIS 1. Political Analysis
a) Government Stability The impact of government stability in terms of hotel industry as a whole are described by the two articles published in Hotel Industry Magazine Intelligence for the UK's Hotel Industry (www.hotel-industry.co.uk). The articles were issued on 26th May 2010 and 16th June 2010 respectively. The article is related to the hotel industry in the United Kingdom. i. Post Election Cuts The Impact for UK Hoteliers By Lee Jamieson

Despite the good news that Rev-PAR figures for London-based hoteliers are set to grow over the next two years, instability from the recent election has already been felt. Whilst hoteliers are enjoying rejuvenated corporate demand, this growth is likely to be tapered by George Osbourne s initial £6.2 billion of public sector cuts this financial year. Assuming a dependency of 30 per cent of hotel business on public sector supply, cuts could shave almost 1 per cent off the latest UK RevPAR growth projections in both 2010 and again in 2011, according to PricewaterhouseCoopers. Occupancy is likely to be the first casualty of any post-election cuts as travel budgets are slashed, explained PricewaterhouseCoopers UK hospitality and leisure leader, Robert Milburn. Private sector business is also dependent on public sector contracts which could reduce the number of corporate traveling as well. That said, 70 per cent of those hoteliers we polled are more optimistic than they were six months ago. Group and transient business is picking up and there is hope of pent up demand for face to face meetings. ii. Coalition Government: A Bright Future for Hoteliers under a Coalition Government?

The recent election was widely predicted to leave the UK with a hung parliament, but few experts and commentators forecast a Conservative/Liberal Democrat coalition, yet David Cameron and Nick Clegg are playing their part in trying to persuade the British public that this unlikely alliance can work. However, is this new political marriage going to be good news for the hotel and tourism industry?

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Well according to the Chief Executive of Pride of Britain Hotels, Peter Hancock, yes it is. He said, Having Cameron at No.10 means the country s monstrous deficit can at last be brought under control, thereby avoiding the high interest rates that would surely ensue otherwise. High interest rates place a terrible strain on hotel businesses and make our customers poorer. Experts in the hospitality sector also seem positive about the effects the new Co/Lib government could have. There were few splits from both parties on the issues of tourism and hospitality preelection, with Bob Cotton, outgoing Chief Executive of the British Hospitality Association saying, The overriding concern is getting the public sector deficit right, and as long as they are both committed to that in the medium term that is the main issue. However, despite a dedicated tourism minister being appointed by the government, Mr Cotton fears that the industry is still not being taken seriously enough. He said, It is disappointing that the word tourism is not in the name of the new department (the Department for Culture, Olympics, Media and Sport). As a signal of taking tourism seriously that would have been a nice little way of doing it. In addition, there may be extensive training and employment opportunities within the hospitality sector. The Conservatives pre-election manifesto pledged 50,000 training places for unemployed people as part of their welfare reform plan to Get Britain Working . Eleven of the UK s largest hospitality, leisure and tourism companies signed up to support a Service Academy which is planned to offer 50,000 training places and work placements for people without work, over the next two years. The companies include Barcelo Hotels and Resorts, Bourne Leisure, Gala Coral Group, Guoman and Thistle Hotels, InterContinental Hotel Group, Merlin Entertainments Group, Pizza Express, Sodexo, Starbucks, Travelodge and Whitbread PLC. They will commence with the Service Academy scheme to train people for jobs within the hospitality sector by promoting an attitude of customer service in those taking part, and improve their basic skills. The Service Academies will provide industry-designed training to allow people to gain the soft skills and basic industry skills that employers need. The industry-led training programs will also give participants some experience of the jobs within this sector before they go on to apply for them. Individual businesses will be responsible for the training content, materials and structure and delivery methods employed on the program. Speaking when she was Shadow Secretary of State for Work and Pensions, Teresa May, the new Home Secretary said, We welcome the support being given by businesses in the hospitality industry and their commitment to helping to tackle unemployment by providing preemployment training in this service sector. The creation of a Service Academy will not only give people practical skills but also an entry route into a career in a growing area of business.

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Considering the drags on the economy such as the depressed housing market. The domestic lodging industry has experienced a definite turnaround in 2010. The near-term future could be that much brighter if certain elements of President Obama s recent tax proposal are enacted into law.S. 2011. According to Moody s Analytics. b) Taxation Policy The effect of the taxation policy on the US hotel industry can be clearly studied in the hospitality research of Mark Woodworth 14th December 2010. The newly proposed tax plan by the Obama administration includes provisions that not only extends the current tax rates.0 percent pay raise. The U. which rely on historic and forecast data from Moody s Analytics. but also introduces a payroll tax reduction of 2. and Federal deficit worries. The rest of the countries it operates in experienced no such big off an event.S. According to Moody s Analytics. thus stimulating the need for additional 14 . lodging industry is highly dependent on the health of the macro economy to sell their products: guestrooms. the Obama administration s recently proposed tax plan has the potential to profoundly affect the state of the U. hence creating no problems for Hilton Hotels. While the continuation of the existing tax rates was largely expected and was incorporated by Moody s in their previous U. The parsimonious quality and explanatory power of these variables relative to changes in lodging demand is significant and far superior to other measures. this additional income would be a boon to consumer spending which in turn would increase overall domestic production. The Hotel Horizons® forecasting models developed by PKF-HR over the past 10 years. are driven by underlying economic movements to predict the performance of hotels. Lodging Industry After suffering through the all-time worst year of performance in 2009. forecasts.0 percent of wages. the swift pace of recovery in the lodging industry has been remarkable. The econometrically based models rely primarily on changes in real personal income and total payroll employment. economy in 2011. U.S. took many macro economists by surprise. Recently released updated forecasts from Colliers PKF Hospitality Research ( PKF-HR ) reveal that a base has been established for very strong gains in both revenue and profits in the years to come. which effectively would give the vast majority of working Americans a 2. this provision alone could boost consumer spending by upwards of $120 billion. According to preliminary estimates from Moody s Analytics.S.As far as Hilton itself is concerned. high unemployment. there has been government stability issue when it comes to countries like Egypt where recent riots have pulled a great number of tourists and businessmen from visiting that particular part of the world. food and beverage services.S. and meeting rooms. The Potential Effect of the Proposed Payroll Tax Reduction on the U. hotel owners and operators are eager for growth. effective January 1. the payroll tax reduction proposal.

in the expected case scenario.3 million). 2011.3 million jobs added in 2011.5 million more jobs than originally expected will stimulate greater levels of corporate and leisure lodging demand nationwide. and a 2. 15 .8 percent increase in GDP.6%. The table below outlines how lodging performance in 2011 could be impacted if employment taxes are reduced from 6. These higher occupancy and average daily rate levels would yield a 280 bps improvement over the already attractive 6. The improved economic outlook would lead to a 5. the payroll tax reduction is directly measurable. Moody s estimates that the increase in GDP of 4. effective January 1.employees.0 percent if the employment tax reduction becomes law January 1. The expected 11.8 million jobs in 2011 (up from 1.1 percent lift in Net Operating Income for the typical U. The incremental 1.2 percent to 4. hotel would expand to 16.2 increase in demand. The recently released December 2010 to February 2011 edition of Hotel Horizons® is based on an employment outlook reflective of the pre-tax plan forecast of 1. Moody s Analytics cautions that the tax plan is far from complete and the disparate reactions from both sides of the aisle since the President made his views known clearly shows this plan is a work in progress.8 percent) will result in the creation of 2.9% improves to 4. if the President s proposal becomes law. These additional travelers would allow hoteliers to become even more aggressive with their pricing strategies such that the average daily room rate forecast increase of 3. while the psychological effects of tax policy certainty over the next year could provide a spending bump (albeit a difficult to quantify one).2 percent increase in revenue per available room (RevPAR).0 percent (up from a pre-proposal forecast of 2. 2011. 2011.2 percent on January 1.S. Importantly. 200 bps greater than the current PKF-HR forecast. However.

By March 2006. the economic stimulus package started to work: the economy shrank only . The longer run outlook.1%. c) Foreign Trade Regulations Hilton does get affected by the foreign trade regulations of different countries. The GDP estimate was 16 .8% with the housing bubble peak. compared with an increase of 0. however. GDP News) The economy only grew 1. The last time this happened? The Great Depression.6% in 2004. expectations for attractive industry growth over the next three to four years remain firm.6% in the third quarters.7% in Q1 2008 with the Bear Stearns bailout.1% in 2007.2% in the second and 3. spurring growth to 3.7 per cent in the previous quarter. but resumed 1. GDP plummeted 6. Overall.5 per cent in the fourth quarter of 2010. Most importantly. Hurricane Katrina slowed growth to 2. When the Subprime Mortgage Crisis hit in October. For instance it imports or buys various items like furniture and other products used from different countries.7%.7%. But high oil prices dragged on growth the rest of 2006. and expanding 3. which only grew 2.S.2% in Q3 and 5. UK: Gross Domestic Product (GDP) decreased by 0. In 2005.7% in Q2. growth slowed to 2. The economy fell . lodging industry hotel fundamentals would strengthen at a much quicker rate than would otherwise be the case. A falling dollar boosted exports. In 2008 and 2009. is effectively shifted one year earlier by this fiscal action. which was expected to arrive in 2012.2% in the first quarter of 2007 as the housing bubble popped. By the second quarter. The recovery. It finally grew 2. growing only .Conclusion The short run implications associated with the employment tax reduction component of the President s plan are significant for the U.9% in 2005.4% in Q1 2009. The Lehman Brothers collapse delivered the death blow-the economy dropped 5.6% in Q4.4% in Q4. is not materially different compared to previous expectations. (Source: BEA. growing 2. Each country has specific foreign trade regulation that affects the buying and/or import of various items. the economy expanded 2. the economy recovered to 4. 2.(Source: GDP Current Statistics).5%. When the banking system imploded in the third quarter. Economic Factors a) GDP Trends US: The 2000 recession was over by 2003. the economy contracted for four consecutive quarters.5% growth by Q2.4% for the year. the economy shrank 2.

5 per cent. Hotels and restaurants contributed most to the decline in this quarter. often upgrading to higher-end. Total services output decreased by 0. Distribution. often wealthy individuals to whom price is less of a factor in selecting a hotel. taking advantage of a weakening US dollar. Interest rates All guests.5 per cent in the previous quarter. Another explanation for the price strength of luxury hotels is their well-off customers. hotels and restaurants decreased by 0. luxury accommodations. compared with an increase of 0. But wealthy and international guests should not get all the credit for the price strength of these top tier hotels. These affluent income groups have been less affected by the economic downturn than that of lower income groups.5 per cent in the fourth quarter compared with a rise of 0. At least part of the price strength of luxury hotels can be explained by the size of this segment there are not many luxury hotels and the number of guests able to afford luxury accommodations has risen dramatically in the past few years. are looking to the US as a prime vacation spot and are spending more money.significantly affected by the bad weather in December. Hotel room rates in popular cities will continue to escalate as demand outstrips supply. Only luxury hotel guests indicate a willingness to accept larger rate hikes compared to a year earlier. except those staying in luxury hotels. Affluent buyers aren t particularly affected by rising interest rates and mortgage related problems. namely services and construction. In addition. The largest contribution to the decline in this quarter was from business services and finance. but even with a smaller increase their guests show more resistance to future rate increases. Some credit must go to the hotels for attracting these guests and creating 17 . The decline in the fourth quarter is due to decreases in two of the component aggregate series. more analysis is provided in the bulletin. While the luxury segment represents only a relatively minor percentage of the total guestrooms in the US. they re a much greater factor in the revenue arena. international tourists. So luxury hotel guests have the ability to absorb the cost increases rather easily. Luxury hotels typically cater to a distinct kind of guest. are less tolerant with rate increases than they were in the previous year. This positive relationship will continue as long as the number of new luxury properties does not grow faster than the number of persons willing to pay their premium prices. Surprisingly. Luxury hotels boosted rates by 6% in 2007 and maintained their occupancy levels (71%). Upper Upscale hotels also boosted rates in 2007 (4%).8 per cent in the previous quarter.

New Orders for Manufactured Goods. Comparing luxury hotel brands (2006 vs. HIL is monthly composite leading indicator that. Interest Rate Spread. Intercontinental and Grand Hyatt showed the biggest gains in guest loyalty. the same as the annual growth rate of the country s overall economic activity. This compares to a long-term annual growth rate of 3. a signal of turning points. The index s six-month growth rate. Housing Activity and National Vacation Barometer. Hotel Profitability. went up by an annual rate of 10 percent during May after increasing 8. During the deepest point of the recession in January 2009.5.7 percent.revenue in the midst of economic uncertainly. Eight of the nine components that make up Hotel Industry Leading indicator had a positive contribution during May: Weekly Hours in Hotels. 18 .8 percent during April.5 percent. Only one of the nine components had a negative or zero contribution to HIL in May: Labor Market Tightness. The index was set to equal 100 in 2000. International Visitors Future Demand. on average. this growth rate was down to negative 15. 2007). The latest increase brought the index to a reading of 113. leads the industry s business activity four to five months in advance. Oil Prices.

The hotels have to carefully segment their markets and decide their target markets. b) Income Distribution Big shot businessmen and those who can afford luxury can afford hotel-ling with Hilton and its chain of hotels. who account for a large proportion of hotels income. These people usually earn themselves and spend on themselves. 3. Amadeus commissioned a report from the Economist Intelligence Unit. c) Inflation Since Hilton Hotels targets the elite and businessmen. according to Amadeus. The masses are not involved. which predicted that the business world was entering a new age of austerity. increase in inflation does not have much strong effect on its business d) Unemployment Unemployment does not bother the hotel industry that much. The outlook appears bleak.b) Money Supply Since Hilton operates in mostly developed or relatively better/strong economies money supply is not an issue. c) Lifestyle Trends The hotel industry has been particularly hard hit by a slump in business travelers. People here love to go on vacations and businessmen love to earn more. The value of currency where it operates is apparently stable. Hence this is a good sign for Hilton Hotels. so they can afford to travel and stay luxury. Socio-cultural Factors a) Demographic Factors The demographic factors have a great impact on the whole hotel industry aswel as Hilton Hotels. a leading provider of technology to the travel and tourism industry. Where tourists love to go and close to business junctions for businessmen. 19 . As far as Hilton is concerned. e) Disposable Income Major operating markets for Hilton are consumption based economies. published in March 2009. Hilton targets the rich. Talking in specifically about Hilton. its hotels are situated exactly where the demand is.

b) New Discoveries y y y DoubleTree by Hilton Hotel Charlotte Airport Charlotte Museum Embassy Suites Anaheim North Discovery Science Center Homewood Suites by Hilton® San Jose Airport-Silicon Valley Museum Children Discovery 20 . and hence require human resource to be on their toes. executives are anxious to make business trips as productive as possible. Forget gyms and restaurants. e) Level of Education For the hotel industry somewhat skilled labor is required. whatever culture they operate in. they mould their employees accordingly. shorter. concluded that executives would make fewer. titled The austere traveler The effect of corporate cutbacks on hotels. the trends have been seen as to how governments support RnD in this sector. Good wifi connectivity is now rated above any other extra. d) Attitude to work Hotels are businesses that run 24/7. There is a flight to trusted brands. When people pay heavy amounts they in return expect good manners and service which can only come from training and development of the employees. They provide tools to allow companies to get closer to their customers. and cheaper business trips in 2009. With the eyes of their organizations and shareholders upon them. Antoine Medawar. Hotels usually run shifts and require their staff to be punctual. instead concentrate on efficient checkin and check-out. and the expectation of a common level of good service. managing director of Amadeus Hospitality Business Group. 4. Technological Factors a) Government Focus As the focus throughout the world is shifting from manufacturing to service sector. was quoted as saying: We are entering an age of visible austerity with regard to business travel. Governments of the developed nations allow hospitality business to go beyond borders since it is becoming a vital and a big part of revenues. So.The report. and that they would prefer basic efficiency and good service over ancillary services. no matter where you are in the world. All the lower level staff needs to be trained with perfect hospitality traits and the senior management need to be selected on the bases of their communication and hospitality skills. and internet access.

They should be linked with other business intelligence solutions so that integrated reports show how each program is performing at any technological touch point of the hotel. then Property Management Systems (PMSs) could evolve with concierge applications enabling guests and hoteliers to communicate more easily prior to or during a stay. making them robust enough to host new content and the necessary workflow and security to accommodate that. and respond to customers service issues. explain how to set up engaging profiles. This would necessitate changes to the hotel chain s content management system. up sell and cross sell. pay-per-click ads. 21 . Marketing also depends on raw information. Marriott Resort and Discovery Cove Dolphin Swim Experience Package  Destination Discovery promotion (Laguna in Phuket) Sheraton c) Speed of Technology Change y y y Strategic. Social media can also help with sales. local search Review Facebook. Hoteliers commonly use rate comparison tools to get valuable information to feed their Revenue Management Systems (RMS). It just depends on what can be done now. build identity in a more personal way. be done. By harnessing the volume of conversations hoteliers can show. Marketing depends on research. promote products. why those people s peers should consider them and this can be done on a many-to-many basis. listening to what people are saying online. If marketing is talking online. But this is just the beginning. Twitter and LinkedIn. through what people are saying. explain how social media sites can contribute to SEO and examine the impact of YouTube and online videos Enhance services y d) Rate of Obsolesce Many industry players already understand this change. and how systems need to change to embrace this potential. and should. and research is monitoring that is. instantly and globally. They could be using keyword systems to pick up on broader conversations. build immediate loyalty or adherence to their brand. determining keywords. and are pioneering initiatives to engage with customers. and there is much that can be done in this area to make the information work harder. resorts and bed and breakfasts. to alert their marketing departments and build on-the-spot promotions in their Central Reservation Systems (CRS) to be available immediately online. comprehensive plan to drive online traffic and reservations to hotels. They already recognize that they need to be part of the conversations taking place online because people believe those conversations more than they do their own advertising. Much more can. Search engine optimization (SEO).

councils employ environmental health officers to implement the Food Act. not just on major carbon emitters. The Commonwealth legislation is usually set first and State governments modify the legislation so that it can be better implemented in their State. d. The tables below summarize the relevant legislation for each of the major areas of the hospitality industry: Hygiene Legislation Food Act 2003 (NSW)(as amended) Main features Covers all aspects of food handling and production as well as the maintenance of premises where the food is stored. hospitality enterprises are endeavoring to recycle. standards and regulations for businesses. reduce energy and water consumption. local governments and households to follow in order to better preserve the environment. Environmental Considerations The European Union currently operates the largest emissions trading scheme in the world and the US and several other countries are also in the process of developing schemes that will place greenhouse gas emission caps on companies. but on other sectors such as the hotel industry. Competition Law Employment Law Health and Safety Product Safety Most Commonwealth legislation that relates to the hospitality industry has State equivalent legislation. For instance. Legal Factors a.5. prepared and sold. These will increasingly have a direct impact. This includes legislation such as the Protection of the Environment Operations Act 1997 NSW and the Smoke Free Environment Act 2000. guidelines. industry. c. 22 . 6. b. Local governments are responsible for implementing some legislation. The Environmental Protection Authority in NSW provides legislation. reduce waste and design more sustainable buildings. As a result of this legislation.

Gaming Machines Act 2005 (NSW) (as amended) Gaming Machines Regulations 2002 (NSW) Responsible Conduct of Gaming/Gambling Main features Includes the number of machines a venue is permitted to have. Alcohol cannot be sold without a license and only staff with a RSA certificate can serve it. hours of operation. training staff must undertake. Environment Legislation Main features Gaming Legislation y y y Smoke Free Environment Act 2000 (NSW) Makes it illegal to smoke in an enclosed public place. actions that must be adopted to address problem gamblers such as displays clocks or counselling signage. signage that must be put in place. harm minimization. RSA provides training on recognizing the problems of alcohol abuse and knowing when to stop serving customers who may be becoming intoxicated.Liquor Legislation y y Liquor Act 1982 (NSW) Responsible Service of Alcohol (RSA) Regulation Main features Covers all aspects of liquor sold in a licensed enterprise. Staff working in gaming must have a RCG certificate to recognize and take action with problem gamblers. and how prizes should be awarded. It includes licensing hours. 23 . Ensures that fair practices are used for gaming equipment. the responsibilities of employers in selling alcohol. thus preventing passive smoking. the dangers of problem gaming. as well as offences and legal proceedings.

Workplace relations Legislation y y Workplace Relations Act 1996 (Cth) (as amended) Workplace Relations Amendment (WorkChoices) Act 2005 Main features The aim of these acts is to ensure employers and employees negotiate fair wages and conditions.Health and safety Legislation y y Occupational Health and Safety Act 2000 (NSW) Occupational Health and Safety Regulations 2001 (NSW) Main features Determines what employers and employees must do to promote the safety and well being of people in the workplace. 24 . Workers compensation Legislation y y Workers Compensation Act 1987 (NSW) (as amended) Workplace Injury Management and Workers Compensation Act 1998 (NSW) Main features Ensures employees are compensated for injury or sickness caused as a result of their employment. and to promote employment. living standards and welfare for Australians. Ensures that businesses do not give false or misleading information in relation to products and services. Consumer protection and trade practices Legislation y y Fair Trading Act 1987 (NSW) Trade Practices Act 1974 (Cth) (as amended) Main features Governs issues of product safety and product information.

age. disabilities or sexual preferences. 25 . religion. y y y y y The Anti Discrimination Act 1977 Anti-Discrimination Act 1977 (NSW) Sex Discrimination Act 1984 (Cth) Racial Discrimination Act 1975 (Cth) Disability Discrimination Act 1992 (Cth) Main features Privacy Legislation Ensures that people are not discriminated against on the basis of gender. y y Privacy Act 1988 (Cth) Privacy Amendment (Private Sector) Act 2000 (NSW) Main features Provides security for personal information such as tax file numbers and credit information held by organizations.Equal employment opportunity Legislation y y Equal Employment Opportunity (Commonwealth Authorities) Act 1987 (Cth) Equal Opportunity for Women in the workplace Act 1999 (Cth) Main features Anti-discrimination Legislation Ensures that everyone is treated fairly and equally when seeking employment. race.

In the hotel/hospitality industry. They are either big shots of corporations or are those have become highly successful businessmen. Hence even in this industry there are certain laws and environmental considerations that need to be followed. Linking this with the economic factors we see that a country s interest rates. governments tend to encourage research and development on this industry. The socio-cultural factors tell us a similar story. All of these advancements and work cannot be carried out without rules and regulations.PESTEL Conclusion After the PESTEL analysis of the entire hotel/hospitality industry. For those who want luxury pleasure or business trips are those who earn huge. money supply. 26 . Fancy gadgets and technologies are being introduced day by day. Similarly. GDP is stable or keeps getting better. Backed by the economic analysis. Even if the country is hit by a major natural disaster. inflation and unemployment are no issues. Evidence from the political analysis shows that taxation policy in the US introduced by Obama Administration. The major markets for such an industry are the United States of America and the United Kingdom where government stability is not an issue. has resulted in more jobs. it has the capacity to stand back on its feet. These have been discussed under legal factors and environmental considerations and have to be followed by any organization in this industry. high wages and an increase in performance of employees and has also increased revenues of the organizations. one can clearly see that such industry s major markets are the economies that have been developed and/or are on the fast lane of developing. They earn themselves and spend at themselves hence making income distribution no issue. Hence. The world is becoming into a fast moving engine. the major market players have targeted those who can afford luxury and those who love travel either as tourists or as businessmen. The technological factors made it clear that the world s trend is now shifting more from manufacturing base to service base. the lifestyles and trends have been changing. Demographics are very important for an organization to study and to decide what will its segments and target market is. This can be clearly seen by linking the political analysis with the economic analysis.

the brand recently completed the translation of its Hilton. 27 .com and HiltonToHome. why those people s peers should consider them and this can be done on a many-to-many basis. brand marketing and management Hilton Hotels. This would necessitate changes to the hotel chain s content management system. through what people are saying.com. Hilton Hotels announced the re-launch of two of the brand s online channels HiltonJourneys. then Property Management Systems (PMSs) could evolve with concierge applications enabling guests and hoteliers to communicate more easily prior to or during a stay. senior vice president. They should be linked with other business intelligence solutions so that integrated reports show how each program is performing at any technological touch point of the hotel. and research is monitoring that is. In addition to the two refreshed sites. said Jeff Diskin.com booking portal into Spanish. listening to what people are saying online. Social media can also help with sales. If marketing is talking online.ANLYZING THE NATURE AND STRENGHT OF COMPETITIVE FORCES RIVALRY 1. to alert their marketing departments and build on-the-spot promotions in their Central Reservation Systems (CRS) to be available immediately online. By harnessing the volume of conversations hoteliers can show. The installation of Mobile Travel technology with Iphone was also one step towards clever marketing strategy. instantly and globally. making them robust enough to host new content and the necessary workflow and security to accommodate that. and there is much that can be done in this area to make the information work harder. Marketing also depends on raw information. With these refreshed sites we have three unique touch points that allow our guests to connect with Hilton in ways that are most relevant to them. Hoteliers commonly use rate comparison tools to get valuable information to feed their Revenue Management Systems (RMS). and is in the process of completing a French version of the site. The explosive and global growth of the Hilton brand has led us to rethink the way we use the internet to connect with our guests. They could be using keyword systems to pick up on broader conversations. Rivalry intensifies more frequently and more aggressively industry members take actions to boost market standing a) Marketing Tactics Marketing depends on research.

Asia Pacific. all providing a turnkey spa solution that owners can easily implement and customize. c) Product innovation Hilton Hotels & Resorts Launches eforea: spa at Hilton Hilton Hotels & Resorts unveils eforea: spa at Hilton. Middle East and Africa and the Americas to create a unique concept for today s savvy global travelers.Comparison with others: Global Hyatt Corp. knowing Hilton Arlington Hotel has announced that they have become the first Hilton hotel in the city to introduce PURE Allergy Friendly Rooms. freshest air in their rooms and enjoy a more restful sleep during their stay. Leveraging its global reach and expertise. Hilton Sponsors Time out Dubai to Launch Pioneering Apple Application The Hilton Hotels brand in association with Time Out Dubai treated Arabian Travel Market (ATM) visitors to a preview of the United Arab Emirates first downloadable city guide. The mobile advertising display campaign is designed to drive people to register for the Hyatt Gold Passport frequent guest rewards program and let people visit the new. Marriott has an extensive and clarifying internet site. Hilton pulled the best elements and practices from Europe. Hilton Arlington Becomes First Hilton in the Dallas Area to Introduce PURE Rooms Travelers to Arlington Texas can breathe a little easier. Travelers who suffer from allergies and asthma can now enjoy the cleanest. Various packages are introduced to attract customers during summer season. as it is considered as an off-season. its new global spa concept that is poised to be one of the world s fastest growing spa brands. eforea: spa at Hilton features an exclusive menu of treatment journeys and innovative design elements. It has a lot of information for the customers and you can also book online. The Hilton is setting a new standard by introducing 15 new PURE rooms which create an allergy-friendly environment and remove up to 98% of bacteria and viruses. But of course there are lots of other ways to promote a hotel. will launch a mobile advertising campaign that leverages Microsoft s mobile advertising relationship with Verizon Wireless. b) Strong dealer networks No information was found regarding dealer networks for any of the Hotels since hotels do not need any distribution network. 28 . fully functional mobile web site using their mobile phones.

called PrintSpots®. causing itching.Hilton Worldwide Unveils Innovative Mobile Printing Application with HP Hilton Worldwide announced today that guests will have the ability to print wirelessly from Blackberry smart phones at 1. dust and animal dander can trigger an immune response. mold. based on intense research around the needs of the guests. a privately held New York-based company that promises removal of 98% of bacteria and viruses and has worked with Marriott hotels. Thirty percent of the PrintSpots are located at hotels within Hilton Worldwide s portfolio. Today. Later innovations of Marriott included the first workspace (desk. d) Improved or higher quality products Highest Water Quality at the Hilton Hotel.300 hotels worldwide within the company s portfolio of brands. Hyatt Hotels Corp. light. Malta The Hilton Hotel in St.) in a hotel room. is paying attention. is located directly at the beach. Malta. HP launched ePrint. sneezing and asthmatic attacks for allergy sufferers. Comparison with others Fifty-four percent of Americans have an allergy according to the National Institutes of Health. first hotel brand to open licensed Starbucks stores in hotels. Hilton Worldwide and IBM Announce Global Technology Infrastructure and Solutions Agreement Hilton Worldwide and IBM (NYSE:IBM) today announced a global collaboration agreement to enhance the hospitality company s technology infrastructure and to facilitate the development and delivery of next-generation technology solutions. carpets and upholstery. an effective alternative for the insufficiently functioning seawater desalination system for the generation of drinking water was to be found. an innovative mobile printing application that enables users to print directly from their BlackBerry to any printer in the PrinterOn® network of public printers. a holistic approach to designing public spaces. 29 . etc. adding "allergy friendly rooms" across the chain in its latest customer service offering. first TV remote control. first to offer express check-out. Odors. and allergy rates have increased by two to five times since 1980. chair. pillows. Julian. with special emphasis on the lobby. allowing guests around the world to print documents from their BlackBerry smart phones directly to a printer at their hotel. And dust mites among the most common of allergens live and procreate prodigiously in mattresses. The hypoallergenic rooms are being outfitted by Pure Solutions. In the course of modernization measures. and more recently.

These programs reward frequent stays at associated properties. pillow cases and pillow shams (decorative covers for bed pillows) at all of their hotels.At the same time. y y y y Starwood Hotels Choice Hotels Internationals InterContinental Hotels Marriot International Orient-Express Hotels y To many travelers. Here we will take a look at two of the most popular 30 . Hyatt also plans to add Portico's organic cotton bath linens (towels. a clean room. Hyatt Regency. Additional Grand Hyatt. and it only makes sense. In spring 2011. and bath rugs) to the premier suites. the frequent traveler is letting their favorite hotel rewards program be their guide. the shaving services will allow men to enjoy their daily shave without having to lift a finger. the choice has been made long before they even looked at the hotels near their destination. 2. often saving the best rooms or amenities for the most loyal guests. The new bedding is now available in premier suites at 14 Hyatt hotels nationwide as well as in Aruba. They provide with luxury living at the best. Rivalry intensifies as number of competitors increases and becomes equal in size and capability. Perfect for the business traveler getting ready for a major presentation or for grooms and groomsmen getting ready for the big day. In many cases. Launching at select Hyatt Pure locations. bathrobes. good location. Increasingly. the hotel wanted to become independent of the public water supply. and complimentary breakfast aren't what drive them to choose one hotel over another. Expert competence was also required for the treatment of the swimming pool water. Comparison with competitors The hotel company has struck a multi-million-dollar deal with New York City-based Portico Home + Spa to launch the eco-friendly bedding consisting of sheets. and Hyatt hotels plan to add this bedding line to their premier suites in the next year. e) Developing valuable expertise The expertise that all major players of the industry enjoy is hospitality and they have built themselves on what they have expertise in. This new offering will be backed by ê Shave products with services delivered by Hyatt Pure estheticians.

2% over 2003 levels. Rivalry is usually stronger in slow growing markets and weaker in fast growing markets In 2006 the selling. and says industry observers. for example.5 74. the supply of upscale hotels rose by only 0. Rivalry is usually weaker when there are less than 5 competitors or else so many that impact of one company s action speed thinly across industry The following table compares Hilton s performance to its competitors in 2006.56 115. The said figures are justifiable given the fact that Hilton Hotel is continuously expanding every year.Marriott Rewards. In 1999. Comparison to Competitors Starwood Number of Hotels Number of Rooms (Thousands) Geographical Presence (Countries) Occupancy (Percent) Average Daily Rate (USD) RevPAR (USD) 871 266 Hilton 2.935 501 Marriott Intercontinental 2.43 153.A.61 N.A. according to Smith Travel Research.rewards programs . by Hilton Hotels Corporation.3% year-over year. 136. 31 .46 114. and Hilton HHonors.4 N. a far cry from the heady days of the 1990s. 3.99 N.2 72. offered by Marriott International.832 514 3. general and administrative expenses of Hilton Hotel accounts to around 900 million USD from 400 USD in 2003.A. 4. the supply of upscale hotel rooms jumped 15.600 538 100 78 68 100 71. But in 2004. 191. The expansion of the Hilton Garden Inn brand comes during a lull in the development of upscale hotels.33 82.

the services offered are somewhat the same. the market is very much fast growing. from spa s to restaurants. "We expect and welcome fair competition. They all have similar services to offer to people from the same segment. Starwood claims that California-based Hilton has been under intense pressure for improved profits since it was bought by the private equity company Blackstone for $20bn (£13. Hilton provides with transportation facility on the road. Overall they target one or the same. By Andrew Clark (guardian.Such dramatic swings in construction are not unusual for an industry notorious for boom and bust periods.co. Kenneth Siegel. Orient Express Hotels have their own Orient Express which facilitates the customers. which owns brands such as Sheraton. The major players are not much bothered about what others are doing. Similarly. Rivalry increases when one or more competitor becomes dissatisfied with their market position and launches moves to foster their standing at the expense of rivals. Since going private. Starwood sues Hilton for stealing trade secrets. computer fraud and unfair competition. however. 6." 32 . i.000 electronic files containing sensitive information about its luxurious W hotel chain. It won t cost any switching cost for a customer to dine in at Marriot or at an InterContinental Hotel. They differentiate themselves in little what they do. "This. According to a lawsuit filed by Starwood. 5. they will go through acquisitions. All of these hotels provide with hotel rooms to residential suites. Hilton has hired 10 managers and executives from Starwood. Westin and Le Meridien.5bn) in 2007." said Starwood's general counsel. but yes they do eat from someone s pie when they feel that their growth has slowed down.e. For instance. is a blatant case of trade secrets. Denizen Hotels. Rivalry increases when products of rival seller become more standardized and which switching cost from one brand to another is low. As far as hotel industry is concerned. two of these executives brought with them a vast store of trade secrets that Hilton used to develop a newly launched concept. Talking about the hotel industry and specially staying in the bracket of Hilton and its rivals.uk Friday 17th April 2009) The US-based hospitality company Starwood has accused its rival Hilton of a "massive" case of industrial espionage through the alleged theft of more than 100.

Washington. Ron Klein. See experience and learning curve) 1940s InterContinental Hotels & Resorts is born as the International Hotels Corporation on 4 April.Starwood claims that a former head of its luxury brands group. according to the lawsuit. In 1949. 33 . according to Starwood's lawsuit. the first InterContinental hotel begins operating in Belém. downloaded files that amounted to "truckloads of documents when printed" on a laptop computer using a personal email account. International changes its name to InterContinental Hotels Corporation in 1947 to reflect its intention to develop around the world. InterContinental's first Caribbean properties are also inaugurated in the 1950s. The information. 1946. Las Vegas and Miami. described as an "eclectic. included a step-by-step guide to creating a luxury concept that was used in building the successful W brand. Blackstone has faced criticism for buying Hilton for a premium price at the top of the market. Hilton said of Starwood's allegations: "Hilton Hotels Corporation believes this lawsuit is without merit and will vigorously defend itself. Key Dates Intercontinental Hotels (compared with Hilton s timeline. Last month Hilton revealed the creation of a new brand. that Denizen was "cut from the same cloth as W in many respects". global lifestyle destination" with locations planned in 13 cities including London. We fully intend to move forward on the development of our newest brand. Brazil. In a statement. The greater benefits of going after a new opportunity the more likely it is that one or more rivals initiate moves to capture it. Competition has become fierce among hoteliers as the economic downturn hits occupancy rates. Starwood maintains that there are striking similarities to its W concept such as the creation of an area described by both as a "resto-lounge" providing food service in a living room setting." 7. Denizen Hotels. in addition to board presentations and market research studies that cost more than $1m. Denizen. 1950s Early expansion of the hotel brand develops along owner Pan American World Airway's routes in Latin America. Klein even admitted at a press conference.

2006 InterContinental launches Concierge Programme and Aston Martin Racing sponsorship. Cozumel. 34 . For the first time since 1959. y Hilton s acquisition of Blackstone y Gatehouse Bank plc (Gatehouse). ft. assuming operations for the Hotel Mark Hopkins in San Francisco (now InterContinental Mark Hopkins San Francisco). The new owners partner with Pan American Life insurance to build and open the 500-room InterContinental New Orleans. The InterContinental Miami and InterContinental The Willard Washington. portfolio late in the decade. United States. 1970s InterContinental breaks into the U. market. 1990s InterContinental re-enters the Mexican market by signing a joint venture with Presidente Hotels. D. the industry's first global guest-recognition program debuts. Massachusetts. has completed the £32. InterContinental opens first-ever hotel in Boston. and Ixtapa. Mexico City. Asia/Pacific and Africa. 2000s InterContinental continues plans to drive growth around the world with key focus on resorts and development in the United States. InterContinental announces 'Insider Experiences. InterContinental London Park Lane reopens after £76m refurbishment. providing a 12 years term certain income with no breaks. Puerto Vallarta. InterContinental New York (now InterContinental the Barclay New York) was also added to the brand's U. a wholesale Shariah compliant investment bank in the City of London. Rivalry increases when a strong company outside industry acquire weak firm in the industry and launch aggressive well funded moves to transform their newly acquired competitors into major contender. Rare for the UK market.340 sq. The 97.1960s InterContinental opens its first hotels outside Latin America and becomes the first international hotel brand to establish a presence in the Middle East.C. Los Cabos. are added to the collection. adding properties in Cancun. 1980s Pan American Airlines sells its interest in InterContinental.65 million acquisition of the InterContinental Hotels Group Global Headquarters in Denham. the world's most prestigious motor sport event.S. The group opens its first four hotels in Europe within a two-week period in 1963. Aston Martin has triumphed at the legendary 24-Heures du Mans in France. The Six Continents Club. 2007InterContinental partners with National Geographic.' 8. Buckinghamshire. the lease benefits from minimum fixed rental uplifts of 13% in both 2012 and 2017. property is fully occupied by InterContinental Hotels Group until July 2022.S.

today announced the successful implementation of Taleo Enterprise Edition.y DUBLIN. and their total value was about $30million. POTENTIAL ENTRY OF NEW COMPETITORS 1. As part of this alliance. the number rose to 11 mergers. Just as Hilton merged with Blackstone and Intercontinental Group merged with TELO. Typically. a company that achieves economies of scale lowers the average cost per unit through increased production since fixed costs are shared over an increased number of goods. The findings suggest that these mergers generally reduce costs by eliminating redundant facilities and personnel. the industry leading talent management solution for large enterprises. For example. joint ventures and mergers. which was partially attributed to economies of scope. Improved financial performance. The hotel industry today is going through many mergers and takeovers. Hence any new entrant would have to enter either on economies of scale or would have to face cost disadvantages. Calif. the leading provider of talent management solutions. Furthermore. Reservation cost of hotel rooms and generate a joint reservation system and a general cost reduction in reservation transactions. In the hospitality industry economies of scope can originate from strategic alliances. As cited above. IHG ("InterContinental Hotels Group"). They have been in these industries for decades. Cost and resource disadvantages not related to size. England. All the big shot hotels are expanding by acquisitions and mergers. and WINDSOR. the companies use the same central reservation system (CRS) to support both hotel and car reservations. In 1993 only two mergers occurred in American hospitality Industry. In 1998. July 5 Taleo Corporation (TLEO). with leading international hotel company. was also identified. the mergers increased the product and service offerings and thus strengthened the economies of scale of merged firms. Consequently. and have achieved economies of scale. valued at $25 billion. all the major players in the hotel industry have reached to a point where their fixed cost has dropped down to minimum. These giants have well established their feet and are still grabbing the best possible opportunities (refer to rivalry point 1) 35 . consider a hospitality company that forms a strategic alliance with a car rental company. Presence of sizeable economies of scale in production or other areas Economies of scale are the increase in efficiency of production as the number of goods being produced increases. 2.

3. Brand preferences and customer loyalty.
People with high income are more likely to stay in an upscale luxury hotel, which a person with a low-medium income may not be able to afford. Customers for the hotel industry include tourists as well as business travelers. Tourists may be further categorized into low-medium income groups and high-income groups as the income of a person will determine the kind of hotel he/she chooses. The target market for such hotels is very clear. Hence brand preference is very important to them. Loyalty for the brand comes from the brand preference itself. The C.E.O of big shot company would not want to stay is any xyz hotel but would love to stay in a hotel that carries years of experience, excellence and a name.

4. Capital Requirements
When you submit your license application for a Hilton franchise, you pay us an initial fee based upon the number of guest rooms in your prospective hotel. The initial fee is currently $85,000 for the first 275 guest rooms or suites plus $300 for each additional guest room or suite, with a minimum fee of $85,000. Monthly royalty fee 5% of monthly gross room s revenue and other fees. The license application fee for Marriott is $50,000 with a royalty fee of 5.5% of gross room revenues. It is not an easy or a cheap job to open up a luxury hotel.

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5. Access to distribution channels
No such distribution channels are need for the hotel industry, since it s the customers that come to the service.

6. Regulatory policies, tariffs and trade restrictions.
Sometimes countries might put trade restrictions as a barrier to entry. Such barriers were seen in the following countries. Although India has steadily opened up its economy, its tariffs continue to be high when compared with other countries, and its investment norms are still restrictive. This leads some to see India as a rapid globalizer while others still see it as a highly protectionist economy. Till the early 1990s, India was a closed economy: average tariffs exceeded 200 percent, quantitative restrictions on imports were extensive, and there were stringent restrictions on foreign investment. The country began to cautiously reform in the 1990s, liberalizing only under conditions of extreme necessity. Since that time, trade reforms have produced remarkable results. India s trade to GDP ratio has increased from 15 percent to 35 percent of GDP between 1990 and 2005, and the economy is now among the fastest growing in the world. Saudi Arabia s overall economic freedom remains constrained by inadequate levels of monetary freedom, investment freedom, and property rights. The legal system is vulnerable to political influence. Investment freedom remains hampered by bureaucracy and a lack of transparency. Monetary stability is weak and continues to be adversely affected by price controls.

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COMPETITIVE PRESSURE FROM SELLERS OF SUBSTITUTE PRODUCTS
1. Whether substitute are readily available and attractively priced.
Hilton has its hotel chains in so many countries around the globe. For people who are actually the target market of Hilton Hotel, there are many other substitute hotels. In china, people can have The opposite House, Four seasons, Mandarin Oriental and Raffles Beijing Hotel to stay in. In Chicago, In Chicago, The Peninsula Hotels (from $263), Trump International Hotel (from US$276), Ohio House Motel (from $117/night), Hard Rock Hotel (from US$119), Four seasons (from US$283). In New York, Four Seasons, The Peninsula New York, Trump international Hotel and Tower are the substitutes of Hilton Hotels. In Egypt, you can have so many hotels which are substitutes of Hilton. Few of them are; Al Moudira Hotel ($150 $195) Avg. price/night, Pavillon Winter Luxor ($73 - $420) Avg. price/night. Whereas Hilton ($154 - $320) Avg. price/night*. They are also providing their customers with all unique services. Their target market is also the high class people. They have convenient locations for their customers and have luxury rooms with all fully fledged services and they have price which can attract customers easily as compared to Hilton hotels.

2. Whether buyer view the substitute as being comparable or better in terms of quality, performance and other attributes.
Four Season Hotels: highly personalized 24-hour service, combined with authentic, elegant surroundings of the highest quality, embodies a home away from home for those who know and appreciate the best. Their deeply instilled culture, personified by our employees, continues to get stronger. Over nearly 50 years, they have built an unrivalled depth of reliability, trust and connection with our guests a connection we will steadfastly uphold, now and always. Their services include Executive club, fitness facilities, spa, dining etc. The Opposite House: The Opposite House is part of The Village in fashionable Sanlitun, Beijing, and is a short 10-minute drive to the city s central business district. Free Wi-Fi is available throughout the hotel. Rooms are spacious and combine modern, minimalist design with luxurious amenities. They are fitted with a flat-screen TV and digital entertainment system. The bathroom features a rain shower and a bathtub.

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The Ohio House Motel provides en suite rooms with cable TV and air conditioning. The Lincoln Park Zoo is 2 miles away. Tokyo. Bangkok and Manila. the hotel is the centre of Hong Kong s social elite and business scene. Our 501 guest rooms and suites are newly designed to blend classic Chinese elegance with Western grace. Peninsula is living legend. the 39 . Hotel Rooms: 99. Al Moudira is just a 4km away from the valley of kings. Millennium Avenue and Grant Park are nearby. near the Luxor Temple and other attractions such as the Karnak Temple. The Opposite House is a 30minute drive from Beijing Capital International Airport. aiming always to delight our customers. lunch and dinner 7 days a week. in the 1920s. Overlooking glittering Victoria Harbour. The Peninsula Hotels unique blend of Eastern and Western hospitality in an atmosphere of unmatched service started at its flagship hotel. Hong Kong redefines luxury experience. The award-winning service and the five-star facilities are legendary. the only palace on the west bank of Nile. The Peninsula Hong Kong. Zeina Aboukheir wants to treat you to these natural and historical surroundings. home to the Chicago Cubs baseball team. The Ohio Motel House is 4 miles from Wrigley Field. In-room safes are available in each room. the patios ornate with arabesques and the eight-hectare garden will provide the setting of your oriental dream. New York. Beverly Hills. The hostel s restaurant serves breakfast. The Opposite House offers cultural tours to make your stay more enjoyable. modern facilities and intuitive technology combined with exceptional. Hotel Al Moudira: All the gateway to Luxor and the horizon of the dessert. with its 6 food and beverage choices. A fitness centre is also available for workouts. Mandarin Oriental. Pavillon Winter Luxor: Located on the banks of the River Nile in the midst of a tropical garden in the city centre. and in many cases we are now serving the third generation of our loyal guests. Chicago. The Peninsula Hotels: The peninsula Hotels group has a unique identity among the World s leading hotels. Guests at the Ohio House have access to free parking.Guests of The Opposite House can enjoy massage treatments at the spa & wellness centre or unwind by the indoor swimming pool. personalized service. Mandarin Oriental: Mandarin Oriental. The ocher domes. Beijing. to help you discover and fully enjoy the magic of the Arabian nights. We set our sights high and standards higher. Hong Kong is the Group s flagship and an icon in its own right. which includes a lounge bar and night club. The group is dedicated to providing luxurious comfort. Ohio House Motel: The features free Wi-Fi and an on-site restaurant. Shanghai. Enjoy Mediterranean flavors or delicious Asian dishes at The Opposite House. the name synonymous luxurious with comfort and impeccable service. which can be experienced in any of its nine award-winning hotels in Hong Kong.

The services and the locations as noted above are somewhat similar to those of luxury hotels. Hence.yahoo. 2009 770. As they are also provide the top class services to their customers. Mandarin Oriental Intl Ltd acquires Shanghai Peace Hotel from Peoples Republic of China. 2008 816.000 Mar 31. $44. performance and price with the Hilton.000 Mar 31. 3. switching costs are equal to zero. they can be the perfect substitutes for Hilton.160 y Mar31. back in 2001. 2007 581. Shanghai.000 Mar 31.986. 3. Similarly the Peninsula Hotels have been in mergers with property businesses in Hong Kong. Beijing. Over the years they have been acquiring and forming agreements with different companies in order to expand. As for the substitutes. These all hotels are comparable in terms of quality.Luxor museum. How much it costs end users to switch to substitutes As all substitutes of Hilton are the top motels and restaurants with standard rates that are almost same as those of Hilton or any other luxury hotel or resort. Bangkok etc. the International Convention Centre and the Mummification Museum.com) Period Ending Total Revenue Mandarin Oriental As their income statement suggests. The Pavillon Winter Luxor features three restaurants. 2010 4 93. Signs that the competition from the substitute is strong y The profit is on the rise Hilton reported $8162million revenue in 2006 (finance. New York. Hilton s and its competitor s examples are stated above. Tokyo. Chicago. 4. It won t take a customer to spend extra just to get to these motels or restraints.948.000(in thousands) Adding a new production capacity Hotels expand by acquisition and franchising.1million for the year 2010 and sales of. two bars and a swimming pool. 40 .

HiltonHonors is offering spring 2011 promotion program to its customers. Surveys on the website will help with marketing. the rates and the services provided by Hilton s competitors and the substitutes are somewhat similar so the buyers do not have problems regarding any switching costs. Hotel managers must embrace customers who continually seek out the best deals and lowest rates when booking their hotel stay. As discussed earlier. Intelligent business tools will be important in keeping track of these rates and deals as they occur. The bargaining power of buyers is very high. feedback centers. Recently. There are also packages related to certain events which hotels try to make attractive and attract customers. which could then be exchanged for coupons and discounts. and allow for more effective advertising. 3. The Spring 2011 promotion offers special terms for 41 . Marriott on valentine s day did something special for its corporate clients. inns. Hotels can award loyalty points to recurring customers. If buyer demand is weak and sellers are scrambling to secure additional sales of product All of the hotels give seasonal packages and strive to make customers come to the hotel and avail these packages. who have many options when it comes to lodging. The biggest push will involve driving customers to website communities as their booking method of choice. and reviews from other customers. This will ensure a high level of interaction between customers and hotel managers. Here the bargaining power lies with the buyers. Save up to 33% and view life differently this spring. so customers have many possibilities when planning their stay. The hotel industry caters to a wide variety of potential customers. Hotels must maintain their websites and keep them up to date and high tech feeling. bed & breakfasts. These range dramatically in price and quality. 2. it sent them gifts. These websites should include forums. If number of buyers are small and customer is particularly important to the seller The corporate clients are important to all the hotels. This will allow them to stay aware of the shifting market.Competitive Pressures from Buyer s Bargaining Power 1. hostels. If buyer cost of switching from one brand to another is low In the hotel industry. Information was not found as to who are the corporate clients but. Hotels can also develop loyalty programs to retain customers and promote brand loyalty. the bargaining power lies in the hands of the buyers. and motels have become as commonplace as a typical hotel as far as location and availability.

bookings made between March 7 and April 7. luxury pillowtop bed. If buyers are well informed about sellers product price and cost of product Buyers are well informed about the price ranges and the packages that different hotels have to offer. Whatever your level. United Kingdom. Marriott's golf holidays & golf hotel packages help you reach the top of your game. 6.00 GBP / night (Hilton Hotel) 47 Park Street.2 kilometers from city center: From 215. Trafalgar Square. 44-207-870-2900 0. non-smoking Executive. Plus enjoy buffet breakfast daily for 2 in Osco! Please book your walking tour with our Concierge upon arrival. 1 King size bed. wonderful view. for stays of one or more nights between April 1 and June 30th 2011. EMBARK ON A CULTURAL JOURNEY WITH OUR MUSEUM PACKAGE. Below are some rates to compare with. SW1A 2TS.00 (Sheraton Hotel) 2 Spring Gardens.00 (GBP) (Marriott Hotel) 5. Dvd And Vcr Player. London. Middle East and Africa for the weekend of 18 March 2011 and. United Kingdom W1K 7EB. 42 . When buyers have discretion in whether and when they purchase the product. 2011 at participating hotels in the Hilton Worldwide portfolio of brands in Europe. Stay at the Sheraton Carlsbad Resort & Spa and take advantage of our private entrance to LEGOLAND® California with our package that includes room accommodations and two LEGOLAND tickets. If buyer pose a credible threat of integrating backward No data regarding backward indication was found for any of the hotels. 44 207-491 7282: 439. with some variations and black-out dates. Marriot s relaxing golf breaks. 4. London. Keeping in mind. Escape!SM Golf package. and the requirements (14nights stay for two). Wi-fi Internet: GBP 354. the location (London s most elite places). InterContinental s Explore Montreal's history with 2 passes to Musée Pointe-à-Callière and a historical and architectural walking tour of Old Montreal.

y y iTravel Solutions . For example. The four large supplier companies are as following. Provides procurement for the hospitality industry.Many hotels come up with their special packages at the same time of year. 01-Apr-2011 . Balcony Ocean View.13 HILTON BED & BREAKFAST: USD 245 at Waldorf Hilton Competitive Pressure from Supplier s Bargaining Power 1. the big shot luxury hotels and resorts and hence the bargaining power lies with the suppliers. These four companies are the suppliers of the market leaders. When few large suppliers are primary source of a particular item. concession supplies and kitchen equipment from the finest companies in the industry to the different hotels in the industry. American Restaurant Equipment.03-Apr2011. Last-Minute Weekends Nightly (Marriot Hotel) rates from 231. and customers choose the best one not only keeping in mind the best price but the best services aswel. every hotel has the holiday package. Jean's Restaurant Supply. freezers.Dynamic Packaging Multimedia Solutions Corporation 43 .00 (USD). Hotels and resorts need to make their presence on the web and have to make presence effective. 1 King Bed. baking equipment. There are only two web developers in the hotel industry hence having the bargaining power. E-commerce is one the emerging field in any industry. The Hotel Industry has four large supply companies. Restaurant equipment s that include. Offers restaurant supplies. Avendra Professional. These companies offer full packages of supplies of the equipment s needed in the restaurants or the kitchens of the hotels. catering supplies. E-commerce has its significance. 2-night stay (Sheraton Hotel)Non-smoking Superior Room. Canoe Hospitality provides innovative and highly personalized procurement services to the owners and developers of luxury hotels and resort. Also in the hotel industry. ice machines. These companies are as follows. kitchen equipment. These packages vary with prices. Beach/pool View. bar supplies. Dual-line Ph W/modem Jack: USD 233. Canoe Hospitality.

y y y y y y y y y y Advantage Reserve InnQuest Software iTravel Solutions .2.Social Media Marketing & Distribution For Hotels iTravel Solutions . It is these reservation systems that help hotels to gain competitive advantage and edge. OpenTravel Alliance AirDepartment. These companies are as follows. The latest trends and research shows that marketing efforts have to be the best via internet. Easy InnKeeping Hotel Industry also needs good marketing. Every hotel or resort needs an efficient reservation system. Amadeus Atlantic City Hotel Experts Avatar Software Creations Inc.Dynamic Packaging Pelican Hotel E-Distribution System VIZERGY Pegasus Systems. reservation systems are a prime importance. From being a large player to a smaller one.com 44 . There are many marketing firms that provide with these services hence giving the buyers the bargaining power. The world has become a global village and internet marketing should cater to all potential and actual customers. y y y y y y y y y y y y y y y y 10Best Solutions Blizzard Internet Marketing Broadband Hospitality Chatter Guard DerbySoft Hospitality Web Design Hotel Social Blogs . For the big shot hotels and resorts there are many suppliers of such reservation systems hence giving them the bargaining power. Inc.com EZYield. Whether item being supplied is a commodity that is readily available from many suppliers at going market price.Dynamic Packaging Milestone Internet Marketing O'Rourke Hospitality Marketing TRAVELCLICK VEM Global VFM Interactive Inc.

The uniforms that are worn by the staff of the hotels are also supplied by many different companies hence giving the bargaining power to the buyers. y y y y y y y y y y Big Front Uniforms Chef Shoes Chef Uniforms Chefwear Class Act Uniforms Clean Rental Services. These are. When certain needed inputs are short in supply The restaurant equipment suppliers are less in number they may play around with the prices in order to get advantage for themselves.com Intellistrand inter-touch . They have the bargaining power and can make us of it. Also they provide with a special GPsystem that helps tourists/customers of the hotel industry to locate the places to visit. For these companies to switch from one software to another would be very costly. and many more 3. When it is difficult or costly to switch purchases from one supplier to other or the supplier of substitutes The top hotels have their own management systems like Hilton works on System21 and Marriott works on the software provided by Siebel Systems Inc. They have launched their own applications on these phones which make it easy for the customers to make reservations. 45 .y y y icableholder.Keeping you in touch with your world. 5. These phones gave a great opportunity for the hotel industry players. 4. and many more. When certain suppliers provide a differentiated input that enhance performance or quality of industry s product Apple introduced its iphone and other smartphones such as blackberry emerged. (SEBL). The Uniform Specialists Clean Rentals the uniform company Custom Uniform Company DRUMMOND Uniform G&K Services. Inc.

tourism consultants. These companies are as follows. y y y y y y y y y AG Hospitality Services Inc. In the hotel industry there are many consultants that provide with solutions related to operation management hence having the bargaining power. Harry Nobles Hospitality Consulting. staff training programs Hogan Hospitality Hotel Guru International Thinking in the Central American Context Marshall Management Inc. social media strategy.6. providing solutions for human resource Daniel Edward Craig | Author and Hotel Consultant. CHIC Hospitality Consulting Services . When certain suppliers provide equipment or services that deliver valuable cost saving efficiencies to industry members operating their production processes. Hotel Consultants. 46 . and many more. MBT.

so are the consultancy services. Jones. We know you like a king-size bed. and research is monitoring that is. Marketing depends on research. For its farsighted approach. They could be using keyword systems to pick up on broader conversations. 47 . As the market size of the companies increase. welcome back to Marriott. What makes such velvet-glove treatment possible is Marriott International Inc. Md. 1. The new mobile services for German and British users. (SEBL) The hotel chain. wireless access throughout all guest rooms and public spaces. wider bandwidth. Growing use of internet and emerging new technology Hilton Hotels has launched a new mobile Web application giving iPhone users accessibility to the hotel chain's Internet features. is counting on such technology to gain an edge with guests.: ''It's a big competitive advantage to be able to greet a customer with: 'Mr. listening to what people are saying online.W. to alert their marketing departments and build on-the-spot promotions in their Central Reservation Systems (CRS) to be available immediately online. It starts with reservations. Hoteliers commonly use rate comparison tools to get valuable information to feed their Revenue Management Systems (RMS). The software lets Marriott pull together information about its customers from different departments. including the ability to book from the iPhone. the hotel has garnered several technology awards since 1996. Says Chairman J.'' Sheraton Grande Sukhumvit (Starwood Hotels) has blazed a trail among Bangkok hotels as a leader in technological advancement and convenience-featuring the fastest possible internet connections. We know you need a rental car. as well as state-of-the-art business and meeting facilities.'s use of customer management software from Siebel Systems Inc. and hotel owners. These services have helped hotels to flourish. Users can access and change bookings and view hotel images and information.. based in Bethesda. were launched in conjunction with Dublin-based Mobile Travel Technologies Ltd. event planners. The companies have already been mentioned above. so that its reps can anticipate and respond more quickly to their needs. Marriott Jr.DRIVERS OF CHANGE What impact will they have? Major underlying causes of changing industry and competitive conditions.

business travelers will be affected by an economic slowdown as that would have a direct impact on the volume of business. The world has become a global village. There are many luxury hotels and resorts that provide not only hospitality services but also provide tourism. 3. Customers for the hotel industry include tourists as well as business travelers. which a person with a low-medium income may not be able to afford. telecom. according to Amadeus. people with high income are more likely to stay in an upscale luxury hotel. Rising stock market and new business opportunities are also attracting hordes of foreign investors and international corporate travelers to look for business opportunities in various countries. Changes in long term industry growth rate. With the globalization of the industry. These customers generally have a fixed budget for their vacations. Hilton primarily focuses on high-income/upscale group and business travelers. Hotel industry is also inextricably linked to the tourism industry and its growth has added fillip to the hotel industry. These affluent income groups have been less affected by the economic downturn than that of lower income groups. On the other hand. The hotel industry is going through an interesting phase.2. So luxury hotel guests have the ability to absorb the cost increases rather easily. The hotel industry has been particularly hard hit by a slump in business travelers. their ability to spend on a hotel room. a leading provider of technology to the travel and tourism industry. As for the hotel industry it has expanded globally. the world is now connected. retail and real estate. One of the major reasons for the increase in demand for hotel rooms in the country is the boom in the overall economy and high growth in sectors like information technology. Increasing globalization of the industry. The outlook appears bleak. Amadeus commissioned a 48 . who account for a large proportion of hotels income. Luxury hotels typically cater to a distinct kind of guest. resort or other services declines. luxury hotels and resorts have expanded all around the world and now customers can explore many places around the world. Thus. if they are forced to spend more on airfare. Affluent buyers aren t particularly affected by rising interest rates and mortgage related problems. For example. Other factors may include natural disasters and terrorism. often wealthy individuals to whom price is less of a factor in selecting a hotel. Tourists may be further categorized into low-medium income groups and high-income groups as the income of a person will determine the kind of hotel he/she chooses. 4. Anybody and everybody can have access to any service present. The demand from low-medium income customers is primarily affected by an increase in airfares. Changes in who buy the product and how they use it.

instead concentrate on efficient checkin and check-out. first hotel brand to open licensed Starbucks stores in hotels.) in a hotel room. Among its industry firsts. and never more so than today when the need for instant. Users can access and change bookings and view hotel images and information. Good wifi connectivity is now rated above any other extra. coast-to-coast hotel chain. chair. and more recently. Hilton's expertise and insight of global travel remains unmatched. Hilton Hotels has launched a new mobile Web application giving iPhone users accessibility to the hotel chain's Internet features. introduced the first multi-hotel reservation system and became the first U. individual Hilton hotels always lead the way. With the eyes of their organizations and shareholders upon them. light. amenities and service. etc. 49 . including the ability to book from the iPhone. Forget gyms and restaurants. and that they would prefer basic efficiency and good service over ancillary services. first TV remote control. no matter where you are in the world. Whether becoming the first hotel to install televisions in guest rooms or the first hotel in the world to earn both LEED and Green Seal environmental certifications. 5. were launched in conjunction with Dublin-based Mobile Travel Technologies Ltd. The report. such as Hilton Reservations Worldwide. shorter. managing director of Amadeus Hospitality Business Group. The new mobile services for German and British users. and internet access. regional offices and Hilton s world headquarters. System 21®. and cheaper business trips in 2009. launched the first airport hotel. a holistic approach to designing public spaces. Hilton has always been on the forefront of technical innovation. airline Global Distribution Systems.report from the Economist Intelligence Unit. first to offer express check-out. After more than 90 years. which predicted that the business world was entering a new age of austerity. and the expectation of a common level of good service. Antoine Medawar. provides true competitive leverage by linking all of Hilton s customer sources together. with special emphasis on the lobby. titled The austere traveler The effect of corporate cutbacks on hotels. published in March 2009. was quoted as saying: We are entering an age of visible austerity with regard to business travel. There is a flight to trusted brands. accurate information is crucial to every hotel s bottom line. Hilton Sales Worldwide even individual Hilton properties. Product Innovation Hilton remains synonymous with hotel because of its innovative approach to products. Hilton s proprietary hotel management system. concluded that executives would make fewer. executives are anxious to make business trips as productive as possible. Hilton developed the concept of franchising hotels.S. based on intense research around the needs of the guests. Marriott included the first workspace (desk.

Marriott noticed that airline passengers would often stop off to his store and buy lunch to eat on board. 8 became the home of his next innovation. Says Chairman J. Marriott s Hot Shoppe No. based in Bethesda. With that came Marriott s idea to sell pre-boxed meals directly to airlines. is counting on such technology to gain an edge with guests. Technology Change Hilton Hotels has launched a new mobile Web application giving iPhone users accessibility to the hotel chain's Internet features. Since it was located near an airport. 6.'s use of customer management software from Siebel Systems Inc. so that its reps can anticipate and respond more quickly to their needs. wireless access throughout all guest rooms and public spaces. It starts with reservations. and hotel owners. New Discoveries y y y DoubleTree by Hilton Hotel Charlotte Airport Charlotte Museum Embassy Suites Anaheim North Discovery Science Center Homewood Suites by Hilton® San Jose Airport-Silicon Valley Museum Children Discovery  Marriott Resort and Discovery Cove Dolphin Swim Experience Package  Destination Discovery promotion (Laguna in Phuket) Sheraton  50 . The new mobile services for German and British users. We know you need a rental car. Hilton Worldwide and IBM (NYSE:IBM) has announced a global collaboration agreement to enhance the hospitality company s technology infrastructure and to facilitate the development and delivery of next-generation technology solutions. Users can access and change bookings and view hotel images and information. Jones.In 1937. (SEBL) The hotel chain. wider bandwidth. The software lets Marriott pull together information about its customers from different departments.'' Sheraton Grande Sukhumvit (Starwood Hotels) has blazed a trail among Bangkok hotels as a leader in technological advancement and convenience-featuring the fastest possible internet connections. We know you like a king-size bed. were launched in conjunction with Dublin-based Mobile Travel Technologies Ltd.W. What makes such velvet-glove treatment possible is Marriott International Inc. and Marriott was soon selling lunches to more than 20 flights a day from that one airport. For its farsighted approach.: ''It's a big competitive advantage to be able to greet a customer with: 'Mr. the hotel has garnered several technology awards since 1996. It was the launch of an entire new industry. welcome back to Marriott.. including the ability to book from the iPhone. event planners. Marriott Jr. Md. as well as state-of-the-art business and meeting facilities.

Hoteliers commonly use rate comparison tools to get valuable information to feed their Revenue Management Systems (RMS). The explosive and global growth of the Hilton brand has led us to rethink the way we use the internet to connect with our guests. listening to what people are saying online. By harnessing the volume of conversations hoteliers can show. through what people are saying. then Property Management Systems (PMSs) could evolve with concierge applications enabling guests and hoteliers to communicate more easily prior to or during a stay. and there is much that can be done in this area to make the information work harder. said Jeff Diskin. senior vice president. and is in the process of completing a French version of the site. instantly and globally. The mobile advertising display campaign is designed to drive people to register for the Hyatt Gold Passport frequent guest rewards program and let people visit the new. It has a lot of information for the 51 . Marketing also depends on raw information. why those people s peers should consider them and this can be done on a many-to-many basis. They should be linked with other business intelligence solutions so that integrated reports show how each program is performing at any technological touch point of the hotel. will launch a mobile advertising campaign that leverages Microsoft s mobile advertising relationship with Verizon Wireless. Social media can also help with sales. brand marketing and management Hilton Hotels.com.com booking portal into Spanish. Comparison with others: Global Hyatt Corp. the brand recently completed the translation of its Hilton.com and HiltonToHome. Hilton Hotels announced the re-launch of two of the brand s online channels HiltonJourneys. This would necessitate changes to the hotel chain s content management system. In addition to the two refreshed sites. fully functional mobile web site using their mobile phones. With these refreshed sites we have three unique touch points that allow our guests to connect with Hilton in ways that are most relevant to them. If marketing is talking online. The installation of Mobile Travel technology with Iphone was also one step towards clever marketing strategy. They could be using keyword systems to pick up on broader conversations. making them robust enough to host new content and the necessary workflow and security to accommodate that. Marriott has an extensive and clarifying internet site. to alert their marketing departments and build on-the-spot promotions in their Central Reservation Systems (CRS) to be available immediately online. Marketing Innovation Marketing depends on research. and research is monitoring that is.7.

Starwood Hotels owns and operates luxury hotels. tourist trains. Hilton already has a strong presence in the U. and Suburban Extended Stay brands throughout the US and more than 40 countries and territories. W. Destination Properties. Orient-Express Hotels is a hotel and leisure group. the Middle East.400 hotels under the Comfort Inn. Clarion. It also signed a multi-year agreement with a leading resort real estate developer in Thailand. The company franchises over 5. For example. with 590. and Holiday Inn Express. EconoLodge. and Element Choice Hotels Internationals is a worldwide franchisor of hotels and the nation s first hotel chain. Sheraton. Sleep Inn. hence its competitors are few in number but are large and widespread. many operated only seasonally. Entry or exit of major firms Since Hilton is a luxury hotel. Aloft. Comfort Suites. But of course there are lots of other ways to promote a hotel. it owns only 18. It operates a diverse portfolio of brands across multiple economic segments.S and is expanding its global operations through acquisitions. including Intercontinental Hotels and Resorts. as it is considered as an off-season. Approximately half of Starwood's hotels are outside of North America. and river cruises in over 25 countries. retreats. which are based as a percentage of gross room revenue of its franchised hotels InterContinental Hotels is the largest hotel company by number of rooms. Mainstay Suites. Holiday Inn. 8. The company manages franchises that operate under its various brand names . Westin. Africa. Inc. to manage a newly built. The Luxury Collection. restaurants.000 hotels bearing IHG brands. 358-room golf resort and spa in Thailand.K-based Hilton International in February 2006 to establish a footprint in the U. Various packages are introduced to attract customers during summer season. with 397 in Europe. Regis. and Asia and new Starwood hotels are being built in developing countries like China. Choice generates a majority of its revenue from royalty fees. Rodeway Inn. which is focused on the luxury market. Cambria Suites.St. IHG makes most of its money by franchising hotels. Crowne Plaza Hotels and Resorts. Le Méridien.K. target luxury travelers Marriott International. 52 . Out of the nearly 4.361 rooms in over 100 countries around the world. and residences across the world.customers and you can also book online. The company owns and operates luxury hotels. Four Points. Hilton acquired the U. OEH's hotels. (Marriott) is a worldwide operator and franchiser of hotels and related lodging facilities. Quality Inn.

In the hotel industry. Just as Hilton s mobile web application on iphone and Marriott being rated as the best website. Let it be Hilton s fashion district or Marriot s Dolphin swim experience customers are attracted to differentiated products. Hilton merged with Blackstone real estate company and InterContinental Hotels acquired Taleo Corporation (TLEO). New improved ways of room cleaning or restaurant services many be a part of the cost efficiency targets yet to come. In the near future as we see technology moving at a fast pace and innovations keep knocking on the door. the technical knowhow spreads very fast across companies and companies. it could also be the first ever hotel to introduced projected touch screen televisions in its rooms. 12. Also.9. Growing buyer preference for differentiated products Hotels today have come up with differentiated services that they have to offer. Hotels today have also merged with real estate business in order to make expansion easier for them. table at a restraint etc. Changes in cost and efficiency The major change that has come in the hotel industry related to cost and efficiency is the reservation system. The top luxury hotels and resorts have somewhat the same services to offer and make use of the same technology in their own distinct ways. the leading provider of talent management solutions. 11. Real estate businesses give them the edge to acquire and know the best land options available for the hotels businesses owners to expand. Diffusion of technical knowhow across more companies and countries. Hotels have their presence online on their distinctive websites and hence customers can easily book or reserve rooms. even more cost effective ways of doing business in the hotel industry may emerge. Reductions in uncertainty and business risk 53 . y y y y y Mobile applications Stay packages Tourism guide Affiliation with NatGeo and Discovery channel Airport Hotels 10. As Hilton was the first ever hotel to introduce a television in the rooms. hotels today have their mobile applications to make things easier for themselves and their customers.

13. Local flavor 10. Services 6. Location 4. Family friendly 8. The trend is shifting more towards resorts and residential suites. attitudes and lifestyles Lifestyle and attitude towards hotel industry has changed. Those technologies can already been introduced in the market and hence their uncertainty and risk has been reduced. Ambience 9. Amenities Firms that fall under these categories y y y y Starwood Hotels Hilton Hotels InterContinental Hotels Marriot International 54 . Just like Hilton s concept of fashion district and/or NatGeo Children s park. Price 2. Loyalty programs 7. Packages 5. Quality 3. Example can be Hilton s agreement with H. As explained earlier Hilton and its competitors target the rich and the businessmen class. Changing societal concerns.P for wireless printing through Black Berry phones. In the near future we may see hotels as being more business center oriented.Hotels are making use of technologies and innovations from other industries. STRATEGIC GROUP MAPS Competitive Characteristics 1. The rich need a good time out and businessmen need a good wi-fi and fast check in check out services.

Graphs 55 .

56 .

57 .

58 .

Scenario Planning
Scenarios are detailed views of hoe business might develop in the future. The scenarios are made by grouping of key environmental influences and drivers of change. Hilton is a vast empire in the hospitality industry and hence it has to expand its business to stay in the game. It is very important for Hilton to plan scenarios in order to forecast the future. The external environment and the drivers of change have been studied in great detail. Out of these some factors will be taken and put on the "environmental ranking chart." The factors that lie in the problematic region will be used to plan scenarios for Hilton.

Environmental Ranking Chart
Most Certain

Highly Predictable

Least Impact Problematic Region

Most Impact

Least Certain

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The variables that were selected in order to make the scenarios are as follows y y y y Political stability Economic Stability Technology Advances Socio culture factors
Most Certain

Highly Predictable y y Technology Advancements Socio ² Cultures Factors

Least Impact Problematic Region y y Political Impact Economic Factors

Most Impact

Least Certain

60

Scenario One Technological Advancements result in Socio Cultural Advancements

Technology Advancements

Negative Socio ² cultural Impact

Positive Socio - cultural Impact

Technology Recession

As of today's time, technology advancements are taking place every minute. Technology advancements are not related to any specific company but technology advancement in one industry can have a positive impact on other industry. For instance the discovery of energy saver bulbs have resulted in cost decrease of electricity bills. People will save and have more money to spend on luxury items. Just as Hilton Hotels made use of mobile technologies to make its reservation systems more efficient. If technology keeps advancing and new innovations keep coming, this can lead to betterment of the society. The lives of the people living in a society will improve and technology will make things more cost effective resulting in more savings with the potential and actual customers of Hilton. Society trends will change and more people will get attracted towards luxury hoteling leaving a positive impact on Hilton.

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people would only have enough amount to spend on their basic needs. None would have the resource or money to spend on luxury goods. When there won't be any such technology that will cater to persons in a society or help them overcome or reduce costs. if the process was turned the other way round. This would leave a negative impact on Hilton since it won't be able to attract more and more customers. 62 . no advancement in technology would mean that no person in the society is facing any sort of positivity.Scenario Two .Technology stops to progress and negative impact on socio cultural factors Just as explained above.

When a country's economy grows the citizens of that country also progress. Hilton would have to target developed such nations where people afford luxury living and tourism is also at its peak. it automatically leads to economic growth. When a country's political environment is stable. In such nations people afford what Hilton has to offer and Hilton can reap profits.Scenario Three . Governments work for the betterment of their people and their country and bring in projects that are suitable for economic growth." They become brand conscious which is a positive sign Hilton. income levels increase and people are attracted more towards a luxury lifestyle. People become more status conscious and want to enter the world of "brands. 63 . More jobs are generated.Political Stability results in Economic Growth We see that developed countries have a stable political scene and also have a strong economy.

the Government will be more into keeping themselves safe than working for the betterment of country or countrymen. People are not status conscious and do not want to enter the world of "brands." rather they fulfill their basic needs. 64 . just as in the case of Pakistan. They are brand conscious which is a negative sign for Hilton. it automatically leads to economic unrest.Scenario Four Political Instability leads to Economic Instability and vice versa When there will be political instability. Governments do not work for the betterment of their people and their country and fail to bring in projects that are suitable for economic growth. When a country's political environment is instable. In such nations people afford what Hilton has to offer and Hilton can reap profits. No or less jobs are generated. income levels decrease and people are not attracted towards a luxury lifestyle. When a country's economy does not grow the citizens of that country do not progress. Hilton would have to target developed such nations where people afford luxury living and tourism is also at its peak.

Key Success Factors Technology Related Key Success Factors Expertise in Particular Technology  Reservation System Hilton has the most effective and efficient reservation system which allows its customers to book rooms and other reservations without any extra effort being made.  Information System System 21 allows management of all internal affairs of Hilton  Room Management Room management systems allow Hilton to keep track of needs to be set right in any particular rooms. 65 . Reservations can be made via smartphones and websites. Details and maintenance issues are kept in this database and the bell rings as soon as something is on the loop  Food and Beverage Control Hilton hotels are full-fledge hotels that have restraints and also organize events. These allow customers espically corporate clients to stay on the go. Proven Ability to improve Production Process The only thing that Hilton may produce is food. With such a vast range of services available Hilton has to keep track of food and beverage inventory and hence has management systems that help keeping track. They also have resorts where tourists keep coming in. not to forget the residential suites Hilton has to offer.

Launching at select Hyatt Pure locations. Expert competence was also required for the treatment of the swimming pool water. Comparison with competitors The hotel company has struck a multi-million-dollar deal with New York City-based Portico Home + Spa to launch the eco-friendly bedding consisting of sheets.Manufacturing Related Key Success Factors Quality Control Knowhow  Quality packages Hilton has more than twenty different packages for its customers. Hyatt also plans to add Portico's organic cotton bath linens (towels. and Hyatt hotels plan to add this bedding line to their premier suites in the next year. an effective alternative for the insufficiently functioning seawater desalination system for the generation of drinking water was to be found. The new bedding is now available in premier suites at 14 Hyatt hotels nationwide as well as in Aruba. Highest Water Quality at the Hilton Hotel. Perfect for the business traveler getting ready for a major presentation or for grooms and groomsmen getting ready for the big day. is located directly at the beach. In spring 2011. Additional Grand Hyatt. Hyatt Regency. In the course of modernization measures.  Front and back offices The reservation desks and the management are of quality  Food and Beverages control 66 . and bath rugs) to the premier suites. At the same time. It also has different packages for different corporate clients and different other packages for different resorts. pillow cases and pillow shams (decorative covers for bed pillows) at all of their hotels. Malta. bathrobes. the hotel wanted to become independent of the public water supply. the shaving services will allow men to enjoy their daily shave without having to lift a finger. Julian. This new offering will be backed by ê Shave products with services delivered by Hyatt Pure estheticians. Malta The Hilton Hotel in St.

joint ventures and mergers. For example clients themselves can choose which room to books according to the view they would 67 . restaurant equipment and other equipment are being highly utilized (furniture etc). As part of this alliance. High Labor Productivity There is high labor productivity for Hilton since the labor they use is in the sense of waiters etc.Hilton hotels are full-fledge hotels that have restraints and also organize events. consider a hospitality company that forms a strategic alliance with a car rental company.  Safety and security Hilton provides quality safety is security to its customers Abilities to Achieve Economies of Scale It is through franchising that Hilton gains economies of scale through cost reduction.  Taleo Talent Management Solutions was acquired by Sheraton Hotel which made it possible for Sheraton to be the first company to get talented management. buildings. Reservation cost of hotel rooms and generate a joint reservation system and a general cost reduction in reservation transactions. the companies use the same central reservation system (CRS) to support both hotel and car reservations. Access to Adequate Suppliers of Skilled Labor Importance of skilled labor is one of the prime importances of any luxury hotel. High Utilization of Fixed Assets Real Estate. not to forget the residential suites Hilton has to offer. In 1993 only two mergers occurred in American hospitality Industry. Consequently. For example. In the hospitality industry economies of scope can originate from strategic alliances. They also have resorts where tourists keep coming in. With such a vast range of services available Hilton has to keep track of food and beverage inventory and hence has management systems that help keeping track. and their total value was about $30million. Ability to Manufacture Customized Products Packages and Room requirements can be customized according to the wants of the clients. since it has to deal with customers directly 24/7.

Hilton is left with no choice but to make its direct sales strong. Customers walk towards the service. The services that they offer directly hit individual customers. corporate clients or even children. Well Known and Well Respected Brand name     Hilton Hotels and Resorts Marriott International Starwood Hotels InterContinental Hotels Fast Accurate Technical Assistance Hilton offers fast accurate technical assistance when required by the customers. Even customers can customize their rooms according to what kind of closets they want. These can be walk in customers. Distribution Related Key Success Factors Strong Network of Wholesale Distribution and Dealers  No dealer network Strong Direct Sales Hilton only gives direct sales.like or the smoking or non smoking requirements. Ability to Secure Favorable Location on Retailer shelf  Does not apply Breadth of Product Line Hilton has huge product line. 68 . Accurate Filling of Buying Orders Room service and restaurant services require accurate and timely fulfilling of orders and this is what Hilton specializes in. say if the television in someone clients room stops to work they provide with technical staff.

The explosive and global growth of the Hilton brand has led us to rethink the way we use the internet to connect with our guests. instantly and globally. brand marketing and management Hilton Hotels. Hilton Hotels announced the re-launch of two of the brand s online channels HiltonJourneys. In addition to the two refreshed sites. and is in the process of completing a French version of the site. With these refreshed sites we have three 69 . Customer Guarantees and Warrantees Guarantees and warrantees are in form of.com booking portal into Spanish. and research is monitoring that is.Courteous Personalized Customer Services Customer services is the prime and the most important thing. They could be using keyword systems to pick up on broader conversations. senior vice president. and there is much that can be done in this area to make the information work harder. Hoteliers commonly use rate comparison tools to get valuable information to feed their Revenue Management Systems (RMS). through what people are saying. making them robust enough to host new content and the necessary workflow and security to accommodate that. The installation of Mobile Travel technology with Iphone was also one step towards clever marketing strategy. why those people s peers should consider them and this can be done on a many-to-many basis. Social media can also help with sales.com and HiltonToHome. Marketing also depends on raw information. the brand recently completed the translation of its Hilton. to alert their marketing departments and build on-the-spot promotions in their Central Reservation Systems (CRS) to be available immediately online. said Jeff Diskin.com. By harnessing the volume of conversations hoteliers can show.   Goodwill Reputation Clever Advertising Marketing depends on research. If marketing is talking online. This would necessitate changes to the hotel chain s content management system. listening to what people are saying online. They should be linked with other business intelligence solutions so that integrated reports show how each program is performing at any technological touch point of the hotel. then Property Management Systems (PMSs) could evolve with concierge applications enabling guests and hoteliers to communicate more easily prior to or during a stay.

After more than 90 years. Hilton developed the concept of franchising hotels. Hilton remains synonymous with hotel because of its innovative approach to products. Skills and Capabilities related Key Success Factors A Talented Workforce Skilled Workforce and talented workforce is required for dealing with customers everyday and providing the best and efficient services all the time. Let it be park lane or resorts in Malaysia. Hilton's expertise and insight of global travel remains unmatched. amenities and service. everyday. Product Innovation Capabilities Hilton has high innovation capabilities.S. Whether becoming the first hotel to install televisions in guest rooms or the first hotel in the world to earn both LEED and Green Seal environmental certifications.unique touch points that allow our guests to connect with Hilton in ways that are most relevant to them. Short Delivery Time Capability   Order delivery Check in and Checkout processes Strong E. 70 .Commerce Capabilities   Internet Marketing Web presence Convenient Locations    Hotels Resorts Residential Suites all present is areas where tourists love to go. individual Hilton hotels always lead the way. launched the first airport hotel. introduced the first multi-hotel reservation system and became the first U. coast-tocoast hotel chain. Hilton also introduced the iphone application. Among its industry firsts.

Patent Protection    The name itself The brands The packages 71 .

54 0.99 0.88 0.1 0.17 8.3 9.50 0.54 0.88 0.99 1.6 0.99 0.40 0.54 0.51 1.45 1.96 11% 11% 6% 6% 5% 11% 12% 1.04 8.54 0.17 Hilton 1.99 0.1 0.Competitive Strength Assessment Key Success Factors Product Innovation capabilities Clever advertising Strong direct sales High Labor Productivity Expert Technology High utilization of fixed assets Accurate filling of buyer order Strong ecommerce capabilities Convenient Locations Starwood 8 9 8 9 8 10 8 9 8 Marriott International 9 9 8 9 9 8 9 10 9 Hilton 10 10 9 9 10 9 10 8 10 Starwood 1.48 0.42 13% Key Success Factors Product Innovation capabilities Clever advertising Strong direct sales High Labor Productivity Expert Technology High utilization of fixed assets Accurate filling of buyer order Strong ecommerce capabilities Convenient Locations Total 72 .08 0.96 1.3 Importance Rating 13% 0.2 1.88 1.04 Marriott 1.

Internal Analysis 73 .

770.Evaluating How Well a Company's Present Strategy Works Whether company is achieving its financial and strategic objectives Hilton has achieved its strategic objectives Hilton's statistics ‡ ‡ ‡ Dec 09: Revenue $7.090.0 (Estimated) Dec 08: Revenue $7.0 Net income for 06: $573million 74 .500.0 (Estimated) Dec 07* $8.

Hilton: $572million(2006) Marriott: $696million(2007) Intercontinental Hotels: £883(2007) Whether firm s sales are growing slower.935 501 Marriott 2.42% Marriott s growth rate: 7.832 514 Intercontinental 3.8 billion in 2002 to USD 8.A.99 N. 136. ‡ ‡ ‡ ‡ Net income for.A. 191.61 N.33 82.Whether the company is an above average industry performer Comparison to Competitors Starwood Number of Hotels Number of Rooms (Thousands) Geographical Presence (Countries) Occupancy (Percent) Average Daily Rate (USD) RevPAR (USD) 871 266 Hilton 2. faster or about the same pace ‡ ‡ ‡ ‡ Hilton s growth rate: 16.A.64% Starwood s growth rate: 5.44% Hilton s growth has increased from USD 3.43 153.4 N.46 114.2 72.5 74.2 billion in 2006 75 .600 538 100 78 68 100 71.56 115.

provided Hilton with revenue management which gave a boost to the market share of Hilton.CEP created Revenue Management University.5% 76 .500million with year growth of 3.44% Marriott: $696million (2007) Hilton s sales for 2009: 7. Hhonors New packages Group reservations Travel guides CEP BlackStone group Hilton: $572million (2006) Hilton s net profit margin for 2007: 1. Whether company is acquiring new customers at an attractive rate as well as retaining existing customers ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Hhonors and Virgin America Airlines have signed a contract that the customers of Virgin Airlines will stay in Hilton hotels when in transit or any other such issues.5% Marriot s net profit margin for 2009: 1.

$840. employees' productivity.7 which will result in a decrease in the credit ratings Whether the company can demonstrate continuous improvement in such internal performance measures as days of inventory.$48750 Stock holders equity for 2006: $3727million Stockholders equity for 2007: $5198million Not listed on New York Stock Exchange 77 . and delivery times and so on Hilton does give any information regarding its days of inventory. How shareholders view the company based on trends in company s stock prices and shareholder value ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Insider Sales: Value $131379million Shares 4812247 Option Exercises: Value .1 billion and is rated an investment grade by Standard and Poor Acquisition of BlackStone boosts credit rating In 2012 Hilton s notes due may rise to 106.693 Shares . defect rate. Employee's productivity is high defect rate. misfiled orders and delivery times are kept effective.Whether the company s overall financial strength and credit rating improving or decreasing ‡ ‡ ‡ Hilton cuts its debt from 4. misfiled orders.

Sizing Up Company s Resource Strength Competence ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Hospitality Information Technology Patent brand name Packages Acquisitions and mergers Ecommerce Reservation systems Human Resource Operations Core Competencies ‡ ‡ Convenient Locations BlackStone Distinctive Competency ‡ ‡ Marriott s website Reservation System What is the competitive power of resource strength? Is the resource strength hard to copy? ‡ Intelligent way of acquisitions and mergers Is the resource strength durable. does it have staying power? ‡ ‡ Very durable Till today Hilton is making use of BlackStone 78 .

Is the resource really competitively superior? ‡ The BlackStone group Can the resource be trumped by different resource strength and capabilities of rivals? 1993 till today Marriott has acquisitions of more than 1000. which means that the resource can be copied by the rivals in the same or better way. 79 .

Value Chain Analysis Benchmarking ‡ ‡ Accenture and Hilton: Hilton Worldwide and Accenture Announce Multi-Year Technology Services Agreement Accenture and Starwood: Accenture Providing Starwood Hotels & Resorts with IT Outsourcing Services Through Multi-Year Transformation Program 80 .

TWOS ANALYSIS Strengths ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Well established organization Leader in hospitality and gaming industry Diversity High end customers Market share Corporate customers Franchise network Manufacturers of furniture Strong participative culture Strong financial position Differentiation strategy Decentralized structure Effective communication Strong reputation R&D Strong reputation Loyal customers Diverse range of skills and management Strong brand name Market share leadership Innovation Opportunities ‡ ‡ ‡ ‡ ‡ ‡ ‡ Array of distinctive services to corporations and entrepreneurs Wedding planning and hosting Expand into or in cruise line Returning growth after economic slump Strong relationship with suppliers Attract more new customers More acquisitions and mergers 81 .

Threats ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Extend its efforts to mix entertainment and gaming Extension of credit Terrorism Price war Cheaper technology Economic slow down Exchange range fluctuations Lower cost competitors Weakness ‡ ‡ ‡ ‡ ‡ ‡ Vulnerable to downturn in global economy Vulnerable to strikes of labor in developing nations Seasonal turnover Certain rooms require upgrade and renovations Targets only the elite Website Strengths and Threats ‡ ‡ ‡ ‡ ‡ ‡ ‡ Make use of its vision Decentralization and minor threats Financial position and fluctuating exchange rate Economies of scale and low cost competitors Countries that were not affected by economic slowdown Companies providing security solutions (technology) Give out credit to only big shot corporate Weakness and Opportunities ‡ ‡ ‡ ‡ Countries with less strict labor laws Offer more diverse products Emerging technologies to overcome renovations and upgrade problems Expansion to get over economic slowdowns 82 .

‡ Hilton s total investment. property and other assets are 34. Hilton has 37.04 per share. 2006--Hilton Hotels Corporation (NYSE:HLT) today declared a dividend of $.Weakness and Threats ‡ ‡ ‡ ‡ ‡ Buffer stocks Joint ventures and price wars Portray their image Strict labor laws Keep track of profits Strategic Position and Action Evaluating Matrix Internal Dimensions Financial Strength Leverage: ‡ Management takeover of Hilton by Jordon s Dead Sea King Hussain Bin Talal s Convention Center. 2006. to stockholders of record at the close of business on September 2.177(M) ‡ Return on Investment ‡ Hilton has 7000 pages on internet which generate $10 in revenue for every 1$. payable in cash on September 15. 2006 83 . payable June 15 to shareholders of record June 1. y July 21. HILTON RAISES DIVIDEND: Hilton Hotels boosted its quarterly dividend to 30 cents from 25 cents.868(M) assets and has debt of 21.097million Working Capital ‡ Current assets current liabilities ‡ 3771 2837 = 934 (M) for 2007 Cash flow ‡ 125 (M) for the year 2007 Dividend y May 11. 1990.

's use of customer management software from Siebel Systems Inc.'' 84 . The software lets Marriott pull together information about its customers from different departments.: ''It's a big competitive advantage to be able to greet a customer with: 'Mr. is counting on such technology to gain an edge with guests. Refer to previous sections. based in Bethesda. including the ability to book from the iPhone. were launched in conjunction with Dublin-based Mobile Travel Technologies Ltd.W. It starts with reservations.. Technical Knowhow Hilton Hotels has launched a new mobile Web application giving iPhone users accessibility to the hotel chain's Internet features. Says Chairman J. Marriott Jr. Md. Product Life Cycle ‡ Growth Bringing new products to the market y y y DoubleTree by Hilton Hotel Charlotte Airport Charlotte Museum Embassy Suites Anaheim North Discovery Science Center Homewood Suites by Hilton® San Jose Airport-Silicon Valley Museum Children Discovery  Marriott Resort and Discovery Cove Dolphin Swim Experience Package  Destination Discovery promotion (Laguna in Phuket) Sheraton Talented workforce One of the prime requirements Customer Loyalty HHonor programs have been able to retain customers. We know you like a king-size bed. and hotel owners. welcome back to Marriott. What makes such velvet-glove treatment possible is Marriott International Inc. Users can access and change bookings and view hotel images and information.Competitive Analysis Product Quality High quality products for high status individuals. so that its reps can anticipate and respond more quickly to their needs. The new mobile services for German and British users. (SEBL) The hotel chain. We know you need a rental car. event planners. Jones.

Hilton developed the concept of franchising hotels. Hilton on the other hand has no distributors. the changing economic and political conditions around the globe have discouraged tourism. the hotel has garnered several technology awards since 1996. Hilton's expertise and insight of global travel remains unmatched. ‡ On the other hand. 85 . Rate of inflation ‡ Since Hilton Hotels targets the elite and businessmen. Among its industry firsts. introduced the first multi-hotel reservation system and became the first U. Innovations Hilton has high innovation capabilities.Sheraton Grande Sukhumvit (Starwood Hotels) has blazed a trail among Bangkok hotels as a leader in technological advancement and convenience-featuring the fastest possible internet connections. increase in inflation does not have much strong effect on its business. After more than 90 years.S. wider bandwidth. Control over suppliers and distributors There are many suppliers available as mentioned above hence there is no such control that can be set on them. Hilton also introduced the iphone application. individual Hilton hotels always lead the way. launched the first airport hotel. as well as state-of-the-art business and meeting facilities. coast-tocoast hotel chain. Whether becoming the first hotel to install televisions in guest rooms or the first hotel in the world to earn both LEED and Green Seal environmental certifications. amenities and service. Hilton remains synonymous with hotel because of its innovative approach to products. For its farsighted approach. Demand variability ‡ Since trends are changing. External Dimensions Economic Stability Technological changes Rapid technology changes take place not only in the hospitality industry but also in other industries which are or may be used by Hilton to make its services more efficient. wireless access throughout all guest rooms and public spaces. other than corporate clients also getting attracted towards hoteling and the culture of celebrating holidays is increasing.

Barriers to entry in market ‡ No direct competitors may enter the market since all of the top players have achieved economies of scale. ‡ Substitutes may keep coming in Price elasticity of demand y Price is inelastic. 2-night stay ‡ (Sheraton Hotel)Non-smoking Superior Room. Since the target market are the elite class and can afford price changes. 01-Apr-2011 03-Apr-2011. Balcony Ocean View. Hilton: $572million(2006) 86 . For them to exit is not easy. Hilton and its rivals are big/ huge players in the market and have spread their roots very deep. Risk involved in business ‡ High risks are involved in the business since they need to very thoroughly keep track of their customers and also have to expand into different geographical areas. 1 King Bed.1 in 2007 Industry Strength Growth potential ‡ High Profit potential ‡ Net income for. Dual-line Ph W/modem Jack: USD 233.Price range of competing products ‡ HILTON BED & BREAKFAST: USD 245 at Waldorf Hilton ‡ Last-Minute Weekends Nightly (Marriot Hotel) rates from 231. So any new player would have to either enter on economies of scale or have to bear high costs. Also. Stable GDP growth ‡ 2. Beach/pool View.13 Competitive pressure ‡ Starwood Hotels ‡ Choice Hotels Internationals ‡ InterContinental Hotels ‡ Marriot International ‡ Orient-Express Hotels Ease of exit from market ‡ Nobody has exit from the market.00 (USD).

's use of customer management software from Siebel Systems Inc. welcome back to Marriott. Marriott Jr.Financial stability ‡ Hilton: $572million (2006) ‡ Hilton s net profit margin for 2007: 1. For its farsighted approach. Md. We know you need a rental car. Ease of entry into market ‡ Not easy 87 . (SEBL) The hotel chain. Says Chairman J. Users can access and change bookings and view hotel images and information. wireless access throughout all guest rooms and public spaces. wider bandwidth. were launched in conjunction with Dublin-based Mobile Travel Technologies Ltd. and hotel owners. We know you like a king-size bed. The new mobile services for German and British users. as well as state-of-the-art business and meeting facilities.: ''It's a big competitive advantage to be able to greet a customer with: 'Mr. event planners. It starts with reservations. based in Bethesda. Jones. including the ability to book from the iPhone. is counting on such technology to gain an edge with guests. the hotel has garnered several technology awards since 1996. Hilton on the other hand has no distributors.44% Technology know how Hilton Hotels has launched a new mobile Web application giving iPhone users accessibility to the hotel chain's Internet features. The software lets Marriott pull together information about its customers from different departments.W.5% ‡ Marriot s net profit margin for 2009: 1. What makes such velvet-glove treatment possible is Marriott International Inc..'' Sheraton Grande Sukhumvit (Starwood Hotels) has blazed a trail among Bangkok hotels as a leader in technological advancement and convenience-featuring the fastest possible internet connections. so that its reps can anticipate and respond more quickly to their needs. Control over suppliers and distributors There are many suppliers available as mentioned above hence there is no such control that can be set on them.

5 Competitive Advantage and Economic Strengths Competitive Advantage Market Share Product Quality Product Life Cycle Brining New Product to Market Talented Workforce Brand Image Customer Loyalty Technology Know How Control Over Suppliers and Distributors Numeric value +4 +5 +5 +5 +5 +6 +6 +5 +4 Economic Strengths Technology Changes Rate of Inflation Demand Variability Price Range of Competing Products Barriers to Entry Competitive Pressure Ease of Exit from Market Price Elasticity of Demand Risk involved in Business Stable GDP Growth Total Average 45 5 Total Average Numeric Value +5 +3 +4 +5 +6 +5 +6 +2 +5 +6 47 4.33 Industry Strengths Growth Potential Profit Potential Financial Stability Technology Knowhow Ease of Entry into Market Productivity Total Average Numerical Value +4 +5 +5 +6 +1 +6 27 4.Matrix Financial and Industry Financial Strengths Return on investments Leverage Liquidity Working Capital Cash Flow Dividend Total Average Numerical Value +4 +4 +4 +5 +5 +4 26 4.7 88 .

Strategies to Use ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Market Penetration Joint Ventures Product and Market Development Backward and Forward Integration Acquisitions Mergers Downsizing Unrelated Diversification 89 .

Quantitative Strategic Planning Matrix ANSOFF Matrix Hilton lies in the quadrant of diversification. BCG Matrix Hilton being a "star" 90 . market development and product development.

2. Strong reputation 15. 4. 3. Effective communication 14. 8. Strong financial position 11. R & D WEAKNESSES Vulnerable to downturn in global economy Vulnerable to strikes of labor in developing nations Seasonal turnover 1. 15% 17% 18% 91 . 6. 2.QUANTITATIVE STRATEGIC PLANNING MATRIX SR. 3. Decentralized structure 13. NO. STRENGTHS Well established organization Leader in hospitality and gaming industry Diversity High end customers Market share Corporate customers Franchise network Manufacturers of furniture Strong participative culture Strategy: use of emerging markets WEIGHT AS TAS 8% 4 32% 7% 7% 8% 7% 6% 6% 1% 8% 6% 7% 8% 7% 7% 7% 4 4 4 4 3 4 1 3 3 3 4 3 4 3 AS -1 -2 -3 28% 28% 32% 28% 18% 24% 1% 24% 18% 21% 32% 21% 28% 21% TAS -15% -34% -54% 10. 7. 1. 5. Differentiation strategy 12. 9.

4. 3. 4. 6. THREATS Extend its efforts to mix entertainment and gaming Extension of credit Terrorism Price war Cheaper technology Economic slow down Exchange range fluctuations WEIGHT 13% 14% 14% 15% 15% 12% 16% AS -2 -3 -2 -3 -4 -2 -4 TAS -26 -42 -28 -45 -60 -24 -64 92 . Certain rooms require upgrade and renovations Targets only the elite Website 12% 19% 19% WEIGHT 14% -1 -4 -4 AS 4 -12% -76% -76% TAS 56% 1. 5. 6. 5.4.. OPPURTUNITIES Array of distinctive services to corporations and entrepreneurs Wedding planning and hosting Expand into or in cruise line Returning growth after economic slump Strong relationship with suppliers Attract more new customers More acquisitions and merger 16% 12% 13% 14% 15% 16% 3 3 4 4 4 4 48% 036% 052% 56% 60% 64% 1. 2. 7. 6. 3. 2. 7. 5.

07 4 3 2 2 2 2 3 3 0. 4. 16. 12.10 10.15 0. 2.3 0.06 0. 15.10 0.16 0.08 0. 0.2 0.07 0.42 TAS 0.21 -0.08 0. 7. OPPURTUNITIES Returning growth after economic slump Strong relationship with suppliers Attract more new customers More acquisitions and merger Returning growth after economic slump AS 1 3 1 1 17.08 0.3 0. 14.06 0.08 4 0. 5. WEAKNESSES Vulnerable to downturn in global economy Vulnerable to strikes of labor in developing nations Seasonal turnover WEIGHT 0.3 0.09 0.12 0.24 0.09 0.10 0. 8. 1. 9. 3.15 TAS -0.57 93 . 11.16 -0. STRENGTHS Franchise network Manufacturers of furniture Strong participative culture Strong financial position Differentiation strategy Decentralized structure Effective communication Strong reputation R&D STRATEGY: use of emerging technology WEIGHT AS TAS 0.32 0.05 100% WEIGHT 0.3 0.10 AS -2 -2 -1 13.21 2.SR.10 0.10 0.08 0. NO.05 -0. 6.

09 -0. THREATS Extend its efforts to mix entertainment and gaming Extension of credit Terrorism Price war Cheaper technology Economic slow down WEIGHT 0. 23. 22.12 100% AS -1 -2 -1 -1 -1 -1 TAS -0.18.12 -0.10 0.71 94 . 19.12 0. 21.12 0.10 -0.16 -0.12 -0.09 0.12 -0. 20.08 0.

82 95 . 11.10 0. NO.06 0.07 0.08 2 0.2 0. 6.08 0.10 0. 16. 9.07 1. 7.16 0.10 0.08 -0.16 0.24 0. 3. 1.06 0.4 TAS -0.10 0.10 -0. 8.. 12.08 0.25 TAS 0. 5.20 0. OPPURTUNITIES Returning growth after economic slump Strong relationship with suppliers Attract more new customers More acquisitions and merger AS 2 2 3 2 0.07 2 2 2 1 2 4 2 1 0.2 0.15 0.18 0.2 10. 15. 2.08 0. STRENGTHS Franchise network Manufacturers of furniture Strong participative culture Strong financial position Differentiation strategy Decentralized structure Effective communication Strong reputation R&D STRATEGY: relationship with suppliers WEIGHT AS TAS 0.12 0. 4.2 0.15 0.07 -0.10 AS -1 -1 -2 13.05 100% WEIGHT 0. 14.SR.09 0.24 0. WEAKNESSES Vulnerable to downturn in global economy Vulnerable to strikes of labor in developing nations Seasonal turnover WEIGHT 0.

10 0. THREATS Extend its efforts to mix entertainment and gaming Extension of credit Terrorism Price war Cheaper technology Economic slow down WEIGHT 0.24 -0.12 0. 22.09 -0.24 -1.17. 20.10 -0.12 100% AS -1 -2 -2 -2 -1 -2 TAS -0.12 0.07 96 .08 0. 21.16 -0.09 0.24 -0. 18. 19.

10 0.32 0.3 10. 8.06 0.2 0.07 0.2 0.07 4 2 3 2 2 2 2 2 TAS 0.10 0. 5.27 0.15 0.24 0.12 0. OPPURTUNITIES Returning growth after economic slump Strong relationship with suppliers Attract more new customers More acquisitions and merger Returning growth after economic slump AS 3 2 3 3 17. 6.10 0. 16. 2.08 -0. 1.07 -0. WEAKNESSES Vulnerable to downturn in global economy Vulnerable to strikes of labor in developing nations Seasonal turnover WEIGHT 0. 15. 1.30 0.24 0.05 100% WEIGHT 0. 3.24 0. 12.2 0.01 97 .08 0.09 0.2 0. 11.96 TAS -0.10 AS -1 -1 -1 13.14 1.08 0.08 4 0.SR. 14. STRENGTHS Franchise network Manufacturers of furniture Strong participative culture Strong financial position Differentiation strategy Decentralized structure Effective communication Strong reputation R&D STRATEGY: more innovation WEIGHT AS 0. 4.05 -0. 9.2 TAS 0.06 0.10 0.08 0. 7. NO.

08 -0.18. THREATS Extend its efforts to mix entertainment and gaming Extension of credit Terrorism Price war Cheaper technology Economic slow down WEIGHT 0.12 -0. 22.12 100% AS -1 -1 -1 -2 -1 -2 TAS -0.10 -0. 19.08 0.09 0.24 -0.09 -0. 21. 23.12 0.87 98 .12 0.24 -0.10 0. 20.

9.09 0.10 0.15 0. 4.08 0. NO.10 0.12 0.08 0. 6. 12.3 0. STRENGTHS STRATEGY: merge with other 4 stars or less hotels WEIGHT 0. 2.36 0.07 0.24 0.2 0.14 1.07 -0.10 AS -1 -1 -1 13.24 0.2 TAS 0. 7. WEAKNESSES Vulnerable to downturn in global economy Vulnerable to strikes of labor in developing nations Seasonal turnover WEIGHT 0.10 0.10 0. OPPURTUNITIES Returning growth after economic slump Strong relationship with suppliers Attract more new customers More acquisitions and merger AS 4 2 3 3 99 .15 0. 3.18 0.2 0.77 TAS -0.3 1. Franchise network Manufacturers of furniture Strong participative culture Strong financial position Differentiation strategy Decentralized structure Effective communication Strong reputation R&D 10. 5.08 0.SR.24 0.05 100% WEIGHT 0. 14. 11.05 -0.06 0. 15.07 AS 3 3 3 3 1 2 2 2 2 TAS 0. 8.06 0.2 0. 16.08 0.08 -0.

08 -0. Returning growth after economic slump THREATS Extend its efforts to mix entertainment and gaming Extension of credit Terrorism Price war Cheaper technology Economic slow down WEIGHT 0.09 -0.08 0.12 0.12 -0.12 100% AS -1 -1 -1 -2 -1 -2 1. 21.87 100 .10 -0. 23.24 -0. TAS -0.1 18. 20.17.10 0. 19. 22.24 -0.09 0.12 0.

8.03 -0. 9.07 0.16 -0.06 0. 7.03 0. 11.08 0. Interest Rates ECONOMIC and Exchange WEIGHT 0.03 0.02 AS 3 2 2 2 3 TECHNOLOGICAL WEIGHT AS 101 . 13.04 0.06 0.1 0.06 0. 12.06 0.12 -0.3 TAS GDP Money Supply Unemployment Inflation Disposal Income 10.04 -0. POLITICAL STRATEGY: expansion in developing countries 1. SOCIO CULTURAL Demographics Income distribution Lifestyle Trends Attitude to work Level of education WEIGHT 0.06 0.PESTEL SR.14 -0.06 0. 3. 6. 5.36 4. NO.02 0.03 0.03 0.55 TAS 0.05 AS 2 2 4 TAS 0.06 AS -2 -2 -1 -1 -2 -1 TAS -0.05 0. GOVERNMENT STABILITY TAXTATION POLICY FOREIGN TRADE REGULATIONS WEIGHT 0.03 0.06 -0.06 0. 2. 14.20 0.

02 100% AS 2 1 2 1 TAS 0.14 0.1 0. 4.06 0.18 0.03 0.01 0.06 0.04 AS 2 TAS 0. 17.05 0. 18.13 0.08 LEGAL 1.02 0.94 102 .02 0.62 ENVIORNMENTAL WEIGHT 0.01 0. 16. Competitive law Employment Law Health & Safety Product Safety WEIGHT 0. 2.04 0. GOVT FOCUS New discoveries Speed of technological transfer Rate Of Obsolense 0.07 2 3 2 2 0.10 0.15. 3.2 0.

06 0. 32.07 0.34 TAS 0.06 0.02 AS 2 1 3 2 2 33.04 0. 23.05 1 1 0. 27. 35.03 1 0.06 -0.08 -0.04 0.02 0. SOCIO CULTURAL Demographics Income distribution Lifestyle Trends Attitude to work Level of education WEIGHT 0.05 0.05 0. 19. Interest Rates ECONOMIC and Exchange WEIGHT 0.05 0.10 0.04 0.07 -0. 26.07 GDP Money Supply Unemployment Inflation Disposal Income 28. NO.06 0.07 AS 1 1 1 1 103 . 31.06 AS -1 -1 -1 -1 -1 -1 TAS -0.05 0.03 0.03 0.03 0.03 0. 20.26 TAS 0. TECHNOLOGICAL GOVT FOCUS New discoveries Speed of technological transfer Rate Of Obsolense WEIGHT 0.03 -0.SR.08 0.1 0. 34.04 -0.05 0. POLITICAL GOVERNMENT STABILITY TAXTATION POLICY FOREIGN TRADE REGULATIONS STRATEGY: taking customer relations to next level WEIGHT AS TAS 0.06 0. 30. 36. 21. 25.03 0.03 0. 24.06 -0.09 0. 29.13 22.

8.0.03 0. 7.49 104 .28 ENVIORNMENTAL WEIGHT 0.08 LEGAL 5.04 AS 2 TAS 0.08 0.02 0.01 0.01 0. Competitive law Employment Law Health & Safety Product Safety WEIGHT 0.02 0.02 100% AS 1 1 1 1 TAS 0.03 0. 6.02 0.

ECONOMIC Interest and Exchange Rates GDP Money Supply Unemployment Inflation Disposal Income WEIGHT 0. 44.02 0. 52.03 -0.05 0. 38.06 AS -1 -1 -1 -1 -1 -1 TAS -0. 37.13 TAS 0.03 0.03 0.3 0. 47.04 -0.05 0.05 0.07 AS 1 2 3 2 105 .05 0.07 0. 48.07 -0.06 0.06 -0.03 0. 45.02 AS 1 1 1 1 1 51. 42. 50.03 0.04 0.34 TAS 0.06 -0.05 0.06 0.10 0.12 0.03 0. SOCIO CULTURAL Demographics Income distribution Lifestyle Trends Attitude to work Level of education WEIGHT 0.14 46. 54.SR.03 0.08 -0. 49.08 0. 39.02 0. 41.03 0. 43.03 1 0. POLITICAL GOVERNMENT STABILITY TAXTATION POLICY FOREIGN TRADE REGULATIONS STRATEGY: launching new packages WEIGHT AS TAS 0.02 0.05 1 1 0. NO. TECHNOLOGICAL GOVT FOCUS New discoveries Speed of technological transfer Rate Of Obsolense WEIGHT 0.13 40.03 0. 53.

61 ENVIORNMENTAL WEIGHT 0.02 100% AS 1 1 1 3 TAS 0.04 AS 1 TAS 0.03 0.12 0.02 0.04 LEGAL 9.0.01 0. 11.68 106 .01 0. 12. Competitive law Employment Law Health & Safety Product Safety WEIGHT 0.06 0.02 0.03 0. 10.

05 0.05 0.08 0.05 0. ECONOMIC Interest and Exchange Rates GDP Money Supply Unemployment Inflation Disposal Income WEIGHT 0.06 0.04 0. 55.02 0. 60. 65.05 0.03 1 0.03 0.02 0.1 0. 61. 63.10 0.07 64. 57.03 0. 62.12 0.07 AS 1 2 1 1 107 . 68.04 -0. NO.08 -0. 67.05 0. 66.06 0.03 0. 56.03 0.03 0. 59.06 -0.02 0. 71.SR. SOCIO CULTURAL Demographics Income distribution Lifestyle Trends Attitude to work Level of education WEIGHT 0.06 AS -1 -1 -1 -1 -1 -1 TAS -0.03 0.34 TAS 0. POLITICAL GOVERNMENT STABILITY TAXTATION POLICY FOREIGN TRADE REGULATIONS STRATEGY: mergers and acquisitions WEIGHT AS TAS 0. TECHNOLOGICAL GOVT FOCUS New discoveries Speed of technological transfer Rate Of Obsolense WEIGHT 0.07 0. 70.03 -0.07 -0.13 58.06 -0.03 0.13 TAS 0.03 0. 72.05 1 1 0.02 AS 1 1 1 1 1 69.

10 0.03 0.04 AS 1 TAS 0.40 108 . Competitive law Employment Law Health & Safety Product Safety WEIGHT 0. 16.34 ENVIORNMENTAL WEIGHT 0.01 0.0.01 0. 15.03 0.04 LEGAL 13.02 0.02 100% AS 1 1 1 2 TAS 0.02 0.04 0. 14.

06 0.10 0.3 0.05 0. NO. Interest Rates ECONOMIC and Exchange WEIGHT 0.03 0.06 0. 86.06 0.03 0.03 -0.03 0.04 0.04 0. SOCIO CULTURAL Demographics Income distribution Lifestyle Trends Attitude to work Level of education WEIGHT 0. 78.08 0.02 AS 2 2 2 1 1 87. 74.05 AS 1 1 1 TAS 0.06 AS -1 -1 -1 -1 -1 -1 TAS -0.05 0. 85. TECHNOLOGICAL GOVT FOCUS New discoveries Speed of technological transfer Rate Of Obsolense WEIGHT 0.07 0.06 -0.07 AS 1 1 3 1 109 . 75.02 0.SR. 88.08 -0.03 0.07 -0.21 TAS 0.06 0. 80.05 0.13 GOVERNMENT STABILITY TAXTATION POLICY FOREIGN TRADE REGULATIONS 76.02 0.03 0. 77.04 -0. 83. 73. 79.07 GDP Money Supply Unemployment Inflation Disposal Income 82.03 0.06 0. POLITICAL STRATEGY: developing more efficient website WEIGHT 0.06 -0.34 TAS 0. 84. 81. 90.05 0. 89.05 0.03 0.

20.02 0.06 0.01 0.02 100% AS 2 2 4 3 TAS 0.08 0. Competitive law Employment Law Health & Safety Product Safety WEIGHT 0.22 0.02 0. 19.04 LEGAL 17.74 110 .06 0.04 AS 1 TAS 0.48 ENVIORNMENTAL WEIGHT 0.03 0. 18.0.

Demographics 101.13 94.05 0. 96. 92.05 0. 91.05 0. Level of education WEIGHT 0.06 -0.06 0.04 -0.SR.03 0. 93.07 AS 1 1 3 1 111 .3 0.06 0.02 AS 2 2 2 1 1 TECHNOLOGICAL 105.05 0.06 0.07 SOCIO CULTURAL 100.05 1 1 0.03 0. 97.02 0.06 -0. 98.02 0.03 0. ECONOMIC Interest and Exchange Rates GDP Money Supply Unemployment Inflation Disposal Income WEIGHT 0.06 0.05 0.08 0.03 0. Speed of technological transfer 108.03 0.03 0.07 -0. NO. 99. Attitude to work 104. GOVT FOCUS 106.06 AS -1 -1 -1 -1 -1 -1 TAS -0. Lifestyle Trends 103.03 -0.06 0.04 0.21 TAS 0.10 0.34 TAS 0.08 -0.04 0. Rate Of Obsolense WEIGHT 0.03 1 0. New discoveries 107. 95. POLITICAL GOVERNMENT STABILITY TAXTATION POLICY FOREIGN TRADE REGULATIONS STRATEGY: mergers with security companies WEIGHT AS TAS 0.07 0. Income distribution 102.

48 ENVIORNMENTAL WEIGHT 0.08 0. 24.02 0.0.01 0.04 LEGAL 21. Competitive law Employment Law Health & Safety Product Safety WEIGHT 0. 23.02 100% AS 1 1 1 1 TAS 0.02 0. 22.01 0.60 112 .02 0.04 AS 1 TAS 0.03 0.03 0.

02 0. POLITICAL STRATEGY: Online changing of reservations WEIGHT 0.10 0.05 0. Attitude to work 122.07 GDP Money Supply Unemployment Inflation Disposal Income SOCIO CULTURAL 118.06 0.03 0. Demographics 119. Interest Rates 113. GOVERNMENT STABILITY 110.07 0. Rate Of Obsolense WEIGHT 0.21 TAS 0.03 0.05 0. TAXTATION POLICY 111.05 0.07 AS 1 1 3 1 113 .03 0.05 AS 1 1 1 TAS 0. Speed of technological transfer 126.05 0.03 0.06 0.03 -0.34 TAS 0.08 0. Income distribution 120.06 -0.04 -0.04 0.02 0. GOVT FOCUS 124.03 0.06 0. Level of education WEIGHT 0. NO.06 0.06 -0. 115.03 0.03 0. New discoveries 125.04 0.13 109.SR.06 0. 114. ECONOMIC and Exchange WEIGHT 0. Lifestyle Trends 121.07 -0.08 -0.06 AS -1 -1 -1 -1 -1 -1 TAS -0.02 AS 2 2 2 1 1 TECHNOLOGICAL 123.3 0.05 0. 116. FOREIGN TRADE REGULATIONS 112. 117.

48 ENVIORNMENTAL WEIGHT 0.01 0.0.04 AS 1 TAS 0.62 114 . 28.02 100% AS 1 1 1 2 TAS 0.02 0.01 0. Competitive law Employment Law Health & Safety Product Safety WEIGHT 0. 26.04 LEGAL 25.02 0.03 0.03 0.04 0.10 0. 27.

07 0. TAXTATION POLICY 129.03 -0. 132.SR.13 127.06 AS -1 -1 -1 -1 -1 -1 TAS -0. FOREIGN TRADE REGULATIONS 130.1 0.06 0.05 0.03 0.06 0.34 TAS 0.07 AS 1 1 1 1 115 .02 0. NO. Attitude to work 140.05 0. Income distribution 138. Rate Of Obsolense WEIGHT 0.08 -0.02 0.19 TAS 0.06 0.06 0.06 -0.08 0.03 0. GOVERNMENT STABILITY 128. 134.03 0. GOVT FOCUS 142.04 0.03 0. POLITICAL STRATEGY: Diversify into new product markets WEIGHT 0.05 0.06 -0.05 AS 1 1 1 TAS 0. Interest Rates 131.07 -0. 135.02 AS 1 2 2 1 1 TECHNOLOGICAL 141. New discoveries 143. Demographics 137.05 0.07 GDP Money Supply Unemployment Inflation Disposal Income SOCIO CULTURAL 136.06 0.03 0.02 0.04 -0. Lifestyle Trends 139.03 0. Speed of technological transfer 144. Level of education WEIGHT 0. ECONOMIC and Exchange WEIGHT 0.05 0.10 0. 133.03 0.

01 0.0.03 0.40 116 .04 0.02 0.10 0. Competitive law Employment Law Health & Safety Product Safety WEIGHT 0.02 0.28 ENVIORNMENTAL WEIGHT 0.04 LEGAL 29.04 AS 1 TAS 0.01 0. 30.03 0. 32. 31.02 100% AS 1 1 1 2 TAS 0.

03 -0. New discoveries 161.05 0.03 0.06 0.05 0.10 AS 1 1 3 117 . FOREIGN TRADE REGULATIONS ECONOMIC 148.08 -0.19 TAS 0.04 0. GOVERNMENT STABILITY 146. 152.06 AS -1 -1 -1 -1 -1 -1 TAS -0.04 -0.03 0.06 0.34 TAS 0.06 -0. 151.02 0. Demographics 155.03 0.06 -0.03 0. NO.05 0. POLITICAL STRATEGY: Online verification of personnel more efficient WEIGHT 0.03 0.02 AS 1 2 2 1 1 TECHNOLOGICAL 159.03 0.06 0.05 0. Level of education WEIGHT 0.3 SOCIO CULTURAL 154.03 0. Income distribution 156.05 0. Attitude to work 158. 150.13 145.06 0.SR.07 0.06 0. GOVT FOCUS 160.05 AS 1 1 1 TAS 0.02 0. GDP Money Supply Unemployment Inflation Disposal Income WEIGHT 0.08 0. Interest and Exchange Rates 149. TAXTATION POLICY 147. Lifestyle Trends 157. 153. Speed of technological transfer WEIGHT 0.02 0.07 -0.

03 0.02 0.03 0. Rate Of Obsolense 0. Competitive law Employment Law Health & Safety Product Safety WEIGHT 0.07 1 0.04 0.07 0. 35.48 ENVIORNMENTAL WEIGHT 0.04 AS 3 TAS 0. 36.02 100% AS 1 1 1 2 TAS 0.01 0.01 0.68 118 . 34.10 0.162.12 LEGAL 33.02 0.

06 0.05 0.08 -0.06 -0.03 0. GOVT FOCUS 178. 169.SR. FOREIGN TRADE REGULATIONS ECONOMIC 166.03 0.06 0.06 0.34 TAS 0.05 0.06 AS -1 -1 -1 -1 -1 -1 TAS -0. 171.07 0. Speed of technological transfer WEIGHT 0.02 0.10 AS 1 1 1 119 .02 0.05 0.06 -0. 170. POLITICAL STRATEGY: Strategic alliance with tourism companies WEIGHT 0.03 0. Income distribution 174.13 163.03 0. GDP Money Supply Unemployment Inflation Disposal Income WEIGHT 0.06 0.07 -0.05 0.06 0. Attitude to work 176. Interest and Exchange Rates 167.03 0.02 0. Lifestyle Trends 175.05 AS 1 1 1 TAS 0.08 0.03 0. New discoveries 179.04 -0.03 0.1 SOCIO CULTURAL 172.19 TAS 0. GOVERNMENT STABILITY 164.02 AS 1 2 2 1 1 TECHNOLOGICAL 177.05 0. NO. Demographics 173. 168.03 -0.04 0. TAXTATION POLICY 165. Level of education WEIGHT 0.

10 0.03 0. 39.01 0. 40. Rate Of Obsolense 0. Competitive law Employment Law Health & Safety Product Safety WEIGHT 0.03 0.40 120 .02 0.180.07 1 0.28 ENVIORNMENTAL WEIGHT 0.07 0.04 LEGAL 37.02 0.01 0.04 0.02 100% AS 1 1 1 2 TAS 0. 38.04 AS 1 TAS 0.

188. Demographics 191. 187.08 0. Interest Rates 185.23 TAS 0.02 AS 3 1 2 2 1 TECHNOLOGICAL 195.06 -0. Lifestyle Trends 193.34 TAS 0.05 0. 189.06 0.05 0.03 0.03 0.10 0. Attitude to work 194.02 0.03 -0.06 0.05 0.06 -0. ECONOMIC and Exchange WEIGHT 0.06 0.07 -0.07 AS 1 1 2 1 121 . FOREIGN TRADE REGULATIONS STRATEGY: Alliance with food producing companies WEIGHT AS TAS 0.02 0.06 0. GOVT FOCUS 196. 186.07 GDP Money Supply Unemployment Inflation Disposal Income SOCIO CULTURAL 190.07 0. Speed of technological transfer 198. POLITICAL 181.03 1 0. GOVERNMENT STABILITY 182.03 0.08 -0. TAXTATION POLICY 183.2 0.03 0.03 0.05 0.04 -0.06 0.SR.10 0.06 0. New discoveries 197. Income distribution 192. Rate Of Obsolense WEIGHT 0. NO.18 184. Level of education WEIGHT 0.05 2 1 0.06 AS -1 -1 -1 -1 -1 -1 TAS -0.03 0.04 0.

03 0.08 LEGAL 41.61 122 .01 0.0.02 0. 44.03 0.38 ENVIORNMENTAL WEIGHT 0.02 100% AS 1 1 1 1 TAS 0.02 0.08 0. 42.01 0.04 AS 2 TAS 0. Competitive law Employment Law Health & Safety Product Safety WEIGHT 0. 43.02 0.

02 0.04 0. NO.06 -0. Rate Of Obsolense WEIGHT 0.10 0.02 AS 1 1 1 1 1 TECHNOLOGICAL 213.03 0.04 -0.05 0. 205. 206.05 AS 2 2 1 TAS 0. ECONOMIC and Exchange WEIGHT 0.07 -0.05 0.07 GDP Money Supply Unemployment Inflation Disposal Income SOCIO CULTURAL 208.03 0. Income distribution 210.05 0. GOVT FOCUS 214. POLITICAL STRATEGY: Merger with Starwood Hotels WEIGHT 0.13 TAS 0. Interest Rates 203. GOVERNMENT STABILITY 200. Speed of technological transfer 216. Lifestyle Trends 211.03 -0.03 0. 207.10 0.SR.03 0.06 0.05 0. FOREIGN TRADE REGULATIONS 202.06 0.02 0.03 0.03 0.1 0.06 AS -1 -1 -1 -1 -1 -1 TAS -0.34 TAS 0. Level of education WEIGHT 0.08 -0.03 0.24 199.03 0.06 0.06 -0.07 AS 1 1 1 1 123 . TAXTATION POLICY 201. Attitude to work 212. New discoveries 215.06 0. 204. Demographics 209.02 0.07 0.08 0.

47.02 100% AS 1 1 1 1 TAS 0.28 ENVIORNMENTAL WEIGHT 0.02 0.01 0.02 0.02 0.43 124 .0. Competitive law Employment Law Health & Safety Product Safety WEIGHT 0. 46.08 0.04 AS 1 TAS 0.03 0. 48.01 0.03 0.04 LEGAL 45.

Lifestyle Trends 229.06 0.03 0.02 0.10 0.02 0.06 0.13 TAS 0. ECONOMIC and Exchange WEIGHT 0. 224.13 217. 222.07 -0.02 0. 223. NO. New discoveries 233.05 0.SR.03 0. Speed of technological transfer 234.06 -0.34 TAS 0. GOVERNMENT STABILITY 218.06 AS -1 -1 -1 -1 -1 -1 TAS -0.03 0.07 0. Demographics 227.03 0.08 -0.07 AS 1 1 1 1 125 .03 0. 225.02 AS 1 1 1 1 1 TECHNOLOGICAL 231.03 0.03 0. Interest Rates 221.08 0.04 -0. Income distribution 228. FOREIGN TRADE REGULATIONS 220. GOVT FOCUS 232.05 0.05 0. TAXTATION POLICY 219. POLITICAL STRATEGY: Market Development WEIGHT 0.1 0. Attitude to work 230.05 0.03 0.06 -0.05 0.03 0.06 0.07 GDP Money Supply Unemployment Inflation Disposal Income SOCIO CULTURAL 226.05 AS 1 1 1 TAS 0. Level of education WEIGHT 0.03 -0.04 0. Rate Of Obsolense WEIGHT 0.

04 LEGAL 49.0. 52.02 0.28 ENVIORNMENTAL WEIGHT 0. 51.02 0.03 0.08 0.32 126 .02 100% AS 1 1 1 1 TAS 0.01 0. 50. Competitive law Employment Law Health & Safety Product Safety WEIGHT 0.03 0.04 AS 1 TAS 0.02 0.01 0.

60 0.00 developing more efficient website mergers with security companies Online changing of reservations Diversify into new product markets Online verification of personnel more efficient Strategic alliance with tourism companies Alliance with food producing companies Merger with Starwood Hotels 0.59 relationship with suppliers 0.25 mergers and acquisitions 1.Consolidated Score Strategy Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Strategy Score use of emerging markets 1.40 0.40 0.43 Expand into developing nation 0.68 0.9 more innovation 1.8 less hotels expansion in developing 1.36 Floating Hotels 0.65 use of emerging technology 1.67 countries taking customer relations to 0.62 next level launching new packages 1.48 strict labor laws Offer more diverse products 0.61 0.99 Advance credit only to big 0.74 0.96 127 .62 0.7 merge with other 4 stars or 1.4 shot firms Diversify in countries with less 0.

02 different areas of the world The Strategies to Apply The strategies that we will select will range from 0.7 to 1.23 24 Expansions to overcome 0.47 slowdown problems Promote different cultures in 1. These strategies are highlighted in the table above. 128 .7.

CHAPTER NO. it does not blur the image by entering other market segments or by adding other products to widen market appeal. The products are custom made and so target every single individual.4 CRAFTING A STRATEGY The Five Generic Competitive Strategies There are five different generic competitive strategies namely.e. Just like Hilton has various holiday packages and on the other hand has corporate packages. This strategy has been applied to Hilton because luxury is something where every buyer needs and preferences are distinctively different. Strategies Low Cost Provider A Broad Differentiation A Best Cost Provider A Focused or Market Niche based on lower Cost A Foocused or Market Niche based on Differentiation Out of the five strategies available. Hilton's target market is the high class individuals of the society and hence the services only appeal to them. The packages that Hilton offers can be tailored to the tastes and requirements of niche members. the fifth strategy i. The customers of Hilton have different preferences than each other and hence ask for customized services. so. for every age group there is a specific package available which can be altered accordingly. The basis of competitive advantage of Hilton is that the attributes it offers to its customers appeal specifically to only those who are the part of the niche target market. Hilton is committed to serve the niche better than its rivals. Hilton also offers excitement for children. "a focused or market niche based on differentiation strategy" will be applied on Hilton. 129 .

Hilton has signed agreements and contracts with for example. Also. 130 . As a result of the merger. opened theme parks for children and also learning facilities where kids can learn and progress. for GBP 3.S. 2007 Hilton Hotels Corporation and The Blackstone Group today announced the completion of the previously announced merger of Hilton with an affiliate of The Blackstone Group's real estate and corporate private equity funds. Also Hilton has is working with HP technologies. The pay higher prices in return get higher services which leads to revenue and profit generation.The target market is big enough to be profitable and offers good growth potential. Strategic Alliances and Partnerships Hilton has no such strategic alliances or partnerships on such a large scale but. October 24. The company acquired Hilton International. by synchronizing their smart phones with the printers. NY. Hilton and IBM also announced a global collaboration agreement to enhance the hospitality company s technology infrastructure and to facilitate the development and delivery of next-generation technology solutions.3 billion in 2006. for each share of common stock that they own immediately prior to the effective time of the Merger. Hilton's common stock will cease to trade on the New York Stock Exchange at the close of market today and will be delisted. Pursuant to the terms of the merger agreement.50 in cash. smart phones like iphone and BlackBerry provide special gps services to the users who are clients of Hilton by providing tourism guide. HP provides printing facilities to the customers of Hilton. Nat Geo and Discovery. They have along with Hilton. As we see Hilton has five rivals and they are the major players in the market. The customers are the elites or the corporate clients who can very easily afford luxury living. holders of Hilton's common stock will receive $47. Merger and Acquisition Strategies 1943 First coast to coast hotel chain in the US through acquisition of Roosevelt and the Plaza in NY BEVERLY HILLS. the lodging assets of Hilton Group Plc. without interest. CA and NEW YORK. primarily for the purpose of expanding operations in the U. Hilton has been involved in purchasing small and medium-sized hotels since 1970. Also. This made Hilton the biggest lodging company in the world. targeting a niche allows a small number of rivals.

Hilton offers them HHonors programs. Hilton offers a children theme park with collaboration with Discovery channel and similarly Sheraton offers Lego Land joys. Hilton as compared to its rivals has somewhat the product. Hilton is also increasingly relying on the franchisee-based model for growth. 131 . If Marriott International sends gifts to its corporate clients. they all enjoy their own space and their own customers who bring them great profits and keep them running on the road of growth. Outsourcing Strategies: Narrowing the Boundaries of the Business There was no data available for Hilton's outsourcing strategies. Defensive Strategies Blocking the Avenues Open to Challengers Hilton keeps on pursuing to adopt new emerging technology in order to reduce the threat that the rivals will attack with a better technology. Hilton develops and operates timeshare resorts through Hilton Grand Vacations Company. They like being different from each other even though they offer similar kinds of products to similar kind of customers. Offensive and Defensive Strategies As there are just a few major players in the market. which provides on-site management services to Hilton Grand Vacations Club resorts. services and packages to offer the difference comes when it is time to deliver. This strategy further enables the company to concentrate its efforts towards building a strong brand instead of buying real estate. They tend to stay busy in their own worlds do what they do best. If Marriott International offers Dolphin Swim Experience with Discovery Channel. Similarly they offer services with such unique technology and keep searching and signing agreement with other technology providing firms. They have kept their reservation systems upto date and so have other rival firms.Vertical Integration Strategies: Operating Across More Stages of the Industry Value Chain Hilton s primary business segments include hotels (ownership and managing & franchising) and timeshare operations (an arrangement under which a purchaser receives the right to use an accommodation or amenities or both for a specified period). In order to retain or gain new customers these firms also offer different loyalty programs which lead to stronger customer relations. This enables the company to earn revenues without incurring any additional costs to purchase real estate and construct hotels.

the prices of these big shots are also similar to each other. 132 . As mentioned earlier in the report.Signaling Challengers That Retaliation is Likely All these big shot luxury hotels including Hiltons give out press releases that talk about their management's commitment to maintain the firm's present market share. Strategies for Using the Internet as a Distribution Channel Does not apply. Also Hilton keeps on acquiring small hotels in order to expand its business and give out the message that it is still an active player in the market.

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