Strengths
Among Hilton Hotels Corporation's strengths is its diversified product portfolio that comprises of resorts, restaurants, holiday homes and hotels. This diversification is also available in terms of price. An advantage of such a diversified portfolio is that it cushions the firm against economic downturns as it has services available for different levels of disposable income. In addition, this portfolio helps the firm mitigate service failures by a single brand, as other brands are perceived by the market independently. Hilton's global leadership position gives it superior bargaining power in regards to suppliers; furtherance, it ensures the firm enjoys economies of scale in its operations. The corporation has invested in innovative technology, which gives it a competitive advantage in customer experiences and efficient business processes. Hilton Hotels has a focused strategic growth plan aimed at consolidating its presence in international markets, which will subsequently help it tap on growing tourism and hospitality sectors in emerging markets, for example China and India. The company's loyalty program is globally recognized and is available for its 17 million members. This program ensures customer retention and a strong brand loyalty for the firm.
Weaknesses
Among Hilton's weaknesses is its over-reliance on the US market; 85% of the corporations revenue is derived from this country, which makes it vulnerable to fiscal downturns in this market. Dynamic markets such as China, Russia, India and Vietnam are experiencing a steady rise in real estate prices; this impedes on the corporation's ability to move some of its low cost brand to these regions because of lack of financial feasibility. Another limitation in Hilton's operations is that it has a weak cost structure, which means its costs are relatively higher than those of its competitors are. Consequently, this attribute implies that if Hilton were to achieve similar revenue with its competitors, its profit margins would be lower. By over-focusing on the US market, the corporation initiated its global expansion program relatively later than other competitors did (MarketLine, 2015). Therefore, these firms have achieved market dominance and considerable brand loyalty in some of the regions Hilton is targeting; this increases the marketing and promotion costs needed by the corporation to penetrate such markets. This corporation has remained a private-owned entity, which means the decisions of its majority shareholder have a significant influence on its strategic direction. In addition, Hilton’s global operations are hard to standardize because of varying regulatory policies in each country.
Opportunities
Hilton Hotels Corporation has a significantly high potential in emerging markets where competitors are yet to establish a strong brand presence. Some of these markets include African countries that have a fast growing middle income, which implies increased disposable income to spend on leisure and travel. The corporation’s superior use of technology gives it an opportunity to harness digital marketing platforms and utilize information systems that offer an improved customer experience. The projected economic boom in the hospitality sector is a growth opportunity for Hilton, especially with its global expansion strategy (Furbay, 2015). The brand has emerged as an innovator in designing and delivery of customer services; this gives it an opportunity to develop differentiated products that give it an edge in the market. Additionally, these new services will assist the brand to diversify its customer base and thus reduce risk of low revenue when a single niche is involved. There has been a shift in consumer demand with an increased focus on unique travel experiences; this shift creates an opportunities for operators in the hotel sector to formulate distinctive services, properties and brands. Globally, companies in the hotel sector are keen on maintaining high-profile brands, and Hilton is focused on achieving this through the development of the Waldorf=Astoria Collection. The increased uptake of technologies and emphasis on international branding have increased organizational reliance on the internet, with establishments continuously accentuating online presence to increase customer service efficiency and reduce their expenditure. Green consumerism is a rising trend in global markets, as tourists become keen on interacting with hotels that use sustainable practices and that engage in environmental conservation campaigns (Bohdanowicz, Zientara & Novotna, 2011). The corporation can utilize this trend to create a brand that aligns with global sustainability frameworks. A similar consumer trend is wellness and health awareness; as a premium service provider, Hilton is well positioned to gain from this growing demand.
Threats
Economic turbulence is a major threat to Hilton Hotel's operations in the US and across the globe. Similarly, political instability, especially in developing countries, impedes on the corporation's operations and may result in damage to property and loss of human resource, thus negatively affecting its balance sheet. The entry of other brands in the international market has increased the intensity of competitive rivalry, and this may result in the firm losing market share. Arguably, Hilton Hotels Corporation has recorded stagnated growth, which may significantly impede on its expansion strategy. Furtherance, there has been increased competitive pricing, which has a high probability of reducing the company's profit margins in an attempt to maintain an edge in the market (MarketLine, 2015). The presence of substitute products in the market has a negative effect on Hilton's ability to increase prices, as clients can easily switch to these alternatives. The volatility in consumer tastes is a threat to the corporation; it relies on prediction of consumer trends and thus a wrong forecast would have a high cost implication. In addition, operation costs in the hotel sector can fluctuate significantly and thus Hilton Hotels has to strategize for scenarios where its expenses are extremely high; this cautious planning slows down growth. Hilton Hotels has relied heavily on business travel, meaning that the current decline in this travel coupled with increased pressure to reduce costs poses a considerable threat to the sustained growth of the brand. An individuation in client choice also poses a significant threat to the corporation, as each consumer wants a unique accommodation experience, which has fostered growth of independent hotels.
References
Bohdanowicz, P., Zientara, P., and Novotna, E. (2011). International hotel chains and environmental protection: an analysis of Hilton’s we care! programme (Europe, 2006–2008). Journal of Sustainable Tourism, 19(7), pp.797-816.
Furbay, S. (2015). US Hotel Supply Growth still in check with Demand. HVS Global Hospitality Report, pp. 1-5
MarketLine (2015). Hilton Worldwide Holdings Inc. Hilton Hotels Corporation SWOT Analysis,
