HOS801 Strategic Improvement of Operations for Hilton Hotel Assessment 3 Answer
ASSESSMENT THREE: INDIVIDUAL REPORT
As an eminent international brand in hospitality sector, the Hilton Hotel and Resorts is operating with significant success and operational efficiency. There are scopes for the organization to operate with higher level of functional efficiency and corporate strategies. Therefore, the present report has mainly been focused on developing effective suggestions for strategic improvement of operations for Hilton Hotel. The report has considered the areas of internal and external environment, operational functions, competitive advantage and internationalization aspects. Therefore, the main objective of this assignment has been to produce valuable strategic recommendations for the organization.
Hilton Hotels is the US based eminent global brand operating in hospitality sector in both national as well as international level. Conrad Hilton founded the business in 1919 and after 1982; its branch was established in Australia and many other international markets. The organization is operating with considerable success in the Australian hospitality sector, where it enjoys significant benefits of its adopted operational strategies and functional planning. However, in almost all fields of operations, there are sufficient scopes for Hilton Hotel for strategic development by following effective recommendations. Hence, this report has produced strategic recommendations through applying critical analytical skills for development of the organization for over next 12 months. The whole consideration has been made from perspective of opinion of the CEO of Hilton Hotel.
History of the Organization and Strategic Development
Hilton Hotel and Resorts is the USA based eminent Flagship brand and multinational hospitality organization Hilton. The company was founded in 1919 and at present, it is operating worldwide along with Sydney, Australia. The company was founded by Conrad Hilton with headquarter in Virginia, US and at present there are 586 Hilton Hotels in 85 countries in different continents (Dardeer et al., 2017). In 1982, following establishment of the Conrad International Hotels, Hilton opened its branches in Australia. Since 1950, this is one of the largest hospitality brands in the world and is eminent for unique consumer loyalty programmes, exclusive discounts and amenities offered like free Wi-Fi, digital system of check in, application of mobile app and keyless entry system. Moreover, in 2018, Hilton opened its seventh hotel in Australia, which was Kalgoorlie Golf Course in West Australia. Therefore, for its strategic development, the hotel introduced application of all these strategies in its operational level.
Though it seems that Hilton Hotel and Resorts is operating with well application of its strategic points of hospitality business, this still has the scopes of improving its premises and developing its product portfolio by adding more innovative range of products (Bogetić et al., 2015). The hotel is operating in 85 markets with considerable success but there is the scope of its image enhancement through differentiation of its products and services from market rivals in national as well as international level (Huaet al., 2018). As part of strategic development, one of the most effective strategies for Hilton will be to attract new market segments as well as retaining the existing consumers. There are also the needs of coming with its primary focus on managing new strategies of operational methods and marketing. However, for strategic development, introduction of the appropriate leadership approach will be a highly necessary requirement for Hilton Hotel and Resorts.
External and Internal Environments
In case of the External environment of Hilton Hotel in Australia, financial and social aspects in national level have greater significance for the business. In 2017-2018, 2.4% economic growth was below expectation, followed by 3% in 2019, giving an indication of likely GDP increase and decreased unemployment (Bartlett et al., 2016). This economic growth in Australia has influenced development of Hilton’s business. Moreover, presence of multicultural society and cultural cohesion has ensured enhanced popularity of the hospitality services offered by Hilton Hotel and Resorts in Australia. This has increased hotel accommodation of Hilton. Apart from this, Australian society is high technology conscious; leading to higher preference of digital technology based service packages and matured service facilities offered by the hotel. Therefore, financial and socio-cultural factors affect operations of Hilton. According to Rosenbaum & Wong (2015), high brand recognition, technical innovation and effective management, systems are the internal strength of the Hotel in Australian market. However, presence of lots of quality hotels and resorts in the market has limited market share of Hilton Hotel and Resorts in Australia.
In case of external and internal environment of Hilton, Australia, this is will be important for the business to enhance its revenue earning by slight increase in the service charge of the hotel. This is important for meeting the capability of 30% tax rate as settled by Australian Government for businesses. However, Hilton Hotel has to improve its operational premises along with adding innovative products for differentiating its operations from market competitors. Therefore, product portfolio development and enhancement of service grade will be among the most important requirements for Hilton in next 12 months. Hilton can avail its operations of the advantage of socio-cultural diversity of Australian society and thus, the hotel would incorporate varieties of hospitality services and products for addressing the needs and preferences of guests from different social and ethnic groups in national as well as international level (Langvinienė & Daunoravičiūtė, 2015). Moreover, Hilton would increase application of technologies like automation, Mobile communication, Smart room keys and Near Field Communication (NFC) in its wide range of operations. This will assist the business in attracting larger consumer segments in Australian hospitality market.
For developing internal strengths, Hilton will provide higher range of luxury opportunities and services for customers. Setting up appropriate service classes for high-class individuals and simple packages for middle-class people would add to its internal strong environment. Moreover, Hilton can also arrange packages for attracting working class consumers (António & Serra, 2015). Hilton would also go for establishing hotels in most of the important cities in Australian and different important junctions in various eminent cities in the country. This will help in developing internal environmental strength of its operations.
Strategy in Business, Function and Corporate Level
In terms of business and functional strategy of Hilton Hotel and Resorts in Australia, the hotel is focused on market development in its existing markets of operations in the country. While operating in total seven areas in Australia, Hilton has adopted the functional strategy of ‘Plan to Win’ through offering exceptional guest experience and consistent improvement of its operations. The business and functional strategy of the business involves strategic approaches for consumer relation development and relationship development with local suppliers (Suhardjanto et al., 2018). However, a type of cost leadership strategy has been adopted by Hilton, which is presently affecting total revenue generation of the business due to decreased efforts for quality improvement. In addition to this, as part of effective corporate strategy, Hilton Hotel and Resorts has adopted Expansion strategy and Adaptation strategy in different cities in Australia. The main motive of the hotel has been to expanse throughout Australia amidst growing economics. Adaptation strategy has assisted the organization in adopting standard practices all over the national market.
However, Hilton Hotel has the scopes of implementing following recommendations for developing its overall functional and corporate strategy in Australian hospitality sector. As part of its current strategy of market development, Hilton can adopt the strategy of aggressive marketing and bringing change in physical image of the hotels for making these more appealing to customers according to the market trends. With regard to its operational strategy, Hilton will focus on providing a combination of quality accommodation, aesthetic experience and exceptional guest service. This will be effective in attracting national and international customers in the hotels in Australia. Moreover, as the part of its corporate strategy, the hotel can devise strategies for balancing the interests of employees, suppliers and franchise owners (Altinet al., 2016). This will be very important for Hilton that it would concentrate on developing string brand loyalty to its customers. With this regard, implementation of environment friendly operational practices will be of specific advantage for Hilton as hospitality consumers in Australia and also the international customers have become highly environment conscious. However, this will be very effective to move its marketing strategy from ‘Consumers Served’ to ‘Consumers Heard’.
Competitive Advantage and Sustainability
For Hilton Hotels and Resorts in Australia, the main sources of competitive advantages have been its unique service philosophy, pre-defined brand promise, application of experienced sales and marketing team and capability of catering to a number of guests ranging from 100 to 10,000 (Dardeer et al., 2017). However, in its competitive advantage, active efforts by Hilton for ensuring sustainability and CSR approach in its business, has been another addition.
However, for developing competitive advantage, Hilton would focus on developing strength of its relationship with different Travel Consortia, Corporate and Travel Management Organizations in national and global level. Apart from, meeting incentives, event organizing and arrangement of Tourism Events and Conferences might be very effective for Hilton’s competitive strength development in Australian hospitality. In this connection, as opined by Kim et al., (2017), the management of Hilton Hotel and Resorts can develop a special team for focusing on Social Events and Weddings programmes to be arranged in the hotels, which will help in immediate enhancement of competitive edge of it in market. Hilton already is arranging effective Customer Loyalty Programmes that can achieve higher success through arranging Inner Circle Programmes for offering unmatched experience, service and recognition to its loyal guests. This type of programmes would involve special offers, benefits and signature experience to customers.
For achieving success amidst intense rivalry in Australian hospitality market, Hilton can incorporate the services like Therapy, Signature Treatments, Aromatherapy, Yoga and Meditation as popularity of these is ever rising in international markets (Chan & Hsu, 2016). The guests would treat this as incredibly unique services that are rare in other hotels or resorts in the market. However, for developing its contribution to sustainability, closer adoption of CSR policies is required to be implemented by Hilton. The hotel might adopt the strategies of investing in energy consumption reduction and use of recycles materials in relevant areas. All these will help the hotel in developing its overall competitive strength and sustainability efforts.
Impacts of Acquisition and Mergers, international strategy and alliances
Merger and Acquisition has significant impacts on business development of Hilton Hotel and Resorts. During 2014-2016, Hilton Hotels eyed over $6.3 billion merger in case of the Hilton Hotels and Restaurants throughout North America, UK and Europe. This international merging operation resulted into a steady 12.1 % increase in share of Hilton Company. This enhanced its presence in EU, UK and USA simultaneously. Moreover, according to Dardeer et al., (2017), Hilton has almost 2300 hotels owned, merged and acquisitioned by it in global level including in Australian hospitality. Moreover, as part of its international strategy, in 2018, Hilton purchased La Quinta Inns & Suites in $1.95billion along with signing good number of alliance deals with Starwood, AccorHotels and Marriott in between 2016 and 2019.
However, in case of implementation of merger and acquisition operations as part of its internationalization, Hilton Hotel and Resorts would consider its potential partners. Performing thorough investigation of the efficiency, strengths and business strategies of the selected business partner will be important for Hilton (Kandampully et al., 2018). This will also be important for the hotel to consider the skills of the employees of prospective business partners. Apart from this, in case of business internationalization through acquisition or merging or alliance, Hilton will consult the current clients and prospective customers of the selected or preferred companies. Considering the future viability of the company will also be important for Hilton. Though Hilton has ensured merger and acquisition of lots of hotels, restaurant and resorts in past decades, the business would take care of the aspects of close consideration of the exact vision and objective of the merger or strategic alliance development. Thus, these recommendations are to be followed by Hilton while employing efforts for international business development of the hotel.
Strategic Implementation and Importance of Entrepreneurship and Leadership
In case of strategic implementation of entrepreneurship, the Hilton has accomplished many entrepreneurial efforts for last 20-30 decades. Dardeer et al., (2017) has described Hilton as an ‘entrepreneurial company’ due to its entrepreneurship achievements in areas of developing coast-to-coast hotel chains, installing advanced technology in resorts, earning the status of ‘Airport Hotel’ and certificate of Green Seal environment. Moreover, the organization has been successful in establishing multi-hotel reservation system due to effective leadership implementation by the management. Bogetić et al., (2015) has stated that Hilton in Australia and in most of the international markets follow an effective combination of Development and Situational leadership traits, which has assisted in quick response to unmet market requirements by the business.
However, for effective implementation of leadership, the management and CEO of Hilton needs developing the strategy for attracting and retaining loyal guests as a part of its internal strength of management. The entrepreneurial approach by Hilton can achieve higher success through developing specific branding strategy for capitalizing commitment of the business for measuring consumer satisfaction over time. However, Hilton might consider application of the theory of leader-member exchange and transformational leadership for emphasising on the relationship development approach between management and followers in the organization (Divisekera & Nguyen, 2018). Apart from this, effective following and implementation of leadership in Hilton Hotel and Resorts needs proper object oriented application of open conversation and communication between the followers and leader. The main objective of entrepreneurship by Hilton in future will be to develop connectivity between innovation and strategic decision making for future operations of the company.
Organizational Structure, controls and Corporate Governance
The organizational structure of Hilton Hotel and Resorts in Australia can be considered Divisional, where three specific divisions are there, Ownership Division, Timeshare Division, Management and Franchise Division. However, this structure is entirely hierarchical and the similar organizational division is also followed in its international markets. Self-sufficient providers by the Hilton group worldwide control and manage the Hilton Hotels in Australia and other global markets. In case of corporate governance, the Hilton Hotel maintains four major divisions that involve Code of Conduct, Guidelines, Management and Ethical Code.
However, the Board of Directors of the Hilton Hotel would develop some specific strategies relating the smooth functioning of organizational structure and flexibility to certain extent will be added with this context. Thus, the management of the hotel will be focused on developing certain level of flexibility in the overall divisional hierarchy system in its organizational functioning (Rosenbaum & Wong, 2015). This will help in flexible arrangement for decision making under emergencies or needs arsing in the hotel. Moreover, for further strengthening the aspects of corporate governance, the CEO and senior management would take specific care of composition of board, ethical process of selection of the directors and chairperson and executive compensation. However, for incorporation of higher level of transparency and clarity in the whole process of corporate governance, the BOD and Nominating Committee of Hilton Hotel would conduct an annual self-evaluation for determining functional effectiveness of the process.
The entire discussion above directs towards many different perspectives of business operations and associated strategies followed and implemented by the Hilton Hotel in both Australia as well as international markets. However, apparently, there are wide range of scope for strategic development in operational procedures and decision-making aspects for the eminent hospitality organization in almost every field of its operations. The overall discussion has produced significant level of recommendations for improving its business, functional and operational environment associated benefits. These recommendations would be very effective in developing corporate governance, ability of mergers and acquisition, alliances and overall competitive advantage for Hilton Hotel.