Strategies for Long-Term Business Success

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8th Feb 2020 Business Strategy Reference this

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 Businesses all want to be successful and have long-term success. For any company to be successful there are steps they will have to take. There will be strategies put in place in which they will follow on the corporate-level and the business-level. In making these types of decisions, a company will have to take in consideration their competition and the type of behavior they will take against you to be more competitive. In the hotel business, all hotels seem to copy each other’s strategies and take the opportunity to take the strategies a little further to convince the customer to use their specific facilities. Hilton is no exception. Hilton’s competitors all seem to follow each other and try to outdo one another. Even though the competition is fierce, Hilton has continued to enlarge their travel opportunities to millions of travelers. With the continue growth of new properties that Hilton continuously open, they continued to have consecutive years of record net unit growth, (1). Even though all hotels seem to copy each other, Hilton strives to do it better than the rest.

Business-Level Strategies

 There are five business-level strategies that companies choose from to help them to get the competitive advantages over other companies. They are cost leadership, differentiation, focused cost leadership, focused differentiation and integrated cost leadership/differentiation, (2). Hilton chooses the differentiation strategy for them to get a competitive advantage over their competitors. Hilton’s CEO states “We are very focused on having pure-bred brands that are leaders in their individual segments that have clearly defined swim lanes, that have premium market share and as a consequence, help us drive industry leading organic net unit growth. That’s our strategy. Others have taken different paths…, (3). Hilton also states that service

differentiation is the cornerstone of their brand. The company feels that they are different in the areas of quality, maintaining the highest standards and how they integrate their technology systems that is utilized at all of their properties. Hilton business-level strategy also depends on their global expansion and how they open Hilton hotels outside of the U.S., adding them to their portfolio, (3). Hilton goes out of their way to make sure every one of their customers have an exceptional experience by making sure that their stay with them is a success by offering every type of options that are available whenever and wherever possible. Hilton uses up to date technology to ensure that they can implement their strategies by making sure that all of their properties have the advanced systems that allow customers to be able to book online, they have implemented the digital key which allows the customer to connect to rooms, order room service, control lighting and temperature and message the front desk if needed all by the palm of their hands using their mobile telephone, (4). Hilton also has the Travel with Purpose Program that is definitely woven into their strategy helps empower communities for positive change by committing to divert waste from landfills through reuse, recycling with the hope that the communities will see the value of them while protecting the environment, they have also created other opportunities by investing in current and future employees by offering jobs and life skills training, (1). By choosing the differentiation strategy, Hilton makes sure they are setting themselves apart from their competition by making sure they are all about their customers and treating them right all the time. If Hilton continues to make sure the customer is always treated right , then this strategy will be important to their long-term success.

Corporate-Level Strategies

 Every business needs to try to diversify their portfolio if they want to compete on a higher level to become a successful company that wants to last a long time. Corporate level strategies are created and implemented within a company to compete in different product markets, (2).  Diversification has played a major role in Hilton’s growth. Besides their Hilton Honor Program, they have the Sustainability Project which is part of their LightStay initiative that tries to reduce energy and water use out in all of their hotels, Operation Opportunity Commitment Project is a

program that supports the U.S. veterans and their families by hiring them and ensuring that they have great careers with Hilton and they have the Open Doors Pledge Project which is a program that targets the young people all around the world that is unemployed and create opportunities for them, (1). Not only does Hilton has hotels under their brand but they have over 100 non-Hilton brand hotels.  Out of all of Hilton’s brand and non-brand hotels, DoubleTree has been driving the company sales. DoubleTree has doubled their sales for over four years. In the area of technology, Hilton’s mobile initiatives was created to customize customers’ experiences. Hilton’s customers can use their advanced technology to be able to book their rooms  from their mobile phones. DoubleTree created a YouTube channel where customers can upload their photographs and videos from their specific hotel locations. Hilton also uses price sensitivity at some of their locations where they make the decision whether to offer full-service vs limited service that makes their hotel location affordable. From full service to limited services, from high-end luxury to their mid-priced hotel rooms will keep them relevant. Hilton will keep themselves visible in the urban areas as well as out of town spots with focusing on technology innovation will keep them on the track for long-term success, (4).

Competitive Environment

 Marriott seems to be the most significant competitor to Hilton because both are similar on how they want to treat their customers and how they operate. The main criteria to compete among someone like Marriott is your locations you choose, the quality of your rooms, the service has to be top notch and how you compete globally. Hilton has managed to standardize their service, integrated their IT systems and maintain to keep their focus on their customer satisfaction, (5). Besides that, the competition gets really tight because they both try to make their facilities more appealing to gravitates customers to their location. Hilton tries to decorate the outside and inside of their hotels to adapt to the culture where the property is located. They both have multiple brands, a lot of properties and most of all, they both have a rewards program, Marriott is called Marriott Rewards and Hilton is called Hilton Honors. Comparing the two rewards programs, they both earn points the same way, but Marriott points are worth more when redeeming them than Hilton. Marriott published their awards chart whereas Hilton does not. As a customer that makes you suspicious of how your points are actually being rewarded. What Hilton offers in amenities are out in the open, for instance, Hilton’s rewards offers free breakfast at all their properties, whereas Marriott’s rewards program only offer free breakfast at their Courtyard properties. In the market segment, Hilton has only 41 hotels in the luxury market compared to 143 luxury market for Marriott. In the upper upscale market, Hilton has 791 hotels compared to Marriott’s 776 hotels. In the upscale market, Hilton has 1,074 hotels compared to Marriott’s 1,934 hotels. In the upper midscale market, Hilton has 1,806 hotels compare to Marriott’s 894, (6). Even though it depends on what type of market you prefer, Marriott has a habit of placing several different levels of their properties right next to each other which gives a little advantage over Hilton when you are in a specific location looking for a place to stay. In evaluating both hotels, they are both very similar and it will depend on the availability of both hotels, but for Hilton, they believe that their position as a multi-branded hotel that also offered franchisee with a system-wide guest honors platform, they will succeed as the largest geographically diverse hospitality company in the world, (1).  They both are likely to be very successful in the long term.

Market Cycles

 Companies want to keep their competitive advantage if possible and there are three rates of speed in which companies chooses to compete, these are standard-cycle, slow-cycle and fast-cycle. A company take actions and response in competition to each other and have to be aware of the cycles in which their products and services are in. A standard-cycle is when a company’s product or service is reasonable protected, and it take a reasonable amount of time to duplicate and a slow-cycle is when a company’s product or service is protected for some time and it will cost you some money to imitate. A fast-cycle is not protected and it can be duplicated quickly, (2). Hilton operates in a fast-cycle markets. Hotels copy each other to convince customers to chose them. For instance, Hilton Honor’s program, which a lot of other hotels have rewards program, try to be better than the others by making their options better. An example is Marriott only offers breakfast to a few of their hotels and Hilton decided to offer free breakfast at all of their locations.  They both have credit cards and one would offer a little more than the other. For instance, Hilton credit card has a higher interest rate than Marriott, but Hilton does not have an annual fee and Marriott has an annual fee. Hilton’s credit card earns more points on purchases than Hilton and gave more annual perks. They both overall is good, they just are different in what you can earn in each category, (5).

 According a Best Hotel Rewards Program, (6), Marriott Rewards rank number 1 and Hilton Honors ranked number 11. The program analyzed the benefits of each reward programs against the average number of stay to get the results.  Even though Marriott ranked better than Hilton, there were some key areas where Hilton did better than Marriott. Hilton’s Elite status qualification where clients can have the ability to earn points on each night where Marriott could not because you had to stay a certain amount of time.

 The brand offerings for both hotels are even similar in comparing. Marriott has 19 brands in about seven service categories. Their luxury hotels with the highest service level are the Ritz-Carlton and Bulgari Hotels and Resorts. Their other luxury hotels are JW Marriott Hotels and Resorts, Renaissance Hotels, AC Hotels and Marriott Hotels and Resorts. They also have two vacation clubs type hotel that is called Marriott Vacation Club and Grand Residences. To keep the business travelers in mind they have the Courtyard, SpringHill Suites and the Fairfield Inn and Suites and if the business travelers is going to stay a little longer, they have the Residence Inn, TownePlace Suites and Marriott Executive Apartments so the travelers will feel at home rather than just a hotel space. For Hilton they have 10 brands in several service levels. They have the luxury line that includes the Waldorf Astoria Hotels and Resorts and the Conrad Hotels and Resorts. They also have their vacation line called the Hilton Grand Vacations. They have for the business travelers in mind they have the Hilton Hotels and Resorts, DoubleTree, Embassy Suites and if you are staying longer, they have the Hilton Garden Inn, Hampton, Homewood Suites and Home2Suites, (7). They both have variety when choosing what hotel you would want to stay and they both will have long-term success. It will come down to your style when choosing a hotel. For me I like Hilton, I loved their style and comfort. 

References

  1. 2017 Annual Report. (2018, February 14). Retrieved from Annual Reports.com: http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_HLT_2017/
  2. Strategic Management and Strategic Competitiveness. (2013). In M. A. Hitt, R. D. Ireland, & R. E. Hoskisson, Strategic Management: Concepts and Cases: Competitiveness and     Globalization (pp. 3-32). Cengage Learning
  3. Hilton International Holding LLC. (2018). Retrieved from Hilton: https://www.hilton.com/-en/corporate/
  4. Johnson, K. (2017, June 26). A Hilton exec explains how technology keeps the hotel chain relevant after nearly 100 years. Retrieved from Business Insider: https://www.businessinsider.com/how-technology-keeps-hilton-hotels-relevant-2017-6
  5. Ewen, N. (2018, April 21). Comparing Hilton Honors and the New Marriott Program. Retrieved from The Points Guy, LLC: https//thepointsguy.com/guide/hilton-honors-vs-New-marriott-program/
  6. Best Travel Reward Hotels 2018-2019. (2018). Retrieved from U.S. News & World Report: https://travel.usnews.com/rankings/travel-rewards/hotel-rewards/
  7. Jarman, B. (2018, November 13). Marriott vs. Hilton – Where Should You Stay During Business Travels? Retrieved from business.org: https://www.business.org/hr/benefits/Marriott-vs-hilton-where-do-you-stay-during-business-travels/

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