Hilton's Strategic Plan

Table of Contents Strategic Plan. 3 1. New Vision & Mission. 3 2. External Environment. 5 2.1 Industry. 5 2.2 Market. 5 2.3 Competitive Forces. 6 2.4 International 6 2.5 Technological 7 2.6 Demographic. 7 2.7 Government. 8 2.8 Economic. 8 2. 9 Financial 9 3 Internal Environment. 10 3.1 Competitive Advantage. 10 3.2 Weaknesses. 12 4. Market Analysis. 14 4.1 Global Market Size. 14 4.2 Hilton’s Projected Market Share. 14 4.3 Target Market. 14 4.4 Major Competitors. 15 4.5 Market Segmentation. 15 4.5.1 Demographics. 15 4.5.2 Psychographics. 15 4.5.3 Lifestyle based segmentation. 16 4.6 Projected Market Growth. 16 4.6.1.Market growth. 16 4.6.2 Social Trends. 16 4.6.3. Geographic trends. 17 5. Positioning Organization in the Marketplace. 17 5.1 Price Positioning. 17 5.2 Promotional Strategy. 18 5.3 Customer Service Positioning. 19 5.4 Technology Positioning. 20 5.5 Customer Segmentation. 21 References. 24
Strategic Plan
1. New Vision & Mission
Hilton’s existing mission and vision statements are as follows:
Mission statement: “To be the most hospitable company in the world – by creating heartfelt experiences for Guests, meaningful opportunities for Team Members, high value for Owners and a positive impact in our communities.”
There are a few problems with Hilton’s mission statement:
* It appears vague. There is no clarity on what customers will get by associating themselves with Hilton.
* Fails to distinguish Hilton from other organizations in the industry. Every organization in the hospitality industry aspires to be the most hospitable. The question is how exactly Hilton is seeking to achieve this and maintain its lead over competitors.
* Too brief. The mission statement appears to be trying to squeeze a lot of information into only two lines. If it is to capture the essence of Hilton and its magnificence, it ought to be longer.
Vision statement: “To fill the earth with the light and warmth of hospitality.”
A few issues emerge with Hilton’s vision statement as well:
* Too vague. Someone can easily ask what Hilton means when they say their desire is to ‘fill the earth with the light and warmth of hospitality.’ This statement appears too cliché and sounds clever yet without any meaningful message being passed.
* Does not align with the mission statement. Alignment with the mission statement is a key aspect of a vision statement. Aligning the two shows unity of purpose, but in Hilton’s case, the two appear to have a different message.
The issues identified above deem the mission and vision statements of Hilton wanting. Therefore, below are the proposed mission and vision statements.
Alternative mission statement:
To offer customers unforgettable experiences supplemented by an ambiance that oozes excellence, impeccable service, and unmatched cuisines that far exceeds expectations. We seek to embody the phrase ‘memories maketh the man.’ Moreover, we value relationships and consider our staff members the most important component of our unit. We endeavor to improve and take it as a challenge to consistently improve and champion a better society.
The proposed mission statement captures the essence of Hilton, which is to offer unforgettable service to its clientele. However, it does not stop there but proceeds to show potential clients that Hilton’s focus is to make them delight in their choice of Hilton. Further, the mission statement reiterates the importance of staff members who make all that Hilton seeks to achieve possible. One omission in the new mission statement is that of the owners. It is our thinking that in honoring its promise to customers and treating its employees well, Hilton will not have to worry about creating value for its owners.
Alternative vision statement:
To offer customer-centric service with a keenness on memories, experiences, and long-lasting relationships.
On the vision, the idea here was to make it more direct and to the point. The earlier version was vague and did not aptly capture the objectives of the company. The new vision statement shares what Hilton seeks to achieve and aligns with the mission statement, a key aspect that the earlier version lacked. A vision statement must align with the mission statement, or else the two can be mistaken as coming from different companies.
2. External Environment
The external environment section mainly entails an in-depth look at the factors outside the organization that appear to impact its progress. The hospitality industry is quite fragile, and this was made evident during the COVID-19 pandemic. The industry shrunk and lost billions of dollars in revenue because of the pandemic. Other factors like volatility of the markets and international relationships also tend to greatly impact organizations in the hospitality industry. Provided herein are external factors that often impact Hilton Hotels & Resorts.
2.1 Industry
In the last two years, the hospitality industry has had one of the most tumultuous seasons in the history of the world. When the COVID-19 pandemic hit, the world’s economy came to a standstill, and governments rushed to institute measures to help ensure that their citizens were safe. Some of these measures, including lockdowns, orders to stay at home, travel restrictions and bans, and social distancing, led to a huge drop in hotel occupancy rates. However, in as much as this was the case, there have been positive signs that the industry is slowly coming back to life. EHL projects a change of fortune for the hospitality industry, with occupancy rates projected to get to 63.4%. Further, revenue projections also appear to be positive, and the expectation is that revenue will grow to $168 billion. With COVID-19 restrictions withdrawn, the growth of the hospitality industry beyond pre-pandemic levels is widely expected. The projections for the industry stand at $4,548.42 billion in 2022 and $6,715.27 billion by 2026. Therefore, there are positive signs in the industry, and Hilton should position itself to make the most of the opportunities.[(Gursoy & Christina, 2020)] [(EHL, 2022)] [(EHL, 2022)]
2.2 Market
The market for the hospitality industry is global, and with restrictions because of COVID-19 withdrawn, it appears that things are getting better. One advantage of the hospitality industry is its ability to change and adopt different elements and aspects that help enhance its allure. For example, the hospitality industry has morphed to include events planning, food and beverage, beauty and spa, entertainment and recreation, travel and tourism, and accommodation. These overlaps are crucial, especially as the industry focuses on enhancing the customer experience. Therefore, the market for the industry is growing as more people are attracted by the amalgamation of experiences within the industry.
The future market of the hospitality industry looks bright. In 2021, the market size of the hospitality industry was valued at 3,953 billion, and this figure was projected to continue growing as more COVID-19 restrictions are withdrawn all over the world. Such projections should prepare Hilton to position itself to be part of the organizations that will take advantage of this growth.[(Facts & Factors, 2022)]
2.3 Competitive Forces
Competition in the hospitality industry is quite high or has been high in the past, and this poses a challenge to big names like Hilton. Currently, the introduction of Airbnb poses a major challenge to hotels like Hilton, which has particular places where they can build their hotels. Aside from the competition from new hospitality models like Airbnb, hotels largely focus on markets in developed countries, especially North America. However, there is a need for these hotels to consider new markets, especially those in developing countries.[(Lehr, 2015)]
While assessing competitive forces using Porter’s Five Forces, a few notable aspects emerge. First, the threat of new entrants is currently low, and this is only because of the COVID-19 pandemic. The revenue drop since 2020 led to the closure of several companies, especially small and medium-sized companies, with big hotels opting to close branches in countries that were hardest hit by COVID.[(Simon E, 2020)]
Currently, buyer bargaining power is moderate because the industry is not yet recovered. However, new entrants like Airbnb offer clients options different from traditional hotels. These new options happen to enhance the buyer's bargaining power.
On the other hand, supplier bargaining power is moderately high. In the hotel industry, external services to hotels and labor make up between 25 and 50 percent of total expenditure. With regards to technology, though technology providers may not have high bargaining power because of competition in the field, switching costs are high. This prevents hotels from seeking alternative technologies.
With regard to alternatives, the hospitality industry is currently flooded with alternatives. Platforms like Airbnb, Booking.com, and Flipkey happen to offer clients numerous options. The growing popularity of these platforms and the competitive prices that they offer gifts clients alternatives that rival major hotel companies like Hilton. However, some of these platforms are working with hotels, which presents an opportunity to split the profits and keep the hotels in business.
2.4 International
The global or international environment is quite complex because of the different factors impacting countries and regions. Even though major hotels, including Hilton, have often focused on developed countries for markets, developing countries are emerging as potential markets with enough clients to rival the traditional markets. Travel destinations, as well as forms of travel, are increasing with a keenness to offer clients the best experiences. Therefore, save for the COVID-19 pandemic, the international environment looks promising and rewarding to companies ready to increase their reach. However, Hilton needs to make sure that it has adopted contingency plans to help avert any international eventualities. It is not possible to plan for every eventuality, however, having a contingency plan for at least some of the known issues can help prepare the company to avert losses and sudden closures. In 2020, Hilton had to close many of its branches in the U.S. and other countries as well. While it might be difficult to plan for a devastating virus like COVID-19, the presence of pandemic contingency plans can be of help. For pandemics and epidemics, there have been numerous activities and plans suggested to help hotels remain operational, albeit at below-optimal levels. Examples of these plans include an emphasis on the safety of customers and staff members, cleanliness, and hygiene. Also, there is the recommendation that staff members be given flexible shifts with longer time gaps. These can help ensure that proper cleaning and sanitation is happening between the shifts. Protective barriers ought to be enacted as well as a measure to protect both staff members and customers. A giant in the hospitality industry like Hilton Worldwide ought to have these measures already in place. A pandemic or an epidemic should not halt operations to the level that the business shuts down its operations. Since these measures have been suggested long before, there ought to have been action in terms of hotels having the necessary equipment and knowledge to deal with a pandemic. Staff members should have adequate training, and procedures that immediately take effect upon the announcement of a pandemic should be clearly displayed. There ought to be no panic but a transition to safety mode.[(Cycil, 2020)] [(Pillai et al., 2021)] [(Pillai et al., 2021)] [(Pillai et al., 2021)]
2.5 Technological
Every industry is finding ways to leverage technological advancements to enhance service delivery. The hospitality industry is not any different, and technology continues to play a major role in helping to enhance service delivery. During the COVID-19 pandemic, many hotels had to adapt to safety measures, and this meant that many ordinary protocols or procedures were changed. For example, voice control, contactless payments, service robots, and mobile check-in and check-out were adopted at the time. Currently, authentication of customers is done through recognition technology, and this has made work easier for customers and for the hotels, operational costs have come down though at the expense of employment. However, all hotels that introduce these advancements must also grapple with the challenge of failure or downtime. These can heavily influence customer satisfaction, ratings, and loyalty.[(RevFine.com, 2022)] [(RevFine.com, 2022)]
Further, it is crucial to mention the role of technology in marketing. Hotels are currently changing from the relatively old marketing strategies of websites to using newer and better technologies like virtual reality. With this technology, customers do not have to search for a hotel online to view its images. Instead, one can simply use virtual reality to have an experience of the hotel while hundreds or thousands of miles away. Further, the use of big data is another major addition to the hospitality industry. Through big data, hotels like Hilton can tailor their advertisements and messaging to meet the needs of their customers. With big data, a customer’s needs can easily be identified, and the messaging can be tailored to meet these needs. So, technology offers hotels options they can explore to their advantage. However, each must be prepared to deal with vulnerabilities that come with technology.[(RevFine.com, 2022)] [(RevFine.com, 2022)]
2.6 Demographic
Understanding customer demographics is a crucial element that can help hotels to segment their customers and meet their needs. For example, understanding the behaviors of baby boomers, Gen X, millennials, and Gen Z can help a hotel to plan its service delivery. Currently, baby boomers are wealthier, and therefore, they have more money to spend in hotels compared to the other age groups. On the other hand, a bigger percentage of the younger generations, 81%, make plans on a budget compared to 57% of baby boomers. Also, understanding the different influences of the generations is also a way to understand their preferences. The younger generations, millennials and Gen Z, happen to be heavily influenced by social media. This means that they love trendy topics and will follow a lot of what they see on social media platforms. Such information is gold for businesses since they can simply leverage the same to make sure that they are a part of trendy topics and news.[(Widmer, B, 2022)] [(Widmer, B, 2022)]
Aside from knowing the different age groups, it is also crucial to understand the different attributes of the clients. For example, there is a group of travelers known as ‘belisure travelers.’ This term describes customers who are combining business and leisure travel. In a survey done by Hilton, it was discovered that about 70% of business travelers try to include shorter vacations within their business trips. Understanding the needs of such a group is one way that hotels can make the best out of this situation. Further, bleisure travel is currently gaining traction, and this means that a new demographic or client base is developing, and hotels ought to pay attention and enhance their services to offer leisure as well.[(Cvent, 2021)]
2.7 Government
Governments all over the world influence the progress of all industries. In the hospitality industry, regulations have been quite extensive and have influenced the industry’s progress greatly. For those trying to travel internationally, problems are compounded because of the existing policies on visas and border entry. At every turn, governments are imposing and instituting new policies, and these make the work of the hotels much more difficult. Currently, with the eyes of the world on climate change, governments are coming up with more stringent measures, especially for hotels, because of their emissions and waste management mechanisms. Further, there are commitments to the environment that the hospitality industry is expected to satisfy. Through the United Nations, the International Tourism Partnership was founded to help hotels meet their 2030 carbon emission goal of 66% and 90% by 2050. While such goals are noble, they do present a challenge to hotels like Hilton because it means that they have to adjust their operations.[(Codo, X., 2018)] [(Codo, X., 2018)] [(Codo, X., 2018)]
2.8 Economic
Like in the Great Recession of 2007 to 2009, the world was reminded of how fragile the economy was when COVID-19 struck. Supply chain breakdowns and international capital shrinks experienced since 2020 showed how vulnerable the world is to economic downtimes. The developed nations experienced inflation at levels never seen before, and even today, some of these countries are still trying to bring inflation down. Other factors like the Russia-Ukraine war have also greatly strained the world economy, especially considering it was still recovering from a pandemic. Therefore, currently, people have lower buying powers, and the little that people are getting is saved for the future. Furthermore, people appear not to have a lot of faith in governments and the systems of the world. Compared to the developing markets, consumers in the developed markets are pessimistic about any improvements that could be made. It is crucial to note that consumer confidence is a crucial element that sheds light on consumer behaviors. However, it remains to be seen how the markets will react or transform as normalcy continues to resume. Though in a country like China, COVID-19 restrictions are still in place, the world has, in many ways, managed to move past the pandemic and is on a path destined for growth.[(McKinsey & Company, 2022)] [(McKinsey & Company, 2022)] [(McKinsey & Company, 2022)] [(McKinsey & Company, 2022)]
2. 9 Financial
The capital markets are quite unpredictable, especially for an industry that is as volatile as the hospitality industry. Being that hotels were some of the worst hit during the pandemic, there was the need for some injection that was to help some hotels to get back on track. PMZ offered short-term relief structures that allow deferred interest payments and secondary loans. A point to note here is that raised capital is typically used for reinvestments in the industry and is subject to return in the capital markets. However, there appears to be little confidence in the hospitality industry because the 3-year average price-to-sales ratio is 3.5x in the hospitality industry, while the current price-to-sales ratio is 2.5x. However, with normalcy resuming, analysts are optimistic that the hospitality industry will be profitable again. Therefore, judging the industry based on current performance is premature, considering it is slowly making a comeback. The positive projections indicate that the world’s economy is improving, and therefore, the hospitality industry will recover fully to the pre-pandemic levels and even better.[(Sonnabend, M, 2020)]
3 Internal Environment
The internal environment provides details of factors within a company that impacts its progress and profitability levels. These could be factors that are seemingly within the control of an organization’s management but that have led to the deterioration of an organization in terms of profitability, reputation, and status. Below is an analysis of Hilton’s internal environment.
3.1 Competitive Advantage
Hilton prides itself as one of the most successful and popular hotel brands in the world. Among its peer, Hilton holds a high position and has many functional strengths that help to sustain its position at the highest level. Some of the factors or elements that give Hilton a competitive advantage over its competitors include strong brand recognition and being the first to prey on new geographical markets. Further, Hilton also engages in franchising, but this is done strategically and with a keenness to Hilton’s standard corporate values and excellent customer service. Also, Hilton has made headway with regard to customer segmentation because of running several brands in different categories. These include full service, luxury, extended stay, vacation ownership, and focused service. As a way to ensure that the franchisees maintain the high standards set by Hilton Worldwide, Hilton allows the franchisees to take advantage of its hotel management services and expertise, especially in hiring and operations. In doing so, Hilton manages to expand its influence to different parts of the world and still maintain its high service delivery and customer service levels.[(Maffei, 2022)] [(Hilton Worldwide, 2021)] [(Hilton Worldwide, 2021)] [(Hilton Worldwide, 2021)]
One way that Hilton maintains its competitive advantage is by providing the highest level of service to ensure that it gives its customers the best. It is crucial to mention that Hilton’s position and continued excellence in service delivery is mainly because of its dedication to training its employees. As per the hotel’s website, its employees undergo training in various areas, including service delivery, innovation, and marketing, especially with the goal of retaining customers. With a commitment to elegance and excellence, Hilton Worldwide understands that it has to set the highest standards even for its employees.[(Hilton Worldwide, 2021)]
Secondly, Hilton has consistently and sufficiently mastered the art of doing small things perfectly. Hilton understands that for customers, it takes the smallest of things to make their stay comfortable and worth considering a second stay. Therefore, Hilton focuses on providing customers with great dining experiences, training staff members, and the strategic positioning of hotels. Aside from these seemingly trivial elements, Hilton also manages its customer relationship management system quite well. Complaints from clients are taken seriously, and the hotel is committed to taking in feedback and using it as a tool to improve service. Finally, booking is also easy. Instead of the long, tedious, and manual system of approach, Hilton Worldwide allows customers to make their bookings through their phones or through their website. Such simple things endear the hotel to more clients who are simply after a great time.[(Hilton Worldwide, 2021)] [(Lorden, A. A. ,2021)]
Thirdly, Hilton continues to leverage technology to enhance its service provision. For example, in a bid to offer customers seamless guest experiences, Hilton introduced digitized room keys for guests that can be shared with one’s companion with the click of a button. Security of such technologies is also ensured, and this gifts customers the confidence to trust the establishment. Further, user experience is also something that Hilton appears to factor in as well. As shown in the image below, the digital key-sharing process is quite easy to perform. Often, organizations improve their technology but fail to keep the customers in mind. In the end, many end up with bulky technologies with poor user experience. Therefore, on this particular front, Hilton appears to be ahead of its competition.[(Stories from Hilton, 2021) – Tech Advancements] [(Stories from Hilton, 2021) – Tech Advancements]
Finally, as already indicated, Hilton Worldwide is an organization founded on deep values that sustain its existence. Everything about Hilton, from its relationship with communities around its establishments to its internal affairs, is guided by its set of values best captured through the name HILTON. HILTON is an acronym for Hospitality, Integrity, Leadership, Teamwork, Ownership, and Now. These values best capture Hilton’s approach to service delivery and customer management. For example, as already indicated, Hilton invests in training its staff members, showcasing the organization’s commitment to the hospitality industry. Further, by encouraging its staff members to innovate and to make the best out of available opportunities, Hilton is embracing its value of leadership and imparting the same to its employees. It is often said that a company that forgets its mission is a company that has no purpose, and though Hilton did forget its mission for a while, currently, the company is slowly finding its way back to its original mission: “to fill the earth with the light and warmth of hospitality”. Further, Hilton is working hard to align its mission, vision, and values, which is a credit to the new leadership committed to returning Hilton to its former glory. Even with a strong value system, a company is likely to struggle to find its footing if its employees do not identify with the same. However, Hilton has been able to build a stable brand with an organizational culture that runs deep and one that its staff members have adopted.[(Hilton Worldwide, 2022)] [(Mission-statement, n.d.)] [(Hilton Worldwide, 2022)]
3.2 Weaknesses
Like any other organization, Hilton has its weaknesses that impact its position as a leader in the hospitality industry. One of its major weaknesses is its reliance on the U.S. market, which according to Hilton Worldwide, made up three-quarters of its revenue in the 2021 fiscal year. This heavy reliance on one market can be detrimental to the survival of Hilton in the long run. In the event that the U.S. is hit with a recession, Hilton is likely to be severely hit. Further, market changes in the U.S. market greatly influence or shift the organization’s earnings. Therefore, it is crucial for Hilton to consider new and potentially profitable international destinations that can be a home for new establishments. However, with reports of new international projects for the organization, it remains to be seen how much of an international presence Hilton is going to have in the coming years.[(Hilton Worldwide, 2021)]
Secondly, like other major organizations in the hospitality industry, Hilton has committed itself to make major changes to its sustainability programs. The hospitality industry has become one of the major contributors to GHG emissions because of food waste. It is reported that many hotel establishments happen to throw away leftover foods, and often, these end up in landfills. Hilton is among these organizations that have been guilty of poor waste management. However, the organization has committed to cutting water usage by 50% and waste production by 50% by 2030. To achieve such a feat, Hilton will need to invest billions in the coming years to erect measures that will help attain this goal. In the coming years, Hilton will need to consider newer technologies and increase its budget to help attain its sustainability goal.[(Hilton Worldwide, 2022) – ESG Report] [(Hilton Worldwide, 2022) – Toward 2030]
Thirdly, being a multinational, Hilton Worldwide also stands to face the problem of flexibility. The problem of flexibility is faced by many multinationals, and this is because of their sizes. For these companies, the diversity of voices, ideas, and perspectives is a major challenge. Any change that the company desires has to be taken through checks, balances, and bureaucratic procedures that often take a lot of time and, therefore, stifle innovation. Therefore, there is a need to watch out for size becoming an impediment to development in the long run. Hilton could consider an independent approach for some regions but with a centralized reporting system. This can be enacted on a trial basis as it is being determined whether the organization can withstand such a change.[(Welch & Welch, 1997)]
Finally, Hilton Worldwide faces the challenge of lacking service consistency in its establishments because of franchising. The challenge with franchising is that, at times, the parent organization will find itself having to work harder to impart its values and standards of service. Hilton Worldwide needs an approach that allows it to negotiate contracts that favor its management and control styles. Third-party owners of local establishments can sometimes have difficulty adopting the company’s approach to business. However, with proper planning, Hilton can manage to exert its influence and transfer excellence of service to its franchisees. Further, as a way to create separation from its competitors, Hilto...