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For businesses in the hospitality sector, comparative advantage is key to survival. This is because brand identity and competition is very high in the hospitality industry. There are many enterprises in the sector that offer almost the same product in the market. Therefore, it is only through effective customer services that one set up may attract customers than the other. It is for this reason that it is easy to find more established names in the sector having a wide customer base while their competitors continues to struggle in the market (Bian, & Liu, 2011). This paper looks at one of the established companies, the Hilton Hotels; under the brand name Hilton Worldwide.
The history of Hilton hotel can be traced back to the year 1919, when Conrad Hilton – the hotel’s founder set up a 40 room hotel in Texas by then (Hilton, 2014). After many milestones, today the Hilton Hotel under the brand name Hilton Worldwide has grown to be one of the most prestigious companies in the hospitality sector. It has been able to expand from the single hotel in Texas to major towns and cities across the world. As a result, it is also one of the largest and fast growing hotel chains in the world with over 4000 hotels spread across more than 90 countries in the world. Hilton worldwide offers a variety of services for its global customers including room service, vacations, food service, and conference services among others (Hilton, 2014).
The company has also partnered with other organizations through licensing and franchise agreements to be able to establish its brand and heritage associated with full service across the globe. Performance experience has also been key to the organization. As per its mission, the company seeks to become a global hospitality company that provides leadership in the areas of customer service through its values of honesty, integrity, leadership, teamwork, and ownership (Hilton, 2014). To be able to retain a strong position in the market, Hilton has continued to undergo a transformation through service improvements, partnerships and global expansion.
As a result, it has also been posting good financial results, which is important for any company in the sector. However, all the successes mentioned in this section have not been achieved without challenges at one stage or the other. Some of its key past and current problems are discussed in the following section.
Past and Current Problems
First, for any service sector company like Hilton, customer service management has posed great challenges. The clients in the high-end segment of the hospitality sector particularly are more sensitive to the nature of service being offered. They are always looking for new things and quality service. As a result, every company has to constantly improve its services in order to increase its chances of growth in the sector. Given that Hilton Hotels is a multinational brand; dealing with the expectations of customers from different regions was one of its past challenges.
Secondly, given that the global market is denoted by diverse cultural, legal and ethical foundations, the company has faced a lot of challenges in its quest to widen its market reach. In terms of culture, the company has had to realign its services according to the cultural expectations of different regions, which may take a lot of time and resources. The legal requirement of setting up and operating businesses in different countries is also one of the greatest challenges the company has had to face. For instance, there are constant changes in the nature and number of requirements in different regions or countries that in turn influence how the company is to conduct is operations and engage in other activities like promotion.
Marketing of the Hilton also requires huge amounts of capital for market research and the development of promotional channels and materials. As a result, this is one of the areas that previously provided great challenges for the company. However, with a well-known brand today, the company has significantly reduced the problems associated with marketing of its brand. In addition, all the activities of the company require a highly trained and dedicated team. In some regions, sourcing for skilled labor specifically trained for the hospitality sector has been a major problem. On the other hand, human resources management and recruitment of best candidates has been a costly affair with rising pay rates across the globe.
Hilton Company also faces a great competition in the market that may be a hindrance to its financial and growth prospects. The hospitality industry is characterized by relatively lower capital for establishment and as a result is highly competitive due to numerous hotel establishments offering the same products and services. Since Hilton hotel targets the high-end customers, competition has highly affected its performance owing to the recent economic challenges in the global markets. For instance, due to reduced disposable incomes, many customers prefer relatively cheaper alternatives.
The reality is that there are luxurious hotels that have managed to offer competitive packages to customers across the world. In addition, the company has also had to contend with high rivalry among other large hotel chains like Marriot international, Intercontinental Hotels, Starwood, and many other established brands in the market.
Having noted the problems facing the hotel, there are many solutions that may be available for the company. First, the company should be able to create a culture of customer service excellence in line with its promotion of teamwork within its core operations. Through this, every client is to be served according to their different expectations. Secondly, product and service differentiation is also essential for the company’s success in the global markets (Kosová, Lafontaine & Perrigot, 2013). Due to different culture and religions, there are many issues associated with food service, presentation and marketing that must be done differently. The company can only succeed in the different regions if it is ready to come up with themed services, for instance, that will create an identity according to the regions being served.
In addition, the company should also exploit the benefits of cost differentiation. Overreliance on the high-end customers may be unhealthy for its financial performance especially with economic turbulence in the global front. As it continues to expand, developing packages for middle income earners will also be prudent enough for it to expand its market reach and take on its competitors. For marketing, the company should intensify its brand campaign using online platforms. The online marketing platforms usually provide cheaper and more effective alternatives of reaching the targeted individuals.
Particularly, like other hospitality sector operators have done, social media should be a priority. This is because social media encourages referrals and enhances a faster spread of information to millions of users across the world within short time spans in comparison to conventional advertising. Lastly, the company’s expansion program should be focused on the emerging markets particularly in the Asian continent. This is because the economic prospects in this region have remained high despite the advantage of accessing mass markets. This will help in the boosting of the company’s financial might through increased revenues.
Impacts and Improvements
There are various impacts that the hotel will experience with the adoption of the solutions suggested above. First, cost differentiation is one of the best alternatives the company has to enable it expand its markets and deal with intense competition in the sector. By introducing relatively lower pricing, many individuals who would have wanted to have a Hilton experience will opt for the company’s services. This will also impact on its profitability because sales will increase and thus augmented revenues. Secondly, exploiting the benefits of expansion in the emerging economies will help to boost the company’s revenue base as well as add to its already wide market reach in the global hospitality sector. Third, adoption of innovative technologies to boost efficiency in product and service promotion will have significant impacts on the company’s brand success.
Even though Hilton is an established brand, taking advantage of social media to promote its services may work for its marketing as well as research and development departments. This is because social media encourages a lot of interaction and immediate feedback from customers. This information is important for constant service improvement (Wang, Chen & Chen, 2012).
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Hilton, (2014). History and heritage. Web.
Kosová, R., Lafontaine, F., & Perrigot, R. (2013). Organizational form and performance: evidence from the hotel industry. Review of Economics and Statistics, 95(4), 1303-1323. Web.
Wang, C. H., Chen, K. Y., & Chen, S. C. (2012). Total quality management, market orientation and hotel performance: the moderating effects of external environmental factors. International Journal of Hospitality Management, 31(1), 119-129. Web.