Strategic Management Project: A case study on Hilton Worldwide - Essay Example

? Strategic Management Project: A case study on Hilton Worldwide ID: Word Count: 3,035 Outline Outline 2 “Anentrepreneur would want things to happen; an opportunist would wait for things to happen 'but’ the Strategist makes these things happen”. Strategy Management in the Hospitality Industry is a growing trend in the world of staggering economy and Globalization. Strategic Management provides 'Business Perspective' to a company which eventually organizes all the activities of the business. It helps to map out performance, progress, Quality and also gives vision, goals, and action plans (Reiner). The proposed methodology aims to study all those factors that constitute an Ideal Strategic Management by doing a case study on one of the oldest and biggest hospitality group ‘Hilton Worldwide’. In accomplishing this goal, this research is divided in to twelve sections respectively. First ten sections comprise precise discussion on distinctive features attributed to ‘Strategic Management’, including facts based on actual plans adopted by Hilton group. Its causes and effects. Followed by a sharp observation of the case study and ending it with an apt conclusion. Historical Background The establishment history of Hilton Hotel dates back to the early 20th century when in the year 1925; it was first opened by Conrad Hilton in Dallas, Texas. Apart from several milestone created by each passing decade; this group still continues to attract the management students to study its strategic principles over the time. ("Hilton Global Media Centre"). With several other added ventures ; creating 10 brands,91 countries,3900 Hotels,630,000 rooms and a series of outstanding achievements in history with phenomenal services initiated ,this group is now known as ‘Hilton Worldwide’("Hilton Worldwide"). Strategic Evolution The Group has had many strategic plans to ensure their stability in the market. They adopted a dual strategic plan of both Emergent and Intended Strategies in 2003. In order to face unexpected problems; the top management at Hilton UK and Ireland decided to devote more time in the development and retention of its people by initiating a Talent Development Program. What really pushed them to adopt these strategies was the highly competitive market post 9/11.The Board added this plan on priority basis to their three year strategic planning. The result was a strong team of efficient workers who were valued in the newly developed culture of the company, it helped them to bring forth their true potential ("Full Potential Group"). This coaching was aimed to merge 12 leadership style of Hilton with PDP.These were - ‘Daring’, ‘Ethical’, ‘Honest’, ‘Respectful’, ‘Open’, ‘Direct’, ‘Professional’, ‘Collaboration’, ‘Guest-Centered’, ‘Commercial’, ‘Talent-Focused’, and ‘Inspirational ("Full Potential Group").The result was promising with substantial growth in PDR(87%),KPI’s(100% compliance) and Retention of personnel (22%)("Full Potential Group"). Mission, Vision and Values Hilton Stands for Hospitality, Integrity-Leadership-Teamwork-Ownership and Now ("Hilton Worldwide").Its mission has always been to be the top most hospitality company and the first choice for its guests and team members, In fact throughout the history of hospitality; Hilton emerged to be the first one in every discipline. It was the first company to provide air conditioned rooms in 1927.It has always been 'Guest Centric' , Introducing concepts like telecommunications, and specialized ‘lady Hilton’ strategy to attract women in 1964, increased its popularity effectively. ("Hilton Global Media Centre"). In the 21st Century; their unique concept of ONQ; is the nervous system of Hilton Hotel Corporation, a technologically advanced comprehensive integrated system which provides support to its already great customer services. Their initiative of 'customer really matter' is exhibited by the services executed by ONQ at every hotel in Hilton Family (Linda M, Gabrielle , and et al). In my opinion, Hilton group has always been innovative when it comes to support their mission, no wonder why; it is still the most favorite lodging for people around the world. In a survey it came as a winner among 50 most happiest company to work with, 2012 ("Career Bliss"). Their corporate commitment is carried out by these four philosophies – Creating Opportunities, Strengthening Communities, Celebrating Cultures and Living Sustainably ("Hilton Worldwide"). The Five Forces Model and Company’s Competency The ONQ system initiated by the Hilton ensures world class service to its guest and prompts the team to act 'on cue' to provide priority service. Implementation of this system ensures growth in the market share and good profit return along with more trust and loyal customers being satisfied (Anne-Birte ). It is not only competitive but also a good example of the first force model (M.E) Considering the second force, Hilton has always been in a competitive spirit since 1970, when it started buying small and medium Hotels to create its Monopoly in the market of Hospitality Industry. Data reflects the result of their efforts to stay in the competition ("Wikinvest"). Comparison to Competitors Starwood Hilton Marriott Intercontinental Number of Hotels 871 2,935 2,832 3,600 Number of Rooms (Thousands) 266 501 514 538 Geographical Presence (Countries) 100 78 68 100 Occupancy (Percent) 71.2 72.5 74.4 N.A. Average Daily Rate (USD) 191.56 115.43 153.99 N.A. RevPAR (USD) 136.33 82.46 114.61 N.A. In the third force the intensity of competition rivalry can be observed by news, stating that Star Wood Hotel sued Hilton’s top executives for stealing secret information when Hilton was planning to launch new lifestyle chain (REUTERS). In the fourth the power of bargaining is quite commendable with the launch of a challenge "Best rate Guarantee' initiative by Hilton ("Hilton family"), Comparatively Hilton provides rewards higher than its rivals where Hyatt offers a 20% discount in a similar challenge and Marriott giving 25% ("Hilton Worldwide"). Fifth force Not much information is available to analyze its advantage and disadvantage of bargaining; Hilton’s ‘Best Challenge Guarantee’ has been attacked many times by strong critique and allegation of it being a mere Spam (CHRISTOPHER) ("New Girl in the Air"). Evaluation and Measures to Improve Competitive Position One controversial step by Hilton provoked much criticism when it started the first casino Hotel in the later years of 60's. In 1987 Ladbroke Group who had a very successful gambling business acquired Hilton International and the profit was huge in number. While at the start of 21st century, post 9/11 the Hotel Industry experienced a set back and Hilton's debts continued to rise. Eventually in the year 2007 a major step by Hilton not only succeeded in recreating its global monopoly again but also added many more ventures in the investment group. Blackstone took all of the Hilton properties for $26 billion dollars; and paid off its debts. The corporate started to invest in new concepts of world wide chain hotels ("Astrum People"). Today, it has almost 9 brands with extra ordinary success history and quite frequently a new hotel is added in their list. With such big Global domination, it has not only proved its credibility in the competitive market of hospitality industry but also added loyal and happy customers by introducing new concepts of world class service by 'ONQ'("Hilton Worldwide"). To withstand such big ambition, a strong corporate and team work is required and Hilton excels there when they are awarded for being the best place to work in ("Career Bliss"). The Pros and Cons of Business Level Strategy Business level strategy by Hilton has mostly been successful. Their most important strategy is to maximize the performances of their personnel through systematic learning process (Michelle). Their recent strategy of ‘best price Guarantee’ did attract many customers and some even had a great experience by enjoying its world class service but on the other hand regular criticism of this plan also evoked many customers to not opt for it ("New Girl in the Air"). Another strategy of attracting customers was the installation of ONQ, its regular publicity embarked a rush of customers wanting to experience this advanced technological customer service, it increased their sales and is still quite popular (Linda M, Gabrielle, and et al). With the initiation of Energy star program which aimed at conserving energy or electricity was widely acclaimed and it also enabled Hilton to win award in 2001(“Energy Star”). It is apparent that most of its strategies have provided good results to Hilton. Company’s attempt to develop a Competitive Strategy Hilton worldwide has developed an integrated system of solutions and technological advancement to develop Business strategies and win over their competitors by keeping the cost lower but not compromising with its quality. They have named this system as 'performance Advantage" , executed by 7 tools,1- Hilton HHonors is an exclusive experience sharing program for its loyal guests, with 27 million members. 2-Hilton Worldwide sales have a skilled team of professionals taking care of customer relationships, keeping an eye over the changing demands of the corporate group. 3-Hilton Reservation and Customer care is operating 24/7 with a team of multi language professional to provide excellent service globally .4- Global Online service where they provide a support system to its customer who; at any given point of time can enjoy services through brand websites and mobile application.5- Revenue Management Consolidation Centre which provides support to achieve good market share and Profits, an Index below as a sample. Index -2006-2010, 13% growth is achieved by 100 participating Hotels. 6- Information Technology offers solutions to its customers through internet, reservations and entertainment too. 7- Hilton Supply Management for corporate partners, it ensures best price of the products for the needs of any Hilton property, they ensure timely delivery and highest quality products ("Hilton Worldwide"). Entering the International Market Hilton's International venture began in 1949; first property was opened in Puerto Rico ("Hilton Global Media Centre"). Its expansion has reached almost every country in the 21st century, by introducing new concepts of exclusive luxury spa hotel, Homewood suites, and Hilton grand vacation clubs established all over the world. Going International and supporting developing countries is a belief that the Hilton has actually worked upon. Recently they opened their first international hotel in Namibia and Equatorial Guinea. They believe in promoting cultural exchange and it is quite evident in their respective menus where they have reintroduced localized food with an international blend. In Thailand, they started Hilton Hua Hin Resort and Spa; since Thailand is a culturally rich country, Hilton provides local heritage sight seeing and cultural tours around Bangkok and educates tourists of the vast cultural heritage that Thailand is known for. Many of its properties in different countries were once historical buildings and Hilton managed to include memoirs of the by gone era by using archival photographs, records to honor the culture of the respective country, they restored waldorf Astoria Shanghai ,and property in Bangkok is the Palace of King Rama V ("Hilton Worldwide"). The Beaurocrats and Diversification of Business Hilton has been ranked 16th on a Business magazine ‘Hispanic Business 2012’ for being one of the best company for Diversification. Due to its diverse and successful history; Hilton has an array of 300,000 skilled and experienced professionals, while its franchisee Hotels are 3,900 in almost 91 countries and still growing. Hilton was also ranked for being the one of the 25 leading company in supplier diversity, 2012. ("Global Corporate news").Its diversification in to new business ventures has been seen throughout its history. Its expansion is evident by a series of hotels and resorts in all the four continents, some hotels are also in the pipeline which one can study through this report ("Brand Fact sheet"). New Business Venture by the Company and its Strategies Today, Hilton World Wide is a perfect example of Diversification and it is known for its innovative ideas of business strategies .Many of its strategies have received accolades from government and its contribution towards charity work has also been a milestone in its achievement ("Hilton in the community foundation"). Through out its history Hilton has indulged in new ventures from Casino to Resort, spa, extended stay suites and its outstanding services for its customer has always won over its competitors. Through the strategy 'save a landmark program'; in every state of US, Hilton has successfully saved at least on landmark, and it was honored by Entrepreneur magazine for being "Top Global Franchise”. New ventures which have been successful are Conrad Algarve in Portugal, Warldorf Astoria Hotel in Edinburg. Over time it will launch many new ventures ("Brand Fact sheet"). Observation of the Case Study According to the proposed methodology, one can observe that a single dream project with conviction can lead to a successful history for others to follow, learn, explore and get inspired. It is observed that Conrad Hilton was a great entrepreneur who brought phenomenal diversities in the Hospitality Industry. It was his efforts to provide the customer services that are beyond just ‘accommodation’ or lodging. By introducing various new concepts of customer care ideas, he was able to receive excellent results. Customer’s love and preference for Hilton over other competitive Hotels is still evident. With time, Hilton surpassed many troubling times like staggering economy or financial instability in the Hospitality industry post 9/11. Hilton lives by its values, and mission which is to be the pioneer in hospitality and many strategies by the company has been successfully emancipated. Because of its work culture people love working here. With hotels in almost every part of the world, and innumerous feathers in its cap; Hilton continues to grow. Hilton is a brand and it has explored many horizons, offered world class service to its customers by technological advancement in the 21st century. Hiltons came up with many strategies and training programs some of which have been mentioned in this research, one of the successful programs for energy saving is also to be included in this methodology In 2000, it saved almost $2.5 million , approximately 43 million kHz of electricity per year by preventing 65 million pounds of CO2 emissions. It was the Energy Star Winner in the year 2001. Apart from this Hilton also received Green Power Leadership award from USA in 2012 Environmental Protection Agency ("Energy Star") .Although there was a time when this company had a huge amount as Outstanding debts but the company did not gave up and quickly bounced back when Black Stone Paid all its dept and is currently the owner of Hilton Worldwide. With this comeback, it registered many more landmarks , international ventures in developing countries , preservation of historical buildings, are also an example of its rigorous planning and dedication to excel in the Hospitality Industry. Hilton’s most important strategic planning is to maximize performances in its company. It runs five colleges, the hotel college, the owner's college, the commercial college, the leadership college and the college of general studies. Hilton acquires external co-operation of internet content from reputed providers and colleges or Universities like eCornell, The Economist, Harvard Business Publishing, and other prestigious Schools. It encourages training by using variety of methods like classes on weekdays and small learning programs of 1 hour. Learning is always considered to have very positive impact on the company; they can measure improvements in ROI directly in which customers are satisfied and revenue coming from the training. In just few years Hilton managed to reshape the strategy of HR (Michelle). They focus on learning which is centralized, leveraging partnership for a promising future and profits coming in. How ever there is one suggestion for the group, to start their learning colleges in developing countries. The whole world is aware of its hospitality standards, and the book by Conrad Hilton “Be my guest” is still after several years, considered as Bible for many Hoteliers across the world. If they propose for the establishment of an Institute particularly in the developing countries, they can contribute in educating youths about the hospitality standards, adding their historical experiences in the course guidelines. ‘Charity’ has been an integral part of Hilton, It is studied under this report ("Brand Fact sheet") that Hilton worldwide in collaboration with International Youth Foundation has decided to form the Global youth Wellbeing Index in order to regularly scrutinize the state of youngsters, and provide them support in an effort to bring forth outstanding results from the investments centered around youths ("Brand Fact sheet"). If this plan is also effectively used in developing countries, the result will be very promising. Hilton will be able to extend a helping hand in the development of that respective country. This suggestion is apt for Hilton because it is the only group among its rivals who has always initiated new norms and has led others to follow only to witness excellent results in the future. Conclusion Hilton was an obvious choice to do case study on Strategic Management because of its diverse history of Hospitality. Many first-ones in the list of services provided in a luxurious hotel were endowments which were actually started by the Hilton group. In my research, I tried to find many news articles where any news of Hilton’s failed plans was reported but my efforts were all in vain. It is surprising to note that each time Hilton comes out as a winner in almost each one of its venture. In the quest to observe the ten proposed questions, many journals and articles have been studied with cross check examination from other websites or blogs. First we studied about the background of Hilton which was important to examine the journey it took 100 years earlier. Followed by understanding its Mission and Corporate goals, interestingly the Hilton world wide lives up to its Mission and values and its successful venture internationally is an example of its advanced corporate ideas where every need of its partner is considered on a priority basis. To examine its performance by applying Five Force Model provides an opportunity to study what goes ‘in’ the workforce and how do they deal with threats or rivals. It is also a good medium to analyze its strategies those which were successful or those who failed. One major step by Hilton that completely transformed its business was when Black Stone paid off its debts and took the company under its control, this enabled it to reconstruct itself with the changing times and it started growing like never before, giving stiff competition to its rivals. Hilton has developed seven tools to initiate and maintain its strategic policies, its International venture in developed and developing countries has only made it stronger and Diversified in several horizons. Its diversification has received commendation by Magazines and surveys, and it would be out of the ordinary to witness its success in the near future. I would here by like to conclude this methodology with a quote- “Success ... seems to be connected with action. Successful men keep moving. They make mistakes, but they don't quit.” ? Conrad Hilton References Reinier , Geel. "Strategic Management vs. Strategic Planning, what’s the difference." booksstrategic. wordpress, 14 2012. Web. 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