Hilton Hotels in groups UK is known as one of the leading hotel group in the world. The Hilton Hotels group was found with its’ very first hotel established by Mr. Conrad in 1919 in Cisco, Texas. But, today the Hilton Hotels group has expanded geographically, produced original hotel and travel concepts, and developed modern technologies to enhance the experiences of the valuable guests. Today, it consists of more than 3600 hotels all over the world also with nearly 500,000 luxurious rooms in 81 countries with the continuously growing crew of over 135,000 members internationally (Hilton Hotels, 2011). Depending on that, it is clear and it was proven that the Hilton Hotels group has the capability of satisfying the interest of their customers as well as their stake holders.
The Hilton Hotels consists of well reputed and highest quality popular brands with in their group such as, Hilton Conrad hotels and resorts, double tree by Hilton, Hampton inn by Hilton, Hilton garden inn, Hilton Grand vacations and home woods suites by Hilton and Waldorf Astoria collection.
The whole Hilton Hotels group is running adherence to the Mr. Conrad Hilton’s philosophy, the vision of the hotel Hilton Hotels group is “To fill the earth with the light and warmth of hospitality” (Hilton Hotels, 2011).
Accordingly, the Hilton Hotels group believes it is their insight to convey the message of kindness and generosity all over the world, simply known as hospitability. According to the core values of the Hilton Hotels group, their brand name HILTON stands for,
HOSPITALITY – We are passionate about delivering exceptional guest experiences.
INTEGRITY – We do the right thing, all the time.
LEADERSHIP – We are leaders in our industry and in our communities.
TEAMWORK – We are team players in everything we do.
OWNERSHIP – We are the owners of our actions and decisions.
NOW – We operate with a sense of urgency and discipline (Hilton Hotels, 2011).
At present, Hilton worldwide can be considered as one of the leading global hospitality company, crossing over the accommodation sector from luxurious full-service hotels and resorts to extended-stay suites and mid-priced hotels.
The Hilton Hotels group is operated as an innovative and dynamic company which is mainly focused on administrating their business operations following the eco-friendly concepts and also with the services to the global community and enhancing the guest experience.
Since the foundation formed by Mr. Conrad Hilton 90 years ago, Hilton’s commitment to creating exceptional guest experiences still remains unaltered, and our more than 130,000 team members continue to bring the highest quality of service to the global visitors also achieving the interests of the stake holders with the mission of “We will be the preeminent global hospitality company – the first choice of guests, team members and owners alike” (Hilton Hotels, 2011).
1.2 Groups of stakeholder and achieving their objectives
Stakeholder can be considered as a person or people who have a stake also known as share in a particular organization or system. Stakeholders can be groups of people, organisations, institutions and sometimes even individuals.
Sometimes the terms either actors or interest groups are used to describe the term stake holders. Accordingly, the word actor emphasizes that stakeholders are active in order to make interactions with each other. The use of the words interest group suggests that people can be grouped to achieve common goal.
In some occasions, stake holder can be identified as a corporate stakeholder, a party that may have the potential to affect or be affected by the actions of the business as a whole. This concept was first used in a 1963 internal memorandum at the Stanford Research institute. It defined stakeholders as “those groups without whose support the organization would cease to exist” (Grimble and Wellard, 1997).
The theory was presently developed by R. Edward Freeman in the 1980s. Since then it has gained wide acceptance in business practice and in theorizing relating to strategic management, corporate governance, business purpose and CSR together.
Stakeholders can be found at any level or position in society, from the international to the national, regional, household or intra-household level. It is clear that, stakeholders may include all the people who affect and may get affected by the policies, decisions or actions within a particular system or an organization.
Referring to the Hilton Hotels group, the stake holders can be identified at three major levels depending on their institutional levels.
Global or International
Locally, the Hilton Hotel group is a business which is based on the ancient cultural environments as well as the aesthetic beauty in the country encouraging their customers as well as their stakeholders to incorporate those things to their beings. Therefore, it is clear that Hilton Hotel is being achieved the objectives of their local stakeholders objectives at a satisfactory level.
Nationally, the Hilton hotels group is known as a business which is mainly focussed on the development of tourism in UK. By providing the lodging facilities by enhancing the customer experiences on travelling through their branded partners such as Hilton Conrad hotels and resorts, double tree by Hilton, Hampton inn by Hilton they have achieved their objective of development of tourism commercially in order to achieve their national stake holders’ objectives.
Statistically it is proven that, the Hilton Hotels group consists of more than three hundred hotels all over the world also with nearly 500,000 luxurious rooms in 80 countries with the crew of over 135,000 members internationally (Hilton Hotels, 2011) and the group is still expanding all over the world. Therefore, the contribution of the international investors may lie at a higher level referring to that statistics. Because of that, it can be concluded that the Hilton Hotel group is being achieving their International Stake holders’ objectives.
1.3 The key responsibilities of the hotel group and the strategies
The key responsibilities that should be possessed by the Hilton Hotel group can be divided in to three major dimensions.
The Customer Dimension
The Employee Dimension
Internal process and financial dimensions
The Customer Dimension consists of increment of the market shares, guest satisfaction, improve the customers profitability, increased the awareness of brand name and the increment of the MICE conversion rate. At present, Hilton Hotels group is incorporated with several partners all over the world such as double tree by Hilton, Hampton inn by Hilton. Therefore, the Hilton Hotel has got the potential to establish as the market leader. At past few decades, Hilton Hotels’ market revenue index increased from 104% to 106% and customer retention has increased Customer retention increased 6% to 56% (Balanced Scorecard Collaborative Hall of Fame Case Study on Hilton Hotels Corporation, 2003).
The employee dimension may include, adherence to recruitment procedures, conducting training and development programs completion of the performance appraisals, control of the staff turnover and control the payroll as % of turnover. Proper management of human resources with the incorporation of employees are may be the strategy behind the achievement of these targets.
Reservations efficiency, improved check-in efficiency, time and motion cleaning of rooms, food beverage cost efficiency, and control property maintenance may be the responsibilities that can be taken under the internal process dimensions. Increment of average room rate and revenue per available room, increment of non-room revenue, proper management of variable cost and reduction of fixed cost can be considered under financial dimension of responsibilities. At past few decades, RevPAR of Hilton Hotels has been increased by 2.7% (Balanced Scorecard Collaborative Hall of Fame Case Study on Hilton Hotels Corporation, 2003).
Economic, Social and Global Environment
2.1 Planned and mixed economic systems and impacts
Planned economy is an economic system in which the government directs the whole economy of a country. This economic system is driven by the central government and it may control and makes critical decisions regarding the production and supply of goods and services. The planners may decide what should be done regarding the production process and hoe to direct lower-level enterprises to produce those goods in collaboration with national and social objectives. Under the planned economy, state sector may involve in the environmental protection, maintenance of the standards of the employments and maintenance of competition and also the economic planning.
Beginning in the 1980s and 1990s, many governments of different countries, commanding over planned economies began deregulating. For an example, after fragmentation of the Soviet Union the economy is being moving towards the market-based economies by allowing the private sector to make the pricing for goods and services, production, and distribution decisions. Although most economies today are market economies or mixed economies. Examples for the countries for the existence of planned economies are as Cuba, Libya, North Korea, Saudi Arabia, and Myanmar ( Brabant and Jozef , 1991).
Considering the impacts of the planned economy on Hilton Hotels group, there may be a regulation of the production and services according to the decision which are made from the government. Accordingly, there may be economic barriers for the foreign investors and stake holders to invest their properties in relation to the hotel industry. This may negatively affect on the Hilton Hotels group also.
In contrast the mixed economy reflecting the features of both socialism and capitalism. In some occasions, it is also known as balanced economy. It is described as market economies with strong lapses, in addition to containing various government sponsored aspects. It is believed the term mixed economy should include the degree of private economic freedom mixed with a degree of government regulation process of markets. Countries may differ in relation to the relative weakness of each component. For an example, economies which are ranging from US to Cuba have been identified as mixed economies.
The economic freedom may include individual freedom, economic efficiency and also the incentives to innovation provided by competition. When considering the Hilton Hotels group, individual competition may be very important between the partners to improve their capabilities in marketing. For an example, if there is a competition between Hilton Conrad hotels and resorts and Hampton inn Hilton, the separate partners may tend to improve their marketing capabilities in order to increase their market shares. This may be beneficial for the Hilton Hotels as the mother – company. On the other hand, some times the whole marketing process can be negatively affected by the individual competition.
Referring the government side of the mixed economy, it may consists of several processes such as environmental protection, maintenance of the standards of the employments and maintenance of competition and also the centralized economic planning some situations. Those are the things that the private sector may not capable to address. Referring to the Hilton Hotels group, due to the environment protection policies implemented by the government, the marketing process can be affected. For an example, if the government is implementing an environmental policy restricting the private access to the places with an aesthetic beauty such as beaches and forests, if the hotel group rely on that places whole marketing process can be negatively affected. In contrast, the establishment of the centralized economic planning may generate positive results in the relation of Hilton Hotels, at marketing process.
2.2 Social welfare policy and industrial policy measures in the UK
The United Kingdom can be considered as a unitary state in which central government considerably lead the most of the state activities. But, when considering the structure of some regions such as Scotland, Wales it differs in certain degrees.
Each region occupies a secretary of state and administrative department located in central government, and its own congress and executive, which participate in the region of certain central state ministries. Accordingly, the laws which apply in Scotland and Northern Ireland may differ from those in England and Wales.
This framework has been subjected to the frequent changes. The most critical changes in recent years have been the renovation of the department of social security into the department of work and pensions, the significant transfer of income maintenance to the HMRC and the flattening of the department of transport, the regions and local government, whose key social policy responsibilities were positioned in the office of the deputy prime minister and have now been resettled mainly into communities and local government.
There are some main government departments which are dealing with social policy in the UK are, the ministry of justice, the department for education, the department of health and the Department for Communities and Local Government.
Referring to the administration of the welfare, UK has undergone two major phases of modifications. The first phase was applied in for 1960s and 1970s, saw central government transformed in order to allow the planning and control of public expenditure by the treasury. The objectives of these changes were to improve the managerial efficiency and economic planning. The effect was the generation of a system in which the treasury allocated resources to departments, and departments to services.
The second phase was taken place in has led in 1980s and 1990s to modify the structure of the civil service and the administration of welfare. It consists of three major elements viz., the change of administration into agencies, the introduction of management and the formation of quasi markets.
Due to that implementation of social welfare policies, the hotel field can be affected in several ways. Formation of new laws regarding to the economy and welfare, management there were some barriers against the growing of the company. That may negatively affect on the Hilton Hotels group.
Referring to the industrial policies in UK, multi- sector industrial policy is critical. Current mainstream economic thinking believes that industrial policy is ineffective, and that market forces should determine the fortunes of companies and industries. In the credit crisis, however, the UK state and most other governments felt obliged to step in. They established a de facto industrial policy strongly favouring the financial sector, at the expense of the rest of the economy. Consequently, the part of the economy that did not fail, was left playing by the old free-market rules, heavily penalised by austerity measures implemented to reduce the budget deficit.
For the UK, there are a number of problems with the theory and practice of this approach. First, SMEs which provide majority of UK private sector employment are starved of credit despite Government entreaties for banks to lend more. This may be acts as a negative impact on the growth of the hotel industry, with no end in sight. Similar way, the private capital concentration in the shadow-banking sector remains surprisingly high, and may lead to volatility and crises in the non-banking sector. Finally, some of the UK’s competitors, such as China and Korea, already have successful, multi-sector industrial strategies.
2.3 Impact of macroeconomic policy measures in the UK and US
The belief that economic growth requires sound macroeconomic policy is a central element of in relation to the development. Even those questioning about that it may be possible to believe that macroeconomic stability is a precondition for successful economic development. At the broadest level, the macroeconomic stability of East Asian countries between the early 1960s and the late 1990s could help to explain why East Asian countries have sustained high growth rates. In contrast, sub-Saharan Africa and Latin America have endured a painful combination of macroeconomic disarray and slow growth.
As most economists would expect, improper management of macro economy could explain not only slow growth, but also why some developing countries have become heavily in obligated. Even if slow growth is attributed to problems with external arrears, the origins of a debt crisis can typically be traced back to policy decisions. Easterly (2002) finds that the group of the HIPCs had worse macroeconomic policies over 1980-97 than other developing countries, even after controlling for income levels.
At present, the global economy has deteriorated rapidly and faced with a synchronised recession in most of the world’s major economies. These developments will have a reflective impact on the UK economy and raise the prospects of an especially severe downturn.
The source of the current recession can be traced to the unsustainable rises in lending, bond, equity and house prices and compression of risk that have been evident since the start of decade across many developed economies also common for both US and UK.
As poor as economic prospects currently are the situation is being getting worse without the various policy initiatives that have been adopted. For example, the Bank recapitalization scheme has clearly helped to avoid a collapse of the UK financial sector. Therefore, those factors can be generating adverse effects on many industries especially in the hotel industry.
Behaviour of organisations and the market environment
3.1 Shortcomings of market models relevant to the hotel group
Market model can be identified as a mathematical representation of the interactions among various participants in the market, variety of economic forces, and variety of choices made during the process of marketing. There are number of market models are used to explain or predict the behaviour of one or more aspects of a market. In the framework of the securities market, for example, one model may used to express the outcome on a particular portfolio and how it can be maximized.
When considering the hotel industry, there are several types of market models can be identified such as future orientation model, results managing model , proactive approach and the on going process model.
Referring to the future orientation model, strategic management implies a future-oriented decision-making process. The objective of this model is to act now in order to survive and improve performance in the future. This can be implemented as 5-10 years year plans. As a fundamental, this model can be identified as an attempt to set future-oriented objectives, to predict and assess future trends in the organisation’s environment and to devise means to ensure meeting the objectives.
According to this model, it may be difficult to predict some market trends due to the unexpected situations. For an example natural disasters may create different market trends. This may be the major draw back of this model.
Considering the on going process, the responsibility of the marketing process lies clearly with top management. Their support and commitment is a requirement for both the design and application of any strategic plan. Furthermore, managing strategically implies a distinct way of managing organisations, i.e. not sporadic efforts to solve problems, but rather a logical framework for perceiving and managing organisations and their environments. The major draw back of this method is it may be difficult to pre identify the failures of the marketing system and trends before it happens.
3.2 Impact by the different factors
Supply and demand play an important role in the marketing process. There should be a balance between demand and supply in terms of achieving the goals of marketing. When considering those factors such as income, price, weather and substitutes can create both positive and negative impacts on the hotel industry. For an example, status of the personal income can be directly affected on the demand. Because, low income people may prefer to use facilities at low level hotel industry, while high income group prefer higher standards.
Price of the good and services can be generated by the costs plus profit margin of an organization. Therefore, if the industry is not going to use proper cross cutting methods and value addition techniques, the prices may increase. It may affect on the accessibility of that goods or service. Especially in the hotel industry this can be a great issue.
Weather also can be generated both positive and negative effects on the demand. If the customers are well interested in travelling and they are willing to enjoy the aesthetic beauty bad weather may lead to problems. This also can be affected on demand.
Substitution may lead the customers away from the loyalty. If the service is available at higher quality at cheaper price they may tend to purchase that one instead of earlier service.
Considering the above facts, it can be concluded that, managing those factors is critical for the hotel industry.
3.3 Competitive strategies in the UK
Competitiveness is defined as ‘the only complete indicator that defines the concept of competitiveness at a national level is national productivity’ (Porter, 1990).
The current situation manifested by globalization and the increasing recognition of interrelations has imposed new rules of conduct: the prosperity of nations is based on competitiveness on international markets, and that of enterprises, on the integration in the worldwide value chains. Because of that, the competitiveness has become a major issue for all the actors in economy, from the regional level to the organizational level. Therefore, it is clear that importance of implementation of competitive strategies in relation to the marketing process.
Considering the tourism as a business it is a sector in which the structure of supply is extremely volatile and the solid and reliable part is the demand. Tourism can be exists for various reasons such as pleasure, business etc. People may want to travel and are willing to spend money; consequently, they may generate demand for tourism products and services. Thus, the decision to travel precedes the acts of consumption (Keller, 2005).
The key to attracting and making clients loyal is offering a remarkable experience and not just lodgings; hotel chains innovate to create a unique environment, from hotel rooms to lobbies and the restaurant. Thus, changes in the design of Marriott restaurants and in the menus – so as to reflect the particularities of different regions – have lead to up to 50% increases in sales recorded in rapport to the number of rooms occupied (Hotels, 2004).
In company with innovation, technology also can be considered as an important strategic asset that allows hotel chains to improve their performance and competitiveness. On a global scale, the role of technology in strengthening the competitive advantage of a hotel is recognized, hence its contribution to the hotel’s success (Nyheim, 2004).
Since the hospitality industry, as any other branch of services, is capital intensive, human resources may represent a source of competitive advantage for a company. Failite Ireland (2005) , in the research conducted among 3, 4 and 5 star hotels in Dublin to analyze successful practices in hotels underline the fact that the industry depends on the know-how of personnel, of the knowledge and understanding of the clients’ requirements that would make the client feel at home.
By considering the above facts, it is clear that hotel industry should follow competitive strategies to survive in the market.
International trade and the European dimension
4.1 Pros and cons of trade between the UK and other countries
Because of the rapid development of the international relationship between countries, Globalization process can be considered as critical in the marketing process. Therefore, globalization process may have the capabilities of generating both positive and negative effects on trade referring to the hotel industry.
Considering the positive effects, the hotel groups can trade in the working force from the countries at a cheaper price where the working force is available at lower cost. This may lead to cutting their additional cost in relation to human resources and beneficial for the hospitality industry. Through the strong international relationship, the hotel groups’ reputation can be published and marketed. This may lead to bring in foreign investors to the country who may have the capabilities of investment for hotel industry as well as for the other industries.
Referring to the negative points of international trade, increased job insecurity of workers may play a critical role. When the industry is demanding the working force at a lower price, the workers may not survive unless they provide their services at that lower price. Except that, the uniqueness of the culture of the country can be affected through the globalization referring to the international trade. Especially, through the development of the hospitality industry there may be a tendency to develop a globalized sub culture based on the tourism. This may lead to interfere with the uniqueness of the original culture in the country.
4.2 The impact of European Union policies on UK organisations and the hotel group
The EU can be identified as is economic and political union of 27 member states which are located primarily in Europe. The EU was originated from the European Coal and Steel Community and the European Economic formed by six countries in the 1950s.
At present, the EU has grown in size by the appointment of new member states, and in power by the addition of policy areas to its responsibilities. The Maastricht Treaty established the European Union under its current name in 1993. The last modification to the constitution of the EU, the Treaty of Lisbon, joined with the EU in 2009.
EU member states keep all powers not openly handed to the Union. In some areas the EU enjoys exclusive competence. These are areas in which member states have renounced any capacity to endorse legislation. In other areas the EU and its member states share the competence to legislate. While both can legislate, member states can only legislate to the extent to which the EU has not. In other policy areas the EU can only co-ordinate, support and supplement member state action but cannot endorse legislation with the aim of incorporating national laws.
Under the exclusive competence it states that “The Union has exclusive competence to make directives and conclude international agreements when provided for in a Union legislative act.” Accordingly the monetary policy for the member is established as Euro. Not only that, the establishment of the competition rules for the internal market has been adopted. Those things can generate both positive and negative impacts on the hotel groups.
Considering the supporting competence it states that “The Union can carry out actions to support, coordinate or supplement Member States’ actions in”. Referring to that, industries, culture as well as the tourism are being regulated. This also can create positive and negative impacts on hotel group.
4.3 EMU and the economy of UK
The term Economic and Monetary Union is used as a collective term for the group of policies aimed at meet the economies of members of the European Union in three stages so as to allow them to adopt a single currency, the euro. All members of the EU are expected to participate in the EMU. The implication of UK becoming a member of EMU can be explained as both positive and negative impacts.
For an example it is clear that, Exchange rate on locking with the Euro regarding the members as well as for UK. It may improve the stability of the value of the money against the inflation. On the other way, it may negatively affect on foreign investors.
Similarly, some policies implemented by the EMU may also affect both negatively and positively on the industries.
Referring to the mission, core values and key objectives of the Hilton Hotels group as a worldwide business it is clear that the objectives are being achieved up to the satisfactory level. Though the impacts of the sudden changes in the business environment, still the Hilton Hotels group has been survived in their business of hospitality with the proven capabilities in successful marketing.
But, when considering the market modelling marketing mix modelling is being a developing trend at innovative marketing strategies.MMM means the use of statistical analysis such as multivariate regressions on sales and marketing time series data to estimate the impact of various marketing tactics on sales and then predict the impact of future sets of strategies. It is often used to optimize advertising mix and promotional tactics with respect to sales revenue or profit. Therefore, implementation of MMM on Hilton Hotels group may improve the trustworthiness as a marketing tool among its’ major rival companies.