Hilton Hotels & Resorts: A Case Study and Global Market Analysis

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Hilton Hotels & Resorts is an international chain of full-service hotels and resorts. Currently, Hilton H&R is one of the worlds largest and most recognized hotel brands in the world with more than 540 hotels and resorts in 78 countries (Hilton, 2013). Founded by Conrad Hilton in 1919, Hilton H&R is owned by Hilton Worldwide and Forbes magazine ranked as the 38th largest private company in the world in 2010 (Forbes, 2010). While the specific ranking and revenue of the Hilton chain may be debatable from source to source, what is not debatable is that Hilton is one of the most dominant brands in the world. Limited to just the United States and other developed countries during its growth, Hilton dominated the hospitality industry in those countries. Competitors seeing the success of the industry were quick to enter and mimic the innovative giant. As the domestic markets became saturated with competition, Hilton H&R quickly took advantage of the globalization phenomenon and began expanding to other lesser-developed countries such as China and Myanmar. As these lesser developed countries spring into modernity as globalization continues to spread, Hilton looks to continue its capitalization on these market opportunities. With the rapid advances in modern technology between the 20th and 21st centuries, the entire hotel industry has changed and these changes impact the actions taken by management officials in organizations like Hilton. 

While it may sound easy to open up a massive luxury hotel on the beach of any country and expect it to make millions, it is, in fact, a difficult and complicated objective. The numerous, not easily identifiable considerations that need to be made in order for a hotel operation to be managed successfully is what was newly learned through this case study. Aside from the physical building of a hotel in another country, performance management also has to cover the recruiting, training and effective performance of multi-cultural and talented individuals capable of maintaining the standard of service Hilton H&R is known to provide. A really nice hotel room is meaningless if the people that operate the front desk are not culturally sensitive and offend the guests unknowingly. On the other hand, recruiting employees from the country of operation may be problematic because they, living in a lesser-developed country, may not understand the complexities and sophistication of providing high-quality American product and service. Finding and retaining talented and effective employees in 540 hotels located in 78 different countries proves to be more challenging than initially expected. Not only do the employees have to be culturally aware, but the practices and procedures of the hotel must also be culturally sensitive. For example, where it is common for women to bathe in a pool, in the Middle East, even though modernity is emerging in the region, precautions may need to be made such as separating male pools from female pools. 

Another culture aspect to be aware of is general resentment of western government and government influenced corporate giants coming in and systematically taking over the country. These ideas can be fuelled by horror stories of Gap and Wal-Mart abusing child and women labor in China or McDonald’s and KFC using genetically enhanced ingredients in their products internationally due to lack of regulation. Hilton Worldwide, on the contrary, has managed to keep positive relations with the public as an article on the news website “Emirates 24|7” explains. In the U.A.E., Hilton has gone on a hiring spree to fill in 1,500 vacant positions for new hotels rapidly sprouting up in the newly developed countries. “On the salaries and benefits front, the hotel chain promises its employees a rewarding career” (Kapur, 2013). With this type of open contact with the public, hardly seen by any other corporate giant, can generate a different appearance for the western giant in a new territory. But just like the company needs to be mindful of the culture it is serving, it must be mindful of the employees allocated to serve that specific culture. A highly educated professional accustomed to living in the developed west may experience what this case study notes as a “culture shock” when they move to a country to work at a hotel like the Hilton. Different temperatures, customs, and products available may be different in other countries than the developed west, and at different prices. A dramatic change in the employee’s lifestyle may drastically affect the quality of work from that employee, regardless of position. While it may have minimal noticeable effects considering the soap restocking position, it may have dramatic effects considering the top management positions. After all, why would top-notch educated quality individuals give up living in America to work in Thailand? They will obviously require significant compensation. These are just some of the many things to be considered when expanding a hotel, or any business internationally.

The most interesting part of the case study was seeing how a big multinational corporation like Hilton H&R manages such a prestigious brand name around the world in such a consistent and professional manner. The article described business performance management involving 1. The creation of strategic goals by specifying key performance indicators meaningful to the organization such as percent of rooms filled and 2. Supporting the subsequent management of the performance to these goals. The simplicity of this business performance management model is most intriguing because of its simplicity yet its applicability to any Hilton hotel around the world. This leads to the lesson that in order to be successful in a global market with such a widely diverse consumer base, the global management strategies have to be broad and all-encompassing in order to adapt in each market. Columbus Business School professor Nelson Fraiman discusses why some big businesses have failed in their international expansion. He states in the article “Large firms like Wal-Mart have gone to countries like Brazil and failed... mainly because of not understanding local culture. The U.S. can become better at learning about people and working together as equals, rather than imposing a series of systems that work here, but don’t necessarily work there” (Blackman, 2013). This links back to the evidence in the previous paragraph of Middle Easterners fearing big western corporate giants coming in and damaging their country either explicitly or implicitly. Smart companies like Hilton H&R uses their specific business performance management to connect with their foreign customers through press releases promising positive economic benefit to the community for allowing them to provide their services in that area. With such a positive expression of their objectives, a business can enter into any culture with less risk of failure. This is an important lesson that big corporate giants like McDonald’s and Wal-Mart need to learn if they wish to remain successful in this increasingly integrating global economy.

As the global economy is becoming increasingly interconnected, businesses realize that they too must use globalization to their advantage if they wish to remain afloat in this competitive global market. Of course, no business wants to move to Angola, where consumers do not have money to afford luxuries such as the Hilton. Instead, companies like Hilton H&R seek booming economies such as that in the Emirates, and more specifically in China. As China rapidly develops and modernizes, its citizens are also modernizing and enjoying a higher standard of living. Not to mention China is one of the hottest centers for businesses looking to expand, those business owners are going to need to stay in hotels and meet clients in these areas. China has long been appealing to business owners worldwide because of cheap labor and operating costs. But as the country modernizes and develops, these labor and operating costs have been steadily increasing; bringing challenges and pressures to business owners and operators (Wing, 2012). As prices in China begin to rise simultaneously with their development, it is predictable that business owners and operators will seek business opportunities in even cheaper countries. Nonetheless, the article remains hopeful of industry growth due to a rapidly growing middle class. 

References

"A LEGACY OF INNOVATION." Hilton Hotels & Resorts. Hilton Worldwide, n.d. Web. 29 May 2013. <http://www3.hilton.com/en/about/index.html>.

"America's Largest Private Companies." Forbes. Forbes Magazine, n.d. Web. 29 May 2013. <http://www.forbes.com/lists/2010/21/private-companies-10_rank.html>.

Blackman, Stacy. "Why Wal-Mart Failed in Brazil." CBSNews. CBS Interactive, n.d. Web. 29 May 2013. <http://www.cbsnews.com/8301-505125_162-31041902/why-wal-mart-failed-in-brazil/>.

Kapur, Shuchita. "1,500 Jobs Available with Hilton UAE: Details Here." Emirates 24/7. N.p., n.d. Web. 29 May 2013. <http://www.emirates247.com/news/emirates/1-500-jobs-available-with-hilton-uae-details-here-2013-03-24-1.499701>.

Yang, Wing. "Challenges, but Room for Expansion in Hotel Industry." Economy. ChinaDaily, n.d. Web. 29 May 2013. <http://www.chinadaily.com.cn/china/2012-11/07/content_15884153.htm>.