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Hilton is a well-established hotel brand that operates across the globe and provides its clients with the exceptional quality of hospitality services. Recently, the group decided to expand its operations into the region of Asia. This report aims to examine the area and its importance for the company, present a SWOT and PESTEL analyses to identify environmental forces that affect the industry and provide a market research proposal.
Hilton in Asia
Asia is an important market for the hotel group because over the past years the economy of the region continued to grow and develop. Therefore, many opportunities connected to entering new markets are presented to the group. AHC Editorial Team (2018) states that in Singapore the hospitality industry is undergoing a process of rapid growth and development. Firstly, the country has become popular with tourists from Europe, the US and other regions.
Secondly, the economy of the domain presents various business opportunities for those travelling for work. This is the case for other Asian countries as well because many of them transformed into successful states over the last years. Therefore, the primary reason that guides Hilton in its decision to enter this market is a growing number of individuals visiting the area as tourists or business travellers.
The company recently opened hotels in Philippines and Manila with plans to expand its presence in the market. According to Sturken (2018), the Asia Pacific and East Asia region is the primary focus of the Hilton’s plan for expansion. Thus, the Asian region presents many opportunities for Hilton Hotels. Additionally, in 2018 the quality of services that the groups provide to its clients was recognised as Asia’s Best Multinational Workplaces award (The Hotel Property Team 2018).
For the company, this means that the strategy that was chosen for this market is viable and can be applied in further establishments. The company launched the band Curio Collection by Hilton specifically tailored to the region (The Hotel Property Team 2018). These examples provide an understanding that Hilton has solid plans to become a well-established brand in Asia through its many affiliate companies and properties.
However, there are potential dangers that can obstruct Hilton’s growth. Chee et al. (2018) state that until 2017 the number of transactions in the hospitality industry was declining; however, since then many countries displayed significant increase in this area. Moreover, the authors state that tourism contributes to over 3% of the GDP in the region. Therefore, a closer examination of the dynamic is required to determine perspectives for the industry.
In total, during 2017 the company opened over forty hotels in the Asian region. According to Rosenthal (2018, para. 2), “of the 2,257 hotel projects in Hilton’s global pipeline, 415 hotels are scheduled to open in Asia-Pacific.” China remains to be the critical area of interest as the group recently established its one-hundredth hotel in the country. It is evident that the expansion within this region allows Hilton to reach new customer segments, which is beneficial for the business. Additionally, the growth of this industry sector and an increasing number of tourists that travel to the destination provide an opportunity to obtain significant revenue. Other factors include governmental support and awards that Hilton received, providing an understanding that the company conducted thorough market research to tailor its approaches to this customer segment.
The factors that were discussed above explain the reasoning behind choosing Asia as the primary region for establishing new hotels for Hilton. Figure 1 displays a SWOT analysis of internal and external factors that the company’s executives should consider when creating an expansion plan. Figure 2 presents a PESTEL table with detailed explanations of Asia’s political, economic and social environment. The analysis involves an examination of several factors within the external setting of Hilton that affect its operations.
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Figure 1. SWOT analysis for Hilton hotel group (created by the author).
|Political tensions in the region due to terrorism (PATA 2018). |
The tension between China and Korea that affects travel and other industries (PATA 2018).
|China is a world leader within travel spending for both domestic and abroad trips (PATA 2018). |
Vietnam is among the fastest growing economies in the region (PATA 2018)
|Chinese travellers prefer to explore the Asian region (PATA 2018). |
Consumer preferences in the area continue to change toward private accommodation (Thakur & Chang 2016).
|Airbnb and similar websites are becoming increasingly popular among clients in the region (Thakur & Chang 2016). |
Technology enables customers to search for the best price per night, which affects the decision-making process (Thakur & Chang 2016).
|Sustainability and care for the environment are becoming crucial for the hospitality industry (Rolland 2018). |
Ecotourism and similar approaches are supported by both clients and governments in the region (Thakur & Chang 2016).
|Korea changed visa policies for international visitors (PATA 2018) |
Vietnam presented the e-visa approach for travellers from 40 countries (PATA 2018)
Figure 2. PESTEL (created by the author).
Primary Market Research Proposal
Hilton should carry out research targeting customer needs evaluation for the new hotels to examine the market correctly. The analysis presented above displays a need to investigate changing customer preferences because those affect their travel choices. Firstly, sustainable practices and environmental tourism should be explored to create new value proposition for tourists. Next, the process of choosing and booking a room should be investigated because the technology altered approaches to it. PESTEL displays a preference for selecting apartments instead of hotel rooms, which can affect the industry in the region significantly.
As was displayed in the PESTEL analysis, the Chinese citizens prefer to explore the Asian region and account for the majority of revenue within this industry. Therefore, examining their preferences and choices in travel can provide valuable knowledge to Hilton. Additionally, it is necessary to determine travel policies and the economic state of the industry in Korea because the country is experiencing difficulties due to a change in its relationship with China. Therefore, the inner connections between different nations should present an understanding of travel destinations that individuals from the Asian region prefer.
Overall, the primary research helped identify critical aspects of Hilton’s expansion within the Asian region. The area presents many opportunities for growth because the hospitality industry contributes significantly to the GDP. However, there are challenges in the form of consumer preferences, competition, increasing costs, and a shortage of human resources. Hilton should carry out market research to determine the specific preferences of travellers within Asia, which would help the establishment to alter its approaches to hospitality.
AHC Editorial Team 2018, Managing labour shortages in Singapore’s booming hospitality industry. Web.
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Chee, HY, Leng, HM, Teo, J, Lam, L, Yang, F, Xin, K, Chawla, H, Zhu, S, Pang, C, & Rolland, D 2018, Market snapshot: Asia Pacific 2018. Web.
Hilton led hospitality industry in customer innovations and recorded best ever growth in 2017, 2018. Web.
PATA 2018, Asia Pacific hotel performance, what’s driving growth? Web.
Rosenthal, V 2018, Hilton targets Asia-Pacific, Southeast Asia for hotel expansion. Web.
Sturken, CA 2018, Hilton opened more than 40 hotels in Asia Pacific in 2017. Web.
Thakur, P, & Chang, R 2016, Hilton is looking to China for rapid growth in Asia. Web.
The Hotel Property Team 2018, Hilton achieves landmark performance in Asia Pacific in 2017. Web.