Introduction
Strategic management involves an organization planning and implementing its set goals and objectives to help achieve them. This procedure evolves with the organization’s growth, as the more significant the organization, the larger the goals and objectives. Tourism and hospitality organizations are among the vast and growing businesses in the 21st century (International Labor Organization, 2022). This industry requires a strategic plan to achieve the goals set either quarterly or annually. The management also has strategic plans in place to cope with the changes and advances in the industry, including technological advancements and globalization.
The core concept of strategic management is setting goals and objectives, developing a mission statement, and promoting organizational values. The primary reason for a company to set goals is to make informed strategic decisions to achieve them (Ferreira et al., 2018). A company develops numerous targets to achieve its overall goal. Due to the increasing competition in the tourism and hospitality industry, what makes it unique is its mission, vision, and values, as well as the strategies it employs to achieve them. It is impossible to be successful in the industry without goal setting (Ferreira et al., 2018). Therefore, the central concept of strategic management in tourism and hospitality is to achieve the set goals and give the company competitive power.
To achieve its goals and objectives, the company must collaborate with its surrounding environment to implement its plans. The organization’s extensive territory enables the implementation of integrated programs (Fickry et al., 2020). The company’s executive management sets strategic management; therefore, it requires a strategic leadership system. It incorporates the best management practices necessary to stay ahead of the competition in the industry.
Elements of Strategic Management
Environmental Scanning
Environmental scanning is the investigation of threats and opportunities in the external business environment. The external business environment of the tourism and hospitality industry is the government rules and regulations, politics and public policy, demographics, technology, labor market, and economies (Fickry et al., 2020). These are external factors that affect the company. It means that the management has no control over these factors. Therefore, they must align their goals with the external environment to ensure the efficiency of their operations. The external environment has a significant impact on the business’s operations.
Environmental scanning involves analyzing Strengths, Weaknesses, Opportunities, and Threats. This analysis facilitates a comparison of the company’s internal assets and external prospects and risks (Fuertes et al., 2020). It is an essential part of the business to achieve the goals that have been set. The analysis enables a comparison of the internal and external environments of the company, allowing for effective planning of its business objectives.
The company highlights the business’s strengths, including competitiveness, cost advantages, employee performance, financial stability, and business location. It also identifies weaknesses, including the lack of innovative ways to improve service in the hospitality industry, a declining market share, and low seasons in the tourism sector (Hadi et al., 2019). The opportunities include personalizing customer services, such as hotel rooms and tour cars, as well as utilizing new technology for market research to expand the market. The threats could include uncertainty in global markets, as tourism is a global business, as well as high interest rates and inflation.
This analysis enables management to set the appropriate measures to achieve its goals. A comprehensive understanding of the business environment would facilitate adaptation to necessary changes, such as technological advancements, weather fluctuations, and evolving market strategies. Environmental scanning is conducted by tourism companies throughout all seasons (Hitt et al., 2019). This is necessary to establish how well the business is equipped to face market threats. After the analysis, the company may need to revamp its operations to best fit the environment.
Strategy Formulation Process
The company leverages existing knowledge to inform its business strategy. The knowledge gained in environmental scanning establishes the organization’s mission, vision, and values. The same knowledge is used to establish whether the set goals can be achieved with the prevailing environmental conditions (Hitt et al., 2019). The knowledge is used to establish rules, regulations, and policies that the business will utilize to achieve its set objectives. Long-term plans are developed to effectively manage environmental opportunities and threats, taking into account the business’s strengths and weaknesses.
The company sets a mission or primary purpose for a given period. It involves setting clear mission and core values for the organization. This ensures that the goals align with the company’s values (Hitt et al., 2019). For instance, if the purpose of the tourism company is to ensure customer satisfaction during tours and provide the best accommodations for tourists, then all the company’s goals should be aligned to achieve this. In general, any business’s primary purpose is to ensure customer satisfaction. Therefore, the company’s missions and values should align with that.
The tourism and hospitality company should consider current events before implementing a strategy. The current threats and market trends are essential for the business to establish its direction. For instance, during the COVID-19 pandemic, many countries were on lockdown, international flights were grounded, and global tourism was paralyzed (International Labor Organization, 2022).
Tourism companies had to maintain their business operations and ensure their customers’ safety (Hitt et al., 2019). Therefore, companies must adjust their objectives in response to the pandemic. Current events dictate the external operations of the business. Some are negative and threats to business operations. It depends on how strong the business is to face such threats. With the right strategies and policies, the company can implement a strategy.
Implementation
Strategy implementation involves turning plans into action to get the required outcome. Tourism can achieve financial, customer, and market objectives within a specific period. For the required actions to occur, they must align with the required goals and objectives. There are specific outcomes that are premeditated by management, and plans are put in motion to ensure that these outcomes are attained (Leiblein and Reuer, 2020). For instance, according to the company’s resources, it sets a target for a specific number of tourists to accommodate. The company then sets plans, such as advertising and business promotion, for the customers to use the company as their agent. These plans are essential to ensure the intended outcome.
Evaluation and Control
The evaluation primarily involves analyzing a strategy to ensure that the actual outcomes align with the expected outcomes of the company’s goals. It is primarily conducted at the end of the business year to compare the company’s actual results with its expected outcomes. It primarily involves auditing and financial statements, which reveal the amount of revenue generated from various income sources (Leiblein and Reuer, 2020).
It also compares the resources to improve performance. If any shortcomings are identified, the evaluation enables the company to take the necessary actions to correct them. For instance, if the tourism company fails to reach the targeted number of customers by the end of the business year, it might take corrective measures, such as offering discounts or personalized customer service, including free getaways, to persuade customers (Leiblein and Reuer, 2020). Other targets can be sales targets, profit margins, and customer reviews.
Theoretical Approach
The main theories of strategic management are profit-maximization and competition-based theory. These theories are based on the assumption that every company’s primary purpose is to maximize profits and eliminate competition. The primary objective of any company is to maintain a competitive edge and remain at the forefront of the competition. The plans implemented are to ensure increased revenue at the end of the financial year. The audits are conducted to provide financial statements on the business’s progress (Fauzi et al., 2021).
The financial statements indicate the losses and the profits, which are analyzed and interpreted to assist the company in evaluating its financial status. Higher profit margins give the company a competitive advantage over other businesses in the same line of business (Fauzi et al., 2021). The increasing profits help the company improve its services, technology, and other promotional strategies.
The survival-based theory enables organizations to adapt continuously to their competitive environment, thereby ensuring their survival in the industry. Tourism companies should be vigilant to every competitive trend and devise new strategies to maintain their competitive edge (Fauzi et al., 2021). The human-based theory is that there is a need for human resources to help with the implementation of strategies. They include the staff and the team members of hospitality and tourism companies.
Other models related to strategic management in the tourism and hospitality industry include strategy maps, which are designed to communicate strategic plans to achieve business goals. The organization could use the political, economic, social, and technological model (PEST). All these factors can affect the organization’s health, as they are elements of the external environment (Fauzi et al., 2021). The company can use this model to track the surrounding environment and identify its downsides. The company could also utilize the gap analysis model, which evaluates the company’s current position and its desired future state.
Hotels Comparison
Similarities
Marriott International and Hilton Hotels are the world’s leading hotel chains. Their primary goal is to provide accommodation to tourists visiting various countries. Both of them have branches worldwide. Both Hotels were first formed in the United States and expanded over time (Fauzi et al., 2021). The origin of Marriott International and Hilton Hotels in the United States means they share the same political environment. These hotels provide top-notch customer service, encompassing accommodation and touring (Leiblein and Reuer, 2020). They ensure that tourists are catered to during their stay in their respective countries. They also facilitate traveling to different destinations and back to the hotel.
The objectives of Marriott International and Hilton Hotels are to make a profit. They also ensure a good workspace for employees and significant returns for the company’s investors. They are also tasked with ensuring that they maintain a competitive advantage in the market. This helps them maintain their position at the top of the market (Leiblein and Reuer, 2020). Their competitive nature helps them to increase the quality of their customer service. The given companies are known for expanding their branches worldwide, as well as for their services, such as Hilton Hotels, which is located in more than 120 countries (Hilton, n.d.). They have also developed various strategies to combat the economic crisis and thrive together.
Marriott International and Hilton Hotels have faced different social hurdles during their periods of expansion, including cultural, racial, and ethical issues. They face the same economic constraints, depending on their location and environmental factors. In the United States, they face the same legal environment. They also share the same government regulations, including taxes, intellectual property, bonds, stock markets, and government relief (Madsen, 2022). They are the first and second leading hotel chains worldwide (Chang et al., 2019). These are some of the similarities between Marriott International and Hilton Hotels.
Differences
Marriott International has a diverse portfolio of well-known hotel brands. They have over 8,000 properties worldwide, where travelers can stay while touring different destinations. This is what makes Marriott International stand out from other hotels. Hilton Hotels, on the other hand, contains only 18 distinct brands (Hunger, 2020).
Some of these include the Hilton, Waldorf-Astoria Collection, Conrad Hotels and Resorts, Embassy Suites, Hilton Grand Vacations, Hilton Garden Inn, Hampton Inn and Suites, and the DoubleTree and Homewood Suites by Hilton (Madsen, 2022). They have over 7,000 properties worldwide, all of which cater to diverse consumer tastes and preferences (Hunger, 2020). Therefore, the main difference between Marriott International and Hilton Hotels is the geographical areas they cover, which makes Marriott International the largest hotel chain.
The differences lie in the quantity and locations of hotels. Marriott International covers over 140 countries all over the world, and Hilton Hotels covers only 122. Due to its wider coverage, Marriott International has the advantage of both a broad market and increased revenue. This means that the company has more geographic advantages to maximize profits in the market. That explains why Marriott International will continue to be the leading hotel in the hospitality industry. In 2021, Marriott International expanded by 121 hotels in different regions of the world, while Hilton Hotels expanded by 80 hotels (Hunger, 2020).
Marriott International does not have a mission statement; instead, it has a vision statement: to be the world’s favorite travel company. Research indicates that the company decided to establish a clear and simple vision statement that would be understandable to customers, while also being implementable within the organization (Hunger, 2020). Their mission statement states that they must enhance their customers’ lives by creating, enabling, and surpassing vacation and leisure experiences. This means that Marriott International has prioritized its customers to ensure satisfaction.
Hilton Hotels’ mission statement is to be the most hospitable company in the world. They strive to achieve this by creating heartfelt experiences that provide meaningful opportunities for team members, offer high value to owners, and have a positive impact on the community (Hitt et al., 2018). From their mission statements, people learn that they aim to improve the lives of the communities around them (Madsen, 2022). They have prioritized their customers, team members, and employees. Hilton Hotels has also prioritized significant returns to the owners and investors.
The Marriott International website must disclose a complete copy of its strategic plan. The company’s strategic plan should be partially articulated to the public. Strategic planning involves developing plans, conducting a SWOT analysis, setting long-term goals, exploring strategic options, identifying specific potential strategies, and making critical development decisions that are crucial to the organization’s success (Fauzi et al., 2021).
These details provide a competitive advantage and reflect the company’s primary operations, target markets, resources, and technologies over time (Hunger, 2020). Every company, including competitors, keeps track of internal and external factors in today’s fiercely competitive business environment.
As a result, publishing a critical strategy plan online allows competitors to replicate key success factors. Research says that Hilton Hotel services are more expensive than those of Marriott International. According to the mission statement, Hilton Hotels also prioritizes profit, which is why the nightly rate is $250. Unlike Hilton Hotels, Marriott International is more affordable since it focuses on catering to customers across all social classes. The price per night ranges from $59 to $129 per night (Hitt et al., 2018). This also explains why the Marriott International chains have an overflow of customers even during the low season, because their prices and services are affordable to all customers.
Achieving and Sustaining Competitive Strategy
A company with a distinct competency, such as higher quality, excellent service, or operational efficiency, will have a competitive advantage. Marriott International has a competitive advantage due to its affordable prices for its customers and high-quality delivery (Hitt et al., 2019). Front-line employees can make informed decisions while remaining flexible in response to shifting client needs and preferences.
However, Hilton Hotels has kept its employees engaged and committed, along with the marketing team, to provide excellent customer service and overall experience (Zeng, 2021). Its operations include accommodation and client treatment during their stays, such as meals, free internet, beautiful views, and a good working environment (Hitt et al., 2019). Marriott International has maintained considerable cost incurrence while maintaining excellent operational efficiency and a premium price to differentiate itself.
Marriott International managers have evaluated their company’s competitive position. They created a vision for their future and developed a transformational strategy to turn that goal into a reality (Huang et al., 2021). The performance of businesses in the industry depends on comprehending the significant forces at play in the competitive market and identifying the underlying causes in the external environment that drive competition dynamics (Schweinsberg et al., 2022). Businesses should utilize various tools, including advanced technology, innovative organizational structures, administrative and managerial flexibility, and efficient resource allocation across different phases of the value chain, to address the challenges of change, complexity, competition, and social responsibility.
According to the company’s findings, a strong loyalty program is critical for retaining customers and fostering brand loyalty among new ones. Hilton Hotels’ loyalty program, “Hilton Honors,” is a key competitive strategy employed in 2007 (Hossain et al, 2021). With the assistance of this program, the hotel has established itself as a trustworthy partner in the hospitality industry. In 2007, the company announced plans to add Experience Rewards to its loyalty program, providing individualized and experience-focused options to its more than 17 million customers as a reward and appreciation for choosing Hilton Hotels (Schweinsberg et al., 2022). As a result, Hilton Hotels was increasing its value in the eyes of its clients worldwide.
Analytics is widely used in the hospitality industry to gain a competitive advantage. The application of analytics can be categorized into two main areas: internal and external. The economic analytics of a company is important in business processes. These analytics provide data on sales, marketing, and other business decisions (Hossain et al., 2021). This analysis examines the company’s finances and operations, enabling it to make the most informed decisions possible. Under normal circumstances, external reporting does not provide a competitive advantage.
Findings
Due to modern technology, hospitality companies have streamlined the online booking process for accommodations. Customers can book their rooms remotely from home through mobile phones. It makes it easy for customers to research the companies before choosing one (Schweinsberg et al., 2022). They have also allowed customers to review their experience online through ratings, making it easy for other customers to evaluate the performance and choose their hospitality company with confidence. The customers can also review the accommodation prices of different destinations and determine the most affordable ones.
Marriott International and Hilton Hotels are among the most competitive hotel companies in the hospitality industry. Therefore, they have adopted ways to stand out in the industry for their customers. Each company ensures that it maintains a competitive edge and provides better customer service. Each company has its mission, vision, and values, which sell out its purpose to the public before they choose it as their travel company (Schweinsberg et al., 2022). However, there are a few improvements that companies can implement to enhance their services and achieve their overall goal. They include standardizing plane ticket prices, improving service quality, and maintaining the planes.
Recommendations
Marriott International
Focusing on the International Market
Marriott International is likely to suffer from an economic crisis because it focuses more on the domestic market in the United States. Therefore, globalizing the market would save them from the crisis. Globalizing the market expands the customer base, meaning that customers come from all parts of the world. They will also benefit from economies of scale resulting from market expansion (Schweinsberg et al., 2022). This will shield the company from being highly affected by economic problems in one country. The influence of market influx and other economic risks will not affect the hotels if they are spread to other parts of the world.
Increasing Low-Income Services
Marriott International should increase the variety of low-cost services, as many of its brands, such as Courtyard, are considered luxury. Research says the Courtyard Brand loses customers due to the high-priced luxury services (Maassen, 2018). More than revitalization would be required to bring back the customers. Therefore, this would remain a weakness. The company should establish affordable brands for low-income earners (Huang et al., 2021). This would attract more customers since many people are middle-income earners. This would make the company accessible to anyone since it would be affordable.
Hilton Hotels
Fastening International Expansion
The company should expand to foreign markets before focusing on domesticizing its operations in the United States. The earlier the expansion, the easier it will be to penetrate the international market (Maassen, 2018). This will not give their rivals an advantage. Therefore, they will have competitive power. They will have ample time to invest and easily penetrate the foreign market (Huang et al., 2021). Concentrating on the American presence will make them vulnerable to suffering from the economic crisis in the American Market. Earlier market penetration will facilitate affordable real estate deals. They will have convenient hotspots for their operations.
Advancing the Technology
Technological advancement and revolution will assist the hotel in developing a unique algorithm for smooth operations. This will include global hotel accommodation bookings and security protocols. Other technological advances include free internet access, work computers, backup power sources, modernized security checks, and computerized visitor records (Huang et al., 2021).
These will attract more customers since their facility will be more accommodating and advanced. Technology would give them a competitive advantage to beat their rivals. Technology also helps them gather customer feedback to identify and improve their weaknesses. It would also help them track the market to establish the appropriate development plans.
Conclusion
Strategic development serves as the framework for all a company’s operations. It specifies a specific company’s plan purpose, plans, and implementations. Strategic management is critical for the company to achieve its desired outcomes after implementing its plans. The strategies developed to achieve specific goals and objectives in tourism and hospitality dictate their roles in the operation. Companies can achieve their objectives through strategic management. Marriott International and Hilton Hotels are two of the world’s competing hospitality companies.
As a result, they have employed a range of competitive strategies, including cost differentiation and service delivery. However, there are areas for improvement, such as accommodation and touring, which could help the organizations run more smoothly. Although the strategies are not disclosed on the companies’ websites, the public can observe their implementation through quality delivery, customer service, and crisis management.
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