Strategic Hospitality Management - Hilton Worldwide - Literature review Example

?Hilton Worldwide Table of Contents Business Bit 3 Journalistic Article 4 Overview of the global hospitality industry 4 Growth of the company in the recent times 6 Growth prospect of the company in markets around the world 6 Brief Conclusion 8 Reference 9 Business Bit Hilton Worldwide is a global hospitality chain based in America and is owned by the private equity firm Blackstone Group. The company was founded by Conrad Hilton and was originally headquartered in Beverly Hills, California since the year 1969. In the year 2009, the company shifted its headquarters from California to Virginia. It is important to highlight that the company is widely known all over the world for owning, managing as well as franchising a large number of popular hospitality brands. In discussing about the hospitality brands, that are owned, managed or franchised by the group, it can be said that the brands has a presence in almost every category like luxury, full service, select service, extended stay suites as well as timeshare. The Hilton Worldwide in the year 2011 was credited as the fastest growing major hotel company. As of the year 2011, the hospitality chain accumulated around 30 million HHonors members out of which 3.5 million members joined in the year 2011 itself. The hotel brand has presence in various continents around the world like the Americas, Europe, Middle East, Africa as well as Asia. Vital information about the company is given below in a summarised format: In 2011, the hotel company had an inventory of over 630,000 rooms all over the globe. The company is the owner of multiple popular brands which are present in around 90 countries. In the year 2006, the annual revenue of the hospitality company was around 7.44 billion USD. Journalistic Article While performing a strategic performance analysis for the Hilton Worldwide from the investors’ point of view, it is important to focus on conducting an overview of the global hospitality industry along with estimating the growth of the company in the recent times. Focus also needs to be given on the prospects of growth for the company in markets around the world. Overview of the global hospitality industry In discussing about the global hospitality industry, it is important to highlight that the global macro factors are bound to have a strong influence in this particular industry. Talking on this note, it needs to be stated that in the current years, the global hospitality industry has been affected in a significant manner by the political and economic factors around the world. In the year 2012, the global hospitality industry suffered the impacts that generated from US presidential election, sovereign debt crisis of the Euro zone, political disturbances and tension in various regions of the Middle East along with slowing down of Asian economies. Talking on this note, it can be stated that in the year 2012, the hospitality sector of the US, especially in the locations of New York, Los Angeles, San Francisco as well as Chicago displayed indications of growth and expansion. A report by the globally popular consulting firm Ernst and Young revealed that the average revenue per available room as of the year 2012 touched the levels of 2007. A deeper analysis revealed that the growth in the average revenue per room happened mainly because of the increase in occupancy levels as well as average daily rate (ADR). It was also found that the influence of the factors like high barriers to entry, longer and extended periods of development of hotel property as well as reduced dependence on wholesalers has greatly helped the upscale, upper upscale as well as luxury segment players of the hospitality industry of the region to attain an increase the revenue per available room (RevPAR) in the recent times. The RevPAR for the Asia Pacific region, barring countries like India and New Zealand also recorded an increase in the year 2012. The prolonged political disturbances in some of the major markets of Middle East regions resulted in generation of mixed performance for this particular market. However, in the current year, the macro factors that continued to make its influence on the global hospitality sector are shutdown of the US government, continued crisis of the Middle East, high fluctuations in the currencies of the emerging markets as well as fluctuating economic as well as growth based performance of the developed markets of the West. Despite the presence of these macro issues around the globe, it is being expected that the predicted rise in global tourism in the year 2013 will continue to create an upward demand curve for the overall hospitality sector around the globe. It is important to mention in these regards that the consulting firm Ernst and Young had already forecasted in the beginning of the year that the renewed surge in tourism marketing along with more pronounced usage of technology and rising interest of travel among the middle class population of the emerging economies will act as trends for triggering global tourism. In discussing the growth forecasts for the global hospitality sector over the long term, it can be stated that the globally renowned consulting firm Deloitte has forecasted that a majority of the demand will arise from the emerging markets of India and China. The report by Deloitte also highlighted that by the year 2015, both of these new markets will have absolute year on year growth in the sector of tourism which will be greater than the markets of UK, Japan and France. This surge in tourism will be the main factors that will contribute to the surging demand for the hospitality sector in these regions. Growth of the company in the recent times While discussing about the growth of the company in the recent times, it is important to focus on performance of the company in the current year. A report in the reputed news daily, Business Wire, in September 2013 revealed that the Hilton Worldwide will be entering in the market of Georgia by signing two consecutive management agreements. Talking on this note, it needs to be highlighted that the flagship brand of the global hospitality company, Hilton Hotels and Resorts will penetrate in Batumi in the summer of 2014. Also, the hospitality company will enter the capital location of Georgia, Tbilisi by developing the brand Hilton Garden Inn in the year 2016. The top management of the hospitality company has revealed that the reason for focusing into the market of Georgia is mainly because of the factors of sustained economic growth of the region, along with the production of sustainable energy as well as inward foreign investment in the particular market. Talking more in regards to the growth of the company in the recent times, the focus needs to be given on the news that the hospitality company has signed a formal agreement for venturing into the African market of Sierra Leone. The global hospitality company has signed a management level agreement with Cape Sierra Hotel Company Ltd which will take the ownership of developing the first Hilton Hotels & Resorts property in the area. Growth prospect of the company in markets around the world Hilton worldwide also known as Hilton Hotel Corp is a global hospitality company in America that is owned by private equity company Blackstone Group. The group was ranked 38th biggest private company by Forbes, United States. The company manages, owns and even franchises portfolio brands that includes some of the most renowned hotel brands in the industry such as Conrad Hotels and Restaurants, Waldorf Astoria Hotels, Double Tree, Hilton Garden Inn, Embassy Suites Hotels, Home2 Suites (Hilton), Hampton Inn & Suites, Homewood Suites, Hilton grand Vacations, etc. A report in The Telegraph has revealed that the rising number of global tourists will continue to create a huge demand for the hospitality services provided by the hotel companies in the immediate future. This is positive and favourable news for the investors. Describing in a more elaborate manner, it can be stated that as a result of the rise in global population, there will be an increase in the number of tourists. The growth will be more skewed in the market of China because of its comparatively fast pace of development as compared to other emerging markets. The company has 84 properties in Asia Pacific and the about 25 properties out of 84 are located in China. The management of the company aims to strategically expand their functions in China from current 25 properties to 110 within the next five years. The newly devised strategy of the Hotels Group will be to increase their focus on the most attractive and emerging markets around the world that will lead to the process of increase in business for the company in maturing markets. Currently to capitalize on the business prospects from the high growth market of emerging markets, the company has focused on entering the market at an early stage, develop long term relationship with various important local third party owners and thereby expanding its growth in a very aggressive fashion. Apart from focusing on the emerging economies, the company has also made significant amount of investments in different markets around the world such as India, Latin America, Middle East and Africa. Discussing on these lines, it is important to bring into focus that the company has made some significant strategic investment in the Indian market. In the October of this year, the Hilton Worldwide has 40 properties in Latin America, 8 properties in Indian and 56 properties in Middle East and Africa. The Hilton hotel group has also expanded its property portfolio in the Middle East & African market, which is being increasingly counted as an upcoming global market in the recent times. Recently, the company has signed management contracts with local hotels in these regions. The contract signings are part of the market specific strategy of the company to establish 7 new hotels in Middle East & African by the end of 2022. The company became one of the fastest growing hotel major companies in United States and it is expanding the portfolio of business by a compounded annual growth rate of average of approximately 29% since the year 2007. With such astonishing growth over such a smaller period of time the company was able surpass its major competitors. For the previous fiscal the 2011-12, the company opened 170 hotels that had an aggregate 29,400 rooms or accommodations. For the same year, the company signed franchised or management contracts with over 320 hotels with total 62,000 rooms. The management’s exceptional understanding of global demand for hotel industry helped them strategically plan appropriate course of action for further business expansions. Apart from expanding into the emerging markets, the company has also focused on the developed and matured markets of the West. It was able to achieve one of the biggest international pipelines in the industry as well as history with over 860 Hotels and nearly 150,000 rooms. Brief Conclusion On a concluding note, it can be said that because of strong growth prospects of the company in the recent times along with significant strategic investments in various markets around the world, the company makes a very good choice for investment in the recent times. Reference ey.com -1, 2013. Top Thoughts for 2013. [Pdf] Available at: http://www.ey.com/Publication/vwLUAssets/Top_thoughts_for_2013/$FILE/Top_thoughts_for_2013.pdf [Accessed 1 Nov 2013] ey.com -2 , 2013. Global Hospitality Insights: Top Thoughts for 2013. [Online] Available at: http://www.ey.com/GL/en/Industries/Real-Estate/Global-Hospitality-Insights---Top-Thoughts-for-2013 [Accessed 1 Nov 2013] Deloitte LLP, 2010. Hospitality 2015: Game Changers or spectators? [Pdf] Available at: http://www.deloitte.com/assets/Dcom-Tanzania/Local%20Assets/Documents/Deloitte%20Reports%20-%20Hospitality%202015.pdf [Accessed 1 Nov 2013] Standard Times, 2013. Hilton Worldwide Signs Deal For First Hotel In Sierra Leone [Online] Available at: http://standardtimespress.org/?p=710 [Accessed 1 Nov 2013] Business Wire, 2013. Hilton Worldwide Announces Entry Into Georgia with Double Signing [Online] Available at: http://finance.yahoo.com/news/hilton-worldwide-announces-entry-georgia-110000206.html [Accessed 1 Nov 2013] Hiltonworldwide.com, 2011. HILTON WORLDWIDE AT-A-GLANCE [Pdf] Available at: http://news.hiltonworldwide.com/assets/HWW/docs/brandFactSheets/BrandFacts1_HW.pdf [Accessed 1 Nov 2013] hilton-foundation.org.uk, 2012. HILTON IN THE COMMUNITY FOUNDATION [Pdf] Available at: https://www.hilton-foundation.org.uk/documents/hcf_comms_materials/annual_report/2013/ARFinal_06.06.13.pdf [Accessed 1 Nov 2013] Blackstone Group L.P., 2013. Private Equity Portfolio [Online] Available at:http://www.blackstone.com/businesses/aam/private-equity/portfolio/show/all/ [Accessed 1 Nov 2013] Bibliography Hoskisson, R.E and et.al., 2008. 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