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Hilton Worldwide, Research Paper Example

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Research Paper

Introduction

Hilton Worldwide is known internationally as a reputable hotel company that offers a wide range of hospitality services globally.  The hospitality industry is highly competitive and Hilton Worldwide has established itself  within the industry as one of the top hotel and resort service providers. The company is specifically known for its diversity and quality of service in regards to its employee base. Hilton Worldwide prides itself in hard work adaptability and goal design based on customer needs.

Hilton World Wide was founded by Conrad Hilton in the 1900’s. Since then,  Hilton Hotels has expanded into a world renowned multinational corporation.. Success in the hospitality industry can be challenging to achieve. Despite this, Hilton Worldwide has become one of the most renown hospitality companies due to their continuous expansion, constructive designs, adaptability and ability to deal with unforeseen situations. This company’s outstanding growth and value makes it a desirable work location for many employees, as well as a viable investment for many external stakeholder.

Conrad Hilton purchased his first hotel in 1919, and constructed the very first original Hilton hotel in 1925 in Dallas, Texas. Between the 1960’s and 80’s Hilton Worldwide expanded substantially , during which time Hilton International was acquired by Trans World Airlines. The company also entered the gaming industry resulting in the Las Vegas Hilton becoming the largest hotel World Wide. The company had numerous properties and projects in the works worldwide. This growth lead into a well ran company that received the honor of top customer satisfaction in 2002. All of this success was able to occur because of the concern for doing what is right (Walkerm 2006, p. 134-135).

Vision, Mission and Objectives

Hilton Worldwide states their vision is to “fill the earth with the light and warmth of hospitality” (Hilton Worldwide, 2014). They state their mission is, “To be the preeminent global hospitality company – the first choice of guests, team members, and owners alike” (Hilton Worldwide, 2014). They cite their key values or objectives to be to provide Hospitality, integrity, leadership, teamwork, ownership, and to do it now (Hilton Worlwide, 2014). The company emphasizes its passion for the consumer and their needs. In regards to leadership, they pride themselves in being leaders within their industry.

Industry Analysis—Macro Environment 

The Macro environmental factors of Hilton Worldwide entail an in depth analysis of the social, economic, technological, political, and environmental aspects of the company. Macroeconomic indicators are trending favorably for the hotels industry. This is due to increased international travel expenditures, which in turn has resulted in an increase in occupancy rates and room rates. Hilton has also expanded aggressively into Asia and other emerging markets.. Hilton has also garnered the attention of investors and  loyalty return consumers who frequently fly for business travel. Finally, Hilton has expanded it’s infrastructure by increasing the amount of properties it manages to 1,100 from when it was acquired by Blackstone in 2007. Despite the costs of this expansion,  revenues have rebounded to 2007 levels,  revealing substantial positioning for growth. Chevance, N., Digney J., & Pollem C. K. (2013)

Social

The travel & tourism industry is considered one of the major national economic sectors . Hilton is a provider of global hospitality services stategically modeled after their consumers’ needs. Hilton Worldwide’s revenues are reinvested into  the Hilton Community Foundation, which enhances it social responsibility factors by supporting communities in need.

Economic

The hospitality industry plays a significant role in the economy, by providing jobs and locally sourcing goods. Despite slow economic challenges, the travel and tourism industry showed signs of development in 2012 and in 2013 the market further grew, demonstrating Hilton was not impacted by the recession. One key stragey the company utilizes is strengthening the communities in which it establishes its hotels. The Hilton Worldwide Foundation works to increase the economic and social benefits it offers the communities surrounding its infrastructure. The company targets the key issues impacting the local economy of each community, such as unemployment and poverty.

Technology

Mobile and social applications, specifically in regards to web tools used to enhance consumer interaction with certain brands have developed into a substantial market on their own. The Hilton app allows customers to browse the company databank for available room and room payments. WLANs have experienced a significant growth and have become popular in the hospitality industry. WLAN enables internet access to customers as well as the employees of a hospitality business (Schneider and Datta, 2006). Providing users with high-speed quality internet and good Quality of Service (QoS) requires a well-planned network architecture.

Political

Increased legislation can substantially impact business operations, especially considering that legislation changes from region to region. As Hilton expands worldwide, it must deal with the business legislation structured to protect companies and consumer  interests. This conflict produces challenges for the hospitality industry as it is expands globally. Hilton expresses emphasizes that legal compliance represents the minimum level of conduct they expect from their employees. In 2012, 20,000 of Hilton’s team members completed an ‘online Code of Conduct training module’. Reporting and investigation procedures were created as a part of this training to promote legal compliance. In June of 2010, one of  Hilton’s hotels in Chongqing had to be  closed  due to fact that a brothel operation was uncovered within the facility.  When a receptionist was questioned about this incident she stated “we are closing down due to unforeseen trouble, we will reopen on July 6” (De Lollis, 2010). The politically savvy response from the receptionist insight of the very controversial event demonstrates Hilton Worldwide employee loyalty and the ability to handle difficult situations. Hilton responded to the incident by contacting  the ECPAT-USA with the intention to help prevent “child prostitution and human trafficking”(De Lollis, 2010). The incident resulted in hotel officials  reducing the company’s five-star rating (De Lollis, 2010).

Environmental

The hospitality industry has become a point of criticism in regards to polluting the environment. This is especially true when it comes to tourist attractions. Hotels are contributing a substantial  amount carbons emissions to the environment, which has negative implications in respect to global warming. Hilton has encountered tight regulations in an attempt to decrease their carbon footprint. This has in turn increased their operational costs. Hilton has responded to these new regulations in kind with an attempt to reduce the pollution levels.

Industry Analysis Competitive Environment

Hilton Worldwide Holdings Inc.’s top competitors are InterContinental Hotels Group PLC, Choice Hotels International, Inc., and Marriott International, Inc.  InterContinental Hotels Group (IHG)  is the world’s largest hotel company by room count. The company has over 4,400 properties located in over 100 countries. The company’s flagship facility is the Holiday Inn, which provides mid-market accommodations at over 1,200 regions in Europe, US, and Asia. IHG also has limited services locations, as many as 2,100 regions operating under the Holiday Inn Express logo. IHG also serves the upscale market with its Crowne Plaza and InterContinental chains, while its Staybridge Suites and Candlewood Suites brands offer extended stay services mostly in the US. Hotel Indigo belongs to its boutique brand, targeting midscale travelers seeking affordable luxury. This company offers a lot of hospitality choices. Choice Hotels is another one of Hilton’s prime competitors and the company represents a leading hotel franchise accounting for over 6,500 hotels throughout the US as well as infrastructure in over 35 other countries. The main brand includes Comfort Inn, known for its limited-services within the hospitality industry and accounting for over 3,000 properties. Quality Inn is one of their brands known for serving the midscale hotel market. Choice Hotels also manages the  Econo Lodge chains which provide lodging  travelers on a budget.

Internal Environment

Every player in the organization is important in their own way, and the fact that the public sees the employees as the representatives of the organization, ensuring a healthy relationship with the employees is a prudent step towards achieving competitive advantage for the organization (Mochal, 2006). Another way of managing internal relationships is through commitment. The level of commitment within the organization determines how well the various tasks are performed and the ability of every player to perform their duties effectively and on time. The level of commitment in the organization also influences the level of trust between different players at the organization. With all these factors put together, the organization can enjoy the benefits of having great internal relationships, which includes keeping it ahead of competition (Mochal, 2006).

Corporate Strategy

Despite extremely difficult business conditions, Hilton survived and was able to grow substantially, as much as 37% over the past few years. Hilton specifically has a stern multi-brand strategy, with as many as 10 different brands, which allow the company to narrow out price discrimination to retain loyal customers (Chevance, N., Digney J., & Pollem C. K., 2013). The chart below shows how Hilton has been able to sustain revenue growth even through the 2008 recession through the strategic implementation of resident fees.

One key downside of the company is that it heavily relies on fees for revenue, more so than the majority of the first class hotels in its market. This could negatively impact its brand and speculation related to its stock performance over the long term, more so than other first class hotels in its market.

Evaluation and Control

Hilton Hotels Corporation, along with all of its subsidiaries, has adopted a company code of conduct which entails, promoting “honest and ethical conduct, including fair dealing and the ethical handling of conflicts of interest; promoting full, fair, accurate, timely and understandable disclosure; promoting compliance with applicable laws and governmental rules and regulations; promoting prompt internal reporting of violations of this Code; ensure the protection of the Company’s legitimate business interests, including corporate opportunities, assets and confidential information” (Hilton Hotels Corporation, 2014).  The company’s code of conduct is designed to deter wrongdoing by staff and executives.  All directors, employers and officers of the company are mandated to know the the code as well as the procedures for enforcing the code of conduct. The Company’s policies and procedures structured within the Hilton Hotels Corporation Code of Conduct are designed with separate policies applicable to officers and employees for differing conditions.

Reporting and Accountability

The Corporate Governance and Nominating Committee is in charge of enforcing the code of conduct and in regards to control and evaluation of employee behavior and performance. Any employee who witnesses a violation of the company code of conduct  is obligated to report the violation to the General counsel. Failure to report violations is also considered a violation.

Procedures

The Company follows specific procedures when investigating violations and enforcing the Code.  Violations executed by directors and executive officers are reported to the General Counsel and delivered to the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee are in charge of evaluation and control procedures. If it is discovered that a violation has occurred the case will be handed over to the board of directors. The Board of Directors is in charge of preventive and disciplinary action, such as dismissal, issuing criminal charges, or notifying the SEC (Hilton Hotels Corporation, 2014).

Recommendations

The hospitality industry is one of the most competitive industries. The high competition in the business environment means that hospitality businesses have to work hard in order to maintain and develop competitiveness. Customers are increasingly demanding for higher quality services from the hospitality companies. One way of enhancing competitiveness in the industry is to adopt information technology in order to reduce costs, enhance efficiency, and improves service quality and enhances customer experience (Law, Leung, and Buhalis, 2009).

References

Chevance, N., Digney J., & Pollem C. K. (2013). Hilton USA Trust 2013-HLT. Standard & Poors <Retrieved From> http://www.standardandpoors.com/spf/upload/Ratings_US/Hilton_USA_Trust_11_15_13.pdf

Hirst, Michael (1992). An Expanding Empire Keeps Hilton International’s CEO On the Go. Management Review, 81(11), 30. Retrieved from Business Source Premier database.

Datamonitor: Hilton Worldwide. Hilton Hotels Corporation SWOT Analysis, 1-8. (2010). Retrieved from Business Source Premier database.

Hilton Hotels Corporation (2014). Code of business conduct and ethics” <Retrieved from> http://media.corporate-ir.net/media_files/irol/88/88577/corpgov/codeofethics_013004.pdf hilton Worldwide. Retrieved October 25, 2010 from web site: http://www.hiltonworldwide.com

Stoessel, E. (2010). Starring Roles For Hilton Hotels. Lodging Hospitality 66(10), 8

De Lollis, Barbara. (2010). Hilton addresses child sex trafficking after China hotel scandal. Retrieved from USA Today

Law, R., Leung, R., & Buhalis, D. (2009). Information technology applications in hospitality and          tourism: A review of publications from 2005 to 2007. Journal of Travel & Tourism    Marketing, 26(5-6), 599-623.

Phalippou, L. (2014). Hilton Hotels: A Case Study in Real Estate Private Equity.Available at SSRN 2429357.

Seeley, C., & Deatherage, M. Hilton Hotels Case Study One Situation Analysis.

Walker, John. (2006). Introduction to Hospitality Ed. 4. New Jersey: Pearson Education, Inc

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