Comparative Analysis of Hilton Hotel and Marriot International Hotels Report

Introduction

The purpose of this paper is to provide an in-depth analysis of two leading companies in the hospitality industry- Hilton Hotels and Marriot international. The aim of this analysis is to identify the major factors affecting their strategic direction and predict their future performances and possibility of existence in a rapidly developing and highly dynamic industry.

Comparative SWOT Analysis

SWOT analysis of Hilton Hotel International

Strengths

Hilton Hotel international is a global leader in the industry, being the world’s second largest group of hotels after Marriot International¹. This means that the company has an advantage of size and global presence, which allows it to maximize its profitability².

The company has a diversified corporate portfolio, with a wide range of products based on both price and service³. In fact, the company has about nine different brands- the Hilton, Waldorf-Astoria Collection, Conrad Hotels and Resorts, Embassy Suites, Hilton Grand Vacations, Hilton Garden Inn, Hampton Inn and Suites, the Doubletree and Homewood Suites by Hilton⁴.

Thirdly, the company ha a focused development that allows it enter into and consolidate new markets. The company has been pursuing its growth strategy with aggressiveness with an aim of consolidating its presence throughout the world. In addition, it aims at capitalizing on the dynamic and booming hotel, travel and tourism industry as well as the emergent world markets such as India, Brazil and China. For instance, the company announced a major plan of building more then 300 outlets in the Asian Pacific region alone beginning 2008.⁵

A loyalty program, the “Hilton HHonours” established at the company is one of its major advantages and strengths⁶. With this program, the company has become a well-recognized partner in the travel and tourism industry. In 2007, the company announced its plans to extend this loyalty program to include Experience Rewards, which aims at offering its more then 17 million customers with personalized and experience-oriented options as a reward and appreciation⁷.

In addition, the company extended its blackout dates in 2008, which made it more valuable in the eyes of its customers throughout the world. From an analysis of the company, it is worth noting that a strong loyalty program is important in retaining its customer and crating brand loyalty among the new customers in order to boost its revenues in the future.

Weakness

A focus on domestic market is actually a problem at the company. For instance, the company’s presence in the United States accounts for more than 80% of the company’s entire hotels⁸. In fact, poor diversification of presence seems to be a problem because it makes it vulnerable to any economic crisis that may hit the American market.

Secondly, the company has been quite late and slow in its international expansion. In fact, the company started late in expanding into other markets, first concentrating on its American presence and giving its rivals a smooth time for operating and investing in foreign markets⁹. Due to its lateness, the company is finding its difficult to penetrate foreign markets, especially where its rivals have consolidated and invested widely prior to its entry.

It is also worth noting that the cost of real estate investment is hurting the presence of Hilton Hotels in various parts of the world such as China, India and Russia. Due to its lateness in entering these new markets, the company is finding it hard to establish itself due to increasing cost of real estates, especially because these areas are hot spots for investment due to the good economic progress demonstrated by these countries.

Single ownership is another weakness affecting Hilton Hotels. As a privately owned corporation, the company is susceptible to any problem associated with poor decision-making and corporate handling.

Opportunities

The dynamism of market growth in emerging economies such as India, China, Brazil, Russia and South Africa provides the company with an opportunity to expand its foreign presence and take the advantage of low presence of foreign companies in these areas. Secondly, the presence of Luxury brands provides Hilton Hotels with an opportunity of redefining its brand and expanding its portfolio.

Technological dynamism and revolution provides Hilton Hotel with an opportunity to take the advantage by developing unique global brands to compete with its rivals in the industry.

Threats

The presence of individual consumer price has increased the demand for unique lodging experience, which is in turn driving towards the establishment of independent hotels. This is common in the United States, which presents a major threat to Hilton that operates as a chain of hotels.

Secondly, the company is threatened by a major downturn in business travel, especially after the world economic crisis of 2007-2010 and its aftermath. Moreover, the invention of e-commerce and internet technology has greatly reduced the need for business travelling, which in turn affects hotel companies.

SWOT analysis of Marriot International

Strengths

Marriot International Inc is a global leader in hotel and travel industry, taking more than 5% value share as at 2010. It is the largest company with a wide geographical presence in the world. Unlike Hilton Hotels, Marriot has an unhampered hotel ownership, owning less then 1% of its portfolio. This means that it has the capacity to avoid price and market fluctuations as well as major and minor economic crisis in a given region.

Like Hilton, the company has a focused pipeline development, where it is pursuing a growth strategy to consolidate its presence in the emerging world markets and to capitalize on the dynamically booming hotel, travel and tourism industries. It is also worth noting that the company has taken the advantage of the internet technology, with a strong and effective website that guarantees a good online trading, advertisement and communication with its customers.

Weaknesses

Like Hilton Hotels, Marriot International Inc is likely to suffer an economic blow due to its heavy presence on the American market. In fact, it has a strong focus on domestic market. Secondly, the company’s focus on luxury brands leaves it vulnerable to any potential global economic crisis.

In addition, it is evident that the company’s focus on Courtyard Brand is a major weakness because the brand is losing its core customers, with experts arguing that business revitalization is not enough to lure the company’s customers back because there is already a fierce competition in the industry.

It is also worth noting that the company lacks a low-cost lifestyle brand, instead, it focuses on luxury brands. This leaves the company les popular among the low and middle-income earners and the most common and largest group of customers.

Opportunities

The presence of emerging markets in Asia, South America and Africa means that companies like Marriot are set to use their massive resources to enter these markets and lock out smaller companies. Secondly, technological advancement places companies with massive resources at a better position to use new technologies as a competitive advantage over upcoming corporations with less resources.

Threats

Consumer confidence is a general threat to companies like Marriott due to its impact on the income levels of the potential customers. In addition, credit crunch remains a threat to multinational companies like Marriot.

Comparative PESTEL analysis

• Political: The two companies share a common political environment, especially because they are located in the United States. However, the wider geographical presence of Marriot over Hilton means that it has diversified its risks associated with localized political threats.
• Economic: The two companies have invested heavily in their international presence, thus diversifying their ability to cope with economic hurdles in various nations¹⁰. However, Marriot’s wider presence means that it beats Hilton on this ground.
• Social factors: social aspects of world population are likely to affect the companies both positively and negatively¹¹. Population growth in foreign markets is likely to favor Marriot due to its heavy presence in foreign markets.
• Technological: Internet technology seems to favor Marriot because of its heavy presence on the internet and a focus on e-commerce.
• Environmental: Both companies experience similar economic effects in their business due to similarity in location and operation.
• Legal factors: in the United States and Europe, the two companies share a common legal environment. However, in some foreign markets, they differ sue to their differences in locations.

Conclusion

From the comparative analysis, it is evident that the two companies have a better future in terms of their performance. However, Marriot seems to have a number of advantages over Hilton, which means its future is much better then than of Hilton.

Bibliography

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