Hilton Hotels SWOT Analysis

HiltonHotels: SWOT Analysis

IntroductionSWOTanalysis is a tool used by market leading companies to establishtheir long-term strategy. Specifically, the tool aims at evaluatingthe company’s internal strengths and weaknesses, as well as, theexternal environment composed of the opportunities and threats(Friend &amp Zehle, 2004). Thefollowing paper provides a SWOT study for the Hilton Worldwide groupof companies to identify factors within the company as well asenvironmental factors that shape the organization’s long-termstrategy (Okumus, Altinay &amp Chathoth, 2010).CompanybackgroundHiltonWorldwide belongs to one of the fastest growing enterprises in thehospitality industry. The company history runs for nearly 100 yearssince it was founded and completely redefined the hospitalityindustry. The brand’s investment portfolio entails more than 4,600hotels, resorts as well as time-share properties. It has establisheda portfolio of 13 world-class brands including the Hilton hotels andresort brand, which is one of the most recognized hotel trade namearound the globe. In overall, the time-share properties are comprisedof more than 758,000 rooms located in 100 countries and territories(Hilton Hotels and Resorts, n.d.).StrengthsStrengthsare internal factors that enhance the performance of organizations.One of the key advantages of the Hilton World Wide hotels is themarket perception of the hotels as a global leader. The Hilton hotelsare the second largest hotel chains in the world market. The marketperception serves as a marketing tool that attracts and maintainstop-level clientele from the private, public and the corporatesector. The ability to attract such a clientele serves as a profitbooster for the company (Friend &amp Zehle, 2004).Thesecond strength is a well-trained management team that guides morethan 4,600 hotels located in 100 countries and territories. Themanagement can maintain the overall image of the hotel in thedecision-making process. Besides, the management experience has grownover time given that the hotels have been in existence forapproximately 100 years. The long-term service in the hospitalitysector has transformed the management into experts of the industrywith the ability to identify trends and steer the hotels to the rightdirection. Consequently, the hotels continue to rank as one of themost famous hotels around the globe (Okumus, Altinay &amp Chathoth,2010).Thirdis the supply chain. The company has a strong supply chain thatenables the acquisition of products from the suppliers to thecustomers promptly. The strength emanates from the ability to cutcosts in the long term as well as increase the profits (Fine, 2009).Thefourth strength is the rate of employee retention. The hotels have anexcellent employee retention that further adds to the ability ofattracting the best employees in the industry. The capacity toretain employees plays a part in enhancing their motivation as wellas the provision of quality services (Friend &amp Zehle, 2004).Fifthis the use of technical innovations that improve customer experiencesas well as the constant upgrade of the business processes. The hotelsfollow a loyalty program that is well recognized in the travel andtourism industry. In the year 2007, the Hilton hotels improved theloyalty program by introducing experience rewards. Specifically, thecompany offered its 17 million members experience-oriented rewardsoptions. Besides, in the year 2008, the hotels management ended theblackout dates that made its programs more valuable to its members.The ability of the members to follow the programs creates loyalty toboth existing and new customers (Okumus, Altinay &amp Chathoth,2010).WeaknessesWeaknessesare internal factors that hinder the achievement of an organization`sgoals. The first weakness of the Worldwide Hilton hotels is theinternal operations that impact heavily on the costs compared to itscompetitors (Okumus, Altinay &amp Chathoth, 2010).Thesecond weakness is the domestic market focus of the hotels. TheHilton hotels have emphasized their focus on the US market.Consequently, the US market accounts for a majority 85% of the entireHilton Corp system. The overreliance on one domestic market makes theorganization vulnerable to the seasonal variation of the domesticmarket (Friend &amp Zehle, 2004).Thethird weakness is the ownership structure of the company. TheWorldwide Hilton hotels are privately owned. Consequently, the hotelsare subject to the decisions made by Blackstone. As a single ownedventure, the owner can decide to carry out a divestiture on any hotelat any time of his liking (Fine, 2009).OpportunitiesOpportunitiesare favorable factors within the environment of an organization. Suchfactors, when taken into consideration, improve the performance ofthe organization. The first opportunity of the Hilton Worldwidehotels is the dynamic growth in emerging markets. Developingcountries pose an opportunity for world-class hotels due to theimproving economic conditions as well as the ongoing development ofinfrastructure. The developing countries are emerging with a set ofnew urban middle class as well as growing tourism sector. Suchcountries present key target markets for the Hotel (Friend &ampZehle, 2004).Secondis the increasing demand for luxury brands. The current trends in thehospitality industry have witnessed growth in the request for luxurybrands from the corporate and the governmental sectors. The increasein demand has led to an increase in competition as otherinternational players place substantial resources to maintain theirhigh profile brands. The Hilton hotels should redefine theireponymous brand and expand its portfolio to take advantage of therising demand (Okumus, Altinay &amp Chathoth, 2010).Thethird opportunity is the increase in the number of unique travelexperiences. Current trends in tourism have indicated a growth in thedemand for unique traveling experiences. The experiences exist inforeign as well as domestic markets from all over the world. Theincrease in demand calls for the Hilton hotels to develop distinctivebrands, services as well as properties (Fine, 2009).Fourth is technological revolution.The adoption of new technologies has improved corporate branding.Hotels are utilizing the internet to enhance their hotel andtransportation services through marketing and branding. Theadaptation of the internet has improved the operations of the hotelindustry by reducing the costs of marketing. Similarly, the Hiltonhotels should take advantage of the opportunity to increase itsappeal to customers as well as obtain feedback on areas that requireimprovement (Okumus, Altinay &amp Chathoth, 2010).ThreatsThreatsare unfavorable market conditions that hinder the profitability of anorganization. The first threat is the expected increase in the costof real estate. Markets such as China and Russia are scheduled toexperience a surge in the prices of housing. The increase in the costof housing poses a threat for the Hilton hotels to move its lowercosts services to such countries (Friend &amp Zehle, 2004).Secondare the downturns in the tourism industry. The Hilton hotels areheavily reliant on both domestic and foreign tourism. A negativeimpact on the tourism sector paired with a surge to lower costs islikely to pose a significant threat to the future performance of thehotels (Okumus, Altinay &amp Chathoth, 2010).Thirdis politics. The international distribution of the Hilton hotelsposes political risks since various governments can change thebusiness laws and affect the business negatively. For example, anincrease in the tax bracket for all international brands is likely toadd more costs to the operation of the hotels (Fine, 2009).Thefourth is competition. The Worldwide Hilton hotels face intensecompetition from other international hotels such as theIntercontinental, the Serena hotels as well as Kempinski. It isimperative for the hotel to keep up with competition that poses adanger to the profitability of the hotels Amsterdam:Butterworth-Heinemann (Okumus, Altinay &amp Chathoth, 2010).References

Fine,L. G. (2009).&nbspTheSWOT analysis: Using your strength to overcome weaknesses, usingopportunities to overcome threats.Place of publication not identified: Kick It

Friend,G., &ampZehle, S. (2004).&nbspGuideto business planning.London: The economist in association with Profile Books.

HiltonHotels and Resorts, (n.d.).Our History.Web. Retrieved from http://www3.hilton.com/en/index.html

Okumus,F., Altinay, L., &ampChathoth, P. (2010).&nbspStrategicmanagement for hospitality and tourism. Amsterdam:Butterworth-Heinemann.