Hilton worldwide

INTRODUCTION

From very humble origins in Cisco, Texas in 1919, where Conrad Hilton purchased his very first hotel,
The Mobley, and in Dallas, again in Texas, where in 1925 the first formally named Hilton opened, Hilton
Worldwide (formerly Hilton Hotels Corporation) is a major global hospitality company. As of January
2016, Hilton Worldwide, which is owned by the Blackstone Group, had 758,502 rooms in 4,610
properties across 100 countries and was ranked as the 36th largest private company in the United
States. In 2011 alone, Hilton Worldwide became the fastest growing major hotel company, opened 170
hotels and signed management or franchised agreements on more than 320 hotels. Within its portfolio
of leading brands are included the likes of the Waldorf Astoria Hotels & Resorts (27 in 11 countries),
Conrad Hotels & Resorts (17 in 13 countries), Hilton Hotels & Resorts(553 in 80 countries), DoubleTree
by Hilton (442 in 35 countries), Embassy Suites Hotels (223 in 6 countries), Hilton Garden Inn (668 in 23
countries), as well as Hampton Inn (2,092 in 17 countries), Homewood Suites by Hilton (365 in 3
countries), Home2 Suites by Hilton (68 in 3 countries), and Hilton Grand Vacations (44 in 4 countries)
(Hilton Worldwide, 2016). The latter is of particular interest as it now hosts in excess of 176,000
members across 5 countries: the United States, Canada, Mexico, Portugal and Scotland. Furthermore,
Hilton Worldwide is very much a leading player in the global hospitality industry as it has continued to
expand its brand portfolio to cater to ever niche of the travel market to include theboutique and
lifestyle based brands: Canopy by Hilton and Tru by Hilton, respectively (Hilton Worldwide, 2016).

THE EARLY INNOVATOR

Returning to its early days, Hilton was always at the leading edge of innovation in the hospitality.
Although not perhaps appearing as radical today, back in 1927 cold running water and air-conditioning
in the public rooms was deemed to be a major leap forward. Similarly, when the Roosevelt Hilton in
New York City became the first hotel in the world to install televisions in guest rooms in 1947, this was a
widely recognized ‘step change’ in the hospitality ‘product’ and was one that many competing hoteliers
felt obliged to follow. The same could also be said about the launch in 1948 of Hilton’s multi-hotel
reservations system, an innovation that soon served as the catalyst for the modern-day reservation
system. This was soon followed by the launch of Hilton’s first international property in 1949 when Hilton
International was ‘born’ with the opening of the Caribe Hilton in Puerto Rico; the beginning of an
international dynasty that continues to go from strength to strength (Hilton History, 2016). The
exponential success of Hilton was such that Conrad Hilton became the first ever hotelier to appear on
the cover of Time magazine, while he later became the first to appear twice when he appeared in the
July issue in 1963. Much of this was attributed to his dedication to customer service and ability to be
one step ahead of the game. This was evidenced in 1970 when Hilton became the first NYSE-listed
company to enter the domestic gaming business with the purchase of the Flamingo Hotel and the Las
Vegas International (Hilton History, 2016). A little later in 1973, Hilton developed the first centralized
reservation service using computer technology, HILTRON, which unites all Hilton hotels. Quite incredibly,
this landmark system, the most sophisticated computerised hotel reservation referral and reporting
system in the industry, served the company right up to the end of the 1990s (Hilton History, 2016). After
the launch of its sophisticated reservation service, perhaps the next biggest customer service landmark
was the launch of Hilton HHonors, its first guest loyalty programme in 1987. This was enhanced further
in 1994 when Hilton HHonors Reward Exchange enabled travellers to earn both points and air miles and
so bring together two of the most potent components of the wider tourism product. HHonors has over
50 million members, adding over 6 million of them in 2015, alone (Egerton-Vernon, 2016). The most
significant aspect of the loyalty programme is that the HHonors members of Hilton are very loyal to the
brands as they accounted for 52% of all room accommodations within Hilton Worldwide in 2015
(Egerton-Vernon, 2016).

With the launch of its first website, http://www.hilton.com, in 1995 and its new reservation system,
HILSTAR, in 1999, innovation continued apace as Hilton entered the new millennium (Hilton History,
2016). For example, it launched Hilton Worldwide Resorts in 2002, its first col-lection of premium
resorts and exotic vacation experiences, while in 2006 Hilton Hotels Corporation and HiltonInternational
were reunited, and also launched its first ever application for mobile devices (Hilton History, 2016). This
new innovation enabled guests to make reservations, check-in, search hotels, view HHonors account
activity, book HHonors reward stays and order Hilton Requests upon Arrival amenities (HHonors, 2016).
And, not wishing to miss out on the social media frenzy occurring at the time, Hilton became the first
major hotelier to reach 50,000 fans on Facebook (Hilton History, 2016). And, in 2009, Hilton Hotels
formally became Hilton Hotels & Resorts and introduced a refreshed brand logo soon after Hilton Hotels
Corporation changed its name to Hilton Worldwide (Hilton History, 2016).

HILTON WORLDWIDE GROWTH

For the future, Hilton Worldwide has four key strategic priorities which will drive the business forward
over the next decade: aligning its culture and organisation, maximising performance across the
enterprise, strengthening and expanding itsbrands and commercial services platform, and, perhaps
above all, expanding its global footprint (Hilton Worldwide, 2016). With a significant number of its
development pipeline of nearly 900 hotels comprising about 130,000 rooms now outside of the United
States and Canada, the international ambitions of the company are very much in evidence, with a
particular focus on Asia/Pacific, Europe, the Middle East and Latin America – all of these being markets
where traditionally Hilton has been under-penetrated when compared to its footprint in the United
States (Hilton Worldwide, 2016). Across the regions, growth really is quite impressive. In fact, there are
plans in place to double its footprint in Latin America, the Caribbean, and Europe; all while, tripling the
number of properties in Asia and to increase nine-fold the number of new hotels in China (Hilton
Worldwide, 2016). To achieve this, Hilton set forth a strategic growth plan to grow by an average of one
new property per day beginning in 2015 (Egerton-Vernon,2016).

Interest in China, although perhaps obvious in view of the sheer number of opportunities on the
horizon, remains impressive. Hilton, recognising the need to adapt to the needs of local markets, is
considering launching a brand targeted specifically at Chinese travellers, as it seeks to keep pace with its
rivals in what very soon is likely to become the world’s single largest hotel market. One particular rival is
the InterContinental Hotels Group PLC (IHG.LN), which is currently the market leader in China with
around 160 ho-tels and a similar number in the pipeline. To cater to the specific needs of the Chinese
market, IHG.LN launched ‘Hualuxe’ in 2013–14 (IHG, 2015). These the new hotels incorporating tea
houses, Chinese gardens, and noodle bars, cater specifically to the Chinese cultural and market needs.
IHG’s ambitions are big in that it expects Hualuxe to reach 100 cities by 2025, with further growth to
follow in Asia’s other booming economies (IHG, 2015). Instead of focusing too much on its competitors,
like IHG, however, Hilton Worldwide is firmly focused on the opportunities to be gained from being one
of the first companies to tap into what may be potentiallythe largest market in the world by 2025, with
approximately 6 million hotel rooms– a figure that is projected to double by 2039 (IHG, 2015).

COMPETITIVE PRICING STRATEGIES

An increasing trend in the hotel and travel industry since the inception of the World Wide Web has been
to utilize the reach of third party distributors to get both exposure and rooms sold. Companies like
Expedia, Priceline, etc. get an allocated number of rooms from Hilton and then sell those rooms for a set
price, taking a percentage of the sale and a commission. For years, this was a standard practice because
these websites were a one-stop shop for consumers to purchase every aspect of their travel
arrangements, including airfare, hotel, rental cars, etc. These third party intermediaries charge large
commissions in order to provide exposure to hotel companies like Hilton (Kessler & Weed, 2015). As of
2015, Hilton has begun a new approach to their online bookings as they are steering away from the
expensive commissions of companies like Expedia, Priceline, etc. and are now incorporating their own
methods of mass exposure to both their potential and current customers. In 2015, over 53% of all of
Hilton’s customers were actually members of their loyalty programme, which is why Hilton, in that year,
began adopting both a more internal approach and also cost-effective approach to maintaining and
growing their customer base (Kessler & Weed, 2015). Hilton teamed up with TripAdvisor and Google
Hotel Finder to generate exposure due to the fact that the fees are a fraction of those charged by the
major third party booking websites. The reason for this change was because these websites are centrally
focused on the customer experience, a place where past customers write reviews of their experiences. It
has been shown that consumers are more likely to purchase a product following a real positive
review/feedback of said product. Hilton decided to tap into this psychological aspect of purchasing
behaviours by placing their product in front of those prospective customers looking for feedback of past
experiences by those who have already stayed (Kessler & Weed, 2015).

Furthermore, Hilton has not abandoned their relationships with Expedia, Priceline, Orbitz, etc. due to
the fact that they do generate huge exposure for their brands; however, they have begun forcing these
companies to maintain more competitive prices by actually underwriting them with cheaper prices
directly through the hotels versus going through these booking websites (Kessler & Weed, 2015). In
addition to this underwriting, Hilton is forcing these companies to formulate more competitive methods
of attracting customers by integrating more convenience and innovation into the buying experience.
Kessler and Weed (2015) highlight how Hilton was the first hotel company to integrate mobile check-in
and direct bookings through a mobile application, something that is vital in this fast paced, always-on-
the-go society. Hilton utilises the power of its HHonors program to both attract and maintain loyal
customers by offering points only when they purchase rooms directly through them (Kessler & Weed,
2015). In 2015 Hilton even instructed front-desk employees to remind guests who booked through
thirdeven instructed front-desk employees to remind guests who booked through third party websites
that they could not earn loyalty points. It may seem a less than hospitable move in the eyes of some;
however, Hilton’s brand loyalty members nearly doubled from 2012 to 2015, suggesting that their
unorthodox approach to customer acquisition may just have been the right move (Kessler & Weed,
2015). This is why Hilton has remained a leader and innovator in the acquisition of customers.

Dikutip dari Tourism Principles and Practice, Fletcher, 2018