Developing a Marketing Mix for International Hospitality Managment: Hilton Hotel - Case Study Example

A Marketing Plan for Hilton Hotel August 17, 2007 I. Executive Summary Hilton Hotel Corporations (HHC) is one the most famous and most successful hotel chains in the whole world. It has branches in key cities in the United States including Chicago, Hawaii, Las Vegas, Los Angeles, New York, Orlando, San Diego, San Francisco and Washington, DC. It also has branches in Europe, among which are those in London, England; Moscow, Russia; Madrid, Spain, Palermo, Italy and Vantaa, Finland. Hilton Hotels may also be located in Canada, particularly in Toronto, Vancouver and Montreal. HHC also has franchise branches as far as Asia and Africa. The hotel operates under various brands, which includes Hilton, Hilton Garden Inn, Doubletree, Embassy Suites, Homewood Suites by Hilton, Hampton, Waldorf-Astoria, and Conrad. To date, Hilton Hotels Corporation has 2,838 hotels and 483,090 rooms. The company owns 50% equity interest in Windsor Casino Limited, which operates the 400-room Casino Windsor in Windsor, Canada. It also provides hotel design and furnishing services, which include the purchase and distribution of furniture, furnishings, equipment, food, beverage, and operating supplies. The company was founded in 1946 and is based in Beverly Hills, California. (Hilton Hotels Corp. Company Profile. 2007). In the UK, Hilton Hotel Corporations remain to be the hotel of choice among tourists and residents. One of its most known branches in London, the Hilton London Metropole, recently underwent renovation to further strengthen its position as the area’s premiere hotel. Furthermore, HHC sealed a deal for a major development alliance with Somerston UK Limited with the intention of introducing additional 25 hotels comprising 3,000 rooms across the UK in the next five years (Hilton Hotels Corporation Announces Second Major UK Development Deal. 2007) These developments reflect Hilton Chains of Hotel’s commitment to be the leader in the hospitality industry. II. Mission Statement The Hilton Chain of Hotels aims to offer to guests the finest accommodations, services, amenities and value for business and leisure. Its goal is to provide customers 100% satisfaction in terms of their facilities, products and services. It operates on a culture that drives each team member towards achieving customer satisfaction. III. Product and Market Review HHC primarily operates full-service and limited service hotels in urban, airport, resort and suburban locations. It operates upscale, all-suite hotel, which includes swimming pools, gift shops and retail facilities, meeting and banquet facilities, restaurant and lounges, room service, parking facilities and other services. Further, it also provides hotel design and furnishing services, which includes the purchase and distribution of furniture, furnishings, equipment, food, beverage and operating supplies (Hilton Hotels Corp. Company Profile). All hotels operated by Hilton Hotels Corporation use the same logo, promote each other’s brand and maintains joint reservation system. Every branch is featured in HHC’s website, where customers can find their desired locations and learn about products and services update. HHC is recognized around the world as the finest lodging hospitality company. It offers its guests outstanding accommodations, services, amenities and value for business or leisure. With the acquisition of some of the most recognized hotels in the world, HHC now offers a wide variety of hospitality services, including city hotels, convention properties, all-suite hotels, extended stays, mid-priced focused service, destination resorts, vacation ownership, airport hotels and corporate centers (Hilton Hotels: A Contemporary Classic). HHC’s variety of products enables it to cater to the needs of a wide range of market, including individual and corporate clients. Despite the ongoing challenges that the hospitality industry faces, HHC continues to acquire and expand in key areas and maintain its competitive edge over its competitors Marriott, Starwood and Intercontinental Hotels. The Hospitality, Travel and Tourism Industry meanwhile continues to create opportunities for its various segments, despite political and economic issues such as terrorism. In London, “the number of visits to the UK doubled between 1985 to 2005”, most of which coming from the United States, France, Germany, Ireland and Spain. Tourist spending increased by 8% in “constant price terms between 2004 and 2005 (International Travel, Record Number of Visits to and from UK in 2005. 2007). There is a steady demand for hotel accommodation from the target market. Local and international tourists will continue to travel and need spaces for lodging. People will always demand for the finest offers in leisure. Moreover, the target market would prefer to spend on products and services that will give added value for their money. IV. Objectives This Marketing Plan aims to: 1. Identify the marketing programs that Hilton Hotels in London need to implement to intensify their position in the market; 2. Identity the best advertising tools to further promote Hilton Hotels’ products and services. 3. Increase revenues derived by the company from its hotel business by enhancing their brand, their products and services. V. SWOT (Strengths, Weaknesses, Opportunities, Threat) Analysis Strengths 1. HHC has already established its position in the hospitality industry. With its existence for almost a century now, it has a solid customer base and a reputation that cannot just be stained by anyone. 2. Coming from HHC’s President and CEO Steven F. Bollenbach, the company takes pride in its “irreplaceable owned assets in key markets” (Hilton Reports First Quarter 2003 Results. 2003). These hotel locations found in key cities guarantee a steady pool of customers. Weaknesses 1. HHC’s ownership of various hotel brands and operations of acquired hotels result in confusion among their target market. Although its brands have already been categorized into segments according to its target markets, patrons would have difficulty in recognizing the particular hotel locations and identify these with the HHC. Opportunities 1. Quoting from the World Travel and Tourism Council’s official website, “Travel and Tourism is expected to grow at a level of 4.3% per year over the next ten years, creating an opportunity for every country in the world to be part of this process and to share the benefits.” (World Travel and Tourism Council 2007) 2. Foreign tourists coming to UK, particularly in London, are generally satisfactory in number due to the economic growth and low cost of travel to this area (Visit London: Prospects for 2007. 2007). Further, London remains to be one of the top tourist destinations in the country. As a result, from July 2006 to June 2007, tourist visits rose by 8%, from 30.8 M to 33.2 M. (Travel and Tourism, UK Residents Visits Abroad by 2%. 2007) Threats 1. Current global issues on terrorism are the primary threat to the hotel industry and the hospitality, tourism and travel segments as a whole. If terrorism-related disasters continue to occur, there would be limited choices for tourists to travel to and that the chances of these travelers to indefinitely postpone their trips would be high. 2. HHC faces stiff competition from Marriott, Starwood and Intercontinental Hotels. These groups are as competitive in terms of facilities, products and services, and have strong presence in the United States and other key cities and countries as well. VI. PEST (Political, Economic, Socio-Cultural, Technological) Analysis Political Analysis Following recent development in global issues on terrorism, the different policies being implemented by countries in order to prevent similar occurrences have given limitations to the hospitality, travel and tourism industries. In London, the recent bombing resulted to heightened security level and intense monitoring of particular groups. This event caused huge impact to the city’s tourism primarily due to the trauma that the incident has given to the residents and visitors. From a global point of view, travel has become an activity that people have to undertake with extra caution. There are areas that travelers do not frequent much due to the huge probability of another terrorist attack. Since the 9/11 bombing, people have become wary of traveling. It is only recently that the effects of these events in the hospitality industry are slowly disappearing. Economic Analysis Besides issues of terrorism, other concerns affecting the hospitality industry include the outbreak of SARS in major cities and countries, the war in Iraq and continued rise of oil prices. All these have caused the decline in the number of travelers, consequently affecting each country’s revenues derived from travel and tourism. As quoted from the Canada News Wire, “The adverse economic conditions and geopolitical factors that have impacted air travel have created downward pressure on lodging pricing, specifically corporate rates” (American Express Study Reveals Improved Prospects For Business Travel Industry. 2003). In the recent years that major countries fought threats of terrorism, the hospitality industry tried to cope by adjusting their rates in order to attract patronage among their target market. However, even with the current issues on terrorism, peace and order, a better state of the hospitality industry is being anticipated in the future. There is a current drive to encourage people to take short vacations close to home to help increase the local occupancy rate and add to the industry’s revenues (Tourists Urged to Sit, Stay a While: Hotels Making Pitch for Leisure Travelers. 2003) Socio-cultural Analysis Tourism comprises one of the largest industries in the UK, accounting for 3.5% of the UK economy and worth approximately £85 in 2005. In 2006, there were over 32 million tourists who entered the UK, spending around £15 Billion (Key Tourism Facts. 2007). Local residents prove to be fond of spending during holidays with over 59M holidays of one night or more with a total spending of £11.5 billion. There were also over 22M overnight business trips with a total spending of £5.3 billion and over 52M overnight trips to friends and relatives with a total spending of £5.4 billion (Key Tourism Facts. 2007). These statistics reflect the lifestyle of UK residents and the trend of activities of UK visitors over the past couple of years. Their total spending proves that the hospitality industry continues to thrive and that there would always be plenty of opportunities to promote and improve their products and services to their target market. Technological Analysis Technological advances are always geared towards the achievement of customer satisfaction. In the hospitality industry, various new services add to marketability of hotels. Recent years have shown tremendous effect on telephone revenues and an increased demand to offer high-speed Internet access throughout hotel properties. These added facilities cater to their patrons who are both on leisure or business travel. While broadband connections in hotels flourished in 2003, the introduction of wi-fi services proves to be an add-on to the value added services being offered in hotels. At present, there are more than 20,000 hotels worldwide that are equipped with this wireless Internet service and this number is expected to rise by 50% this year (Wi-Fi Spurs Broadband Growth In Hotel Industries. 2007). This service alone gives patrons additional communication options besides the existence of cell phones. Internet also proves to be of great help to hotel owners in reaching their target market. A website brings products closer to the target audience. Online bookings prove to be a good medium for customers to actually purchase their desired product through the web. Security-wise, card-key locking systems are commonly used products throughout major chains. Recent advances have even linked credit cards with computer chips attached to electronic card keys, enabling it to contain the cardholder’s personal data. These value-added products and services play a major role in increasing the marketability of a hotel. Technology will certainly continue to advance and with it, the improvement of services under the hospitality, tourism and travel industries. VII. Target Market HHC caters to both individuals and corporate groups. It competes in the luxury, up scale and mid scale markets/ By individual, HHC means to reach the A and upper B segments of the society. The main service to be offered would be HHC’s signature hotel accommodation, including use of basic facilities such as the parking area, swimming pools, gymnasiums and other leisure services. Individuals who wish to have a leisurely meal and subtle fun may also visit HHC’s restaurants. HHC also aims to get a huge number of returning patrons from the corporate segment, with its facilities designed for conferences and conventions. Its banquet facilities would be perfect for events and special occasions such as weddings, birthdays and other personal gatherings. VIII. Marketing Strategies/ Advertising Plan In this light, HHC in the UK would be utilizing the following Marketing Strategies: 1. Continued implementation of HHC’s website, enabling potential tourists and visitors to locate the best Hilton Hotel in the UK. The HHC’s official website features all Hilton Hotels, including its brands Hilton, Hilton Garden Inn, Doubletree, Embassy Suites, Homewood Suites by Hilton, Hampton, Waldorf-Astoria, and Conrad. It also advertises the different rates and promotional activities of these hotels. However, more than being featured in this website, another site shall be created that will collectively feature all Hilton Hotels located in the UK. All products, services, programs and events will be featured in this website. In addition, this website will enforce an online Customer Service System. This system will give website viewers a chance to forward their queries and clarifications to a central customer service group. 2. Aggressive tri media advertising, which includes the production and placement of TV, radio and print ads. These advertisements shall introduce new product development and HHC’s promotional activities. A Thematic Campaign entitled “Business for Leisure/ Leisure for Business” shall be introduced. With this theme, particular emphasis on the way HHC hotels in UK provide its guest with 100% satisfaction will be made. The yearlong campaign will cater to both leisure and business travelers. It will also incorporate this region’s culture and its approach to tourism. To support this campaign, billboards shall also be put up in key locations in the region. This will help reach other potential customers with the aim of encouraging them to spend their weekends in one of HHC’s hotels. 3. HHC will give particular focus on the implementation of customer-friendly programs, including the enhancement of its customer service system. A call center common to all Hilton hotels will be built, and the call center specialists shall entertain calls for all branches, giving assistance to those who wish to find the perfect location and right services and facilities. Here, customers would be able to learn about hotel rates, latest promos and events. The call center specialists will also entertain complaints and concerns, and will try to address them as soon as possible. 4. Implementation of promotional activities such as rewards points. Local residents shall enroll in this program and shall be given rewards points for every endorsement made. These points may then be converted to a night’s stay at any of the hotels or free use of their facilities. Rewards points shall also be given to returning customers as reinforcement for their continued patronage of HHC’s hotels. 5. Tie-ups with local tourist destinations and the UK Tourism council shall be created to tap their existing market. To save on cost, HHC shall provide their partners with gift certificates entitling holders to free accommodation that they may use as prizes for their own promotional efforts. In return, HHC shall be allowed to advertise in these locations to ensure that they reach their captive market. IX. Execution/ Budget An Advertising and Promotions budget amounting to £ 10M shall be spent on the implementation of the media plan alone. As sustaining effort, another £5M shall be used for below-the-line efforts such as billboards and transit advertising. £20M shall be used in establishing the HHC Call Center in the UK. This shall include operations and manpower costs. X. Evaluation The effectiveness of all the planned marketing strategies shall be measured against the actual revenues to be computed collectively from all HHC branches in the UK. All strategies are geared towards the increased revenue per hotel. More than just the acquisition of customers, these strategies aim to encourage added spending among the target market. Increase in revenues from all sales channels are expected to happen after the implementation of the mentioned promotional strategies. HHC-owned and operated hotels are expected to have a revenue increase of 20% in 2008 as combined results of the promotional programs. Leased Hotels are also expected to benefit from these efforts, with the target increase of 12% in terms of collective revenues. The Hilton Grand Vacations Company also targets to have a 15% increase in sales, to be attributed to this marketing plan. Monitoring shall be made on a quarterly basis and shall be evaluated vis-à-vis the actual Ads and Promo expenditures. Expenses to be incurred due to the Call Center Operations shall be charged to the Ads and Promo budget as well. The Call Center shall not be expected to gain revenues per se, but will contribute half of the projected increase for all sales channels. The loyalty program, on the other hand, shall be monitored basing on the number of memberships and the total number of referrals made per member. More events, activities and rewards shall be added for those who continuously refer and endorse HHC hotels to their families and friends. XI. Conclusion and Recommendation The Hilton Hotels in the UK have already established its name and has a captured market in this area despite the ongoing issues on terrorism and economic conditions. Revenue trends may have been erratic the past few years, but HHC definitely was able to hold its position as owner of the most preferred hotels in the UK. The need to implement additional marketing and promotional strategies is fueled by the fact the HHC needs to prevent any more fluctuations in terms of revenue. It needs to have steady increase in sales when compared to the actual operational and promotional expenses. HHC needs to cope up with the growing demands of the market and has to be continuously aggressive with its efforts to match the current strategies of its direct competitors. There are several external factors that HHC may not be able to control such as the political situation as reflected by terrorism threats and the economic conditions of the region. However, these should not prevent HHC to deliver quality services. In fact, these factors should set HHC to continue with its quest to offer its patrons with only the best in the hospitality area. This marketing plan should keep HHC alert for any other conditions that would require them to take more steps towards the achievement of their corporate goals. The realization of their mission statement lies on the consistent implementation of their plans and strategies, and the accomplishment of their financial objectives is directly proportional to their level of commitment in brining to their market their trademark excellent and unparalleled services Reference List (2003, April) “Hilton Reports First Quarter 2003 Results”. Hilton News Release International Travel, Record Number of Visits to and from UK in 2005. Retrieved August 15, 2007 from http://www.statistics.gov.uk/cci/nugget.asp?id=178 Joyce, A. (2003, October) “Tourists Urged to Sit, Stay a While: Hotels Making Pitch for Leisure Travelers”. The Washington Post. Key Tourism Facts 2007. Retrieved August 16, 2007 from http://www.tourismtrade.org.uk/MarketIntelligenceResearch/KeyTourismFacts.asp Hilton Hotels Corporation Announces Second Major UK Development Deal. 2007, Retrieved August 16, 2007 from http://www.hamptonfranchise.com/marketing/ hhc_announces_second_major_uk_deveopment.asp Hilton Hotels Corp. Company Profile 2007. Retrieved August 13, 2007 from http://finance.yahoo.com/q/pr?s=HLT Hilton Hotels Corporation 2007. Retrieved August 13, 2007 from http://en.wikipedia.org/wiki/Hilton_Hotels_Corporation Hilton Hotels: A Contemporary Classic. Retrieved August 14, 2007 from http://hiltonworldwide1.hilton.com/en_US/ww/business/history.do World Travel and Tourism Council. Retrieved August 15, 2007 from http://www.wttc.org/ Travel and Tourism, UK Residents Visits Abroad by 2%. Retrieved August 15, 2007 from http://www.statistics.gov.uk/cci/nugget.asp?id=352 Visit London: Prospects for 2007 2007. Retrieved August 15, 2007 from http://static.visitlondon.com/corporate1/assets/1prospects20072.pdf Wi-Fi Spurs Broadband Growth In Hotel Industries. 2007. Retrieved August 16, 2007 from http://www.computerworld.com/managementtopics/outsourcing/isptelecom/story/ 0,10801,105451,00.html Read More