MKTG240 Essay: Tourism, Hospitality, And Events Management. (70 Characters)

The assignment is a study of an international hotel company operating in New Zealand and its contribution towards tourism development, both local and national. The assignment takes the international luury hotel chain Hilton Properties as the base of the study. The paper starts with a background study of the hotel chain followed by a study of its business model(franchising and management contract). The next sections delve into its transitional identity followed by its products. The subsequent sections deal with  customer behaviour from the point of view of Hilton. The next sections deal with impact of technology on hotel industry, particularly Hilton and future markets. The last section deals with future of the hotel industry emphasising on the prospect of the industry in New Zealand.           

Hilton Hotels and Resorts is a global brand of hotels and resorts which has its operation in six continents and known luxurious hospitality. Founded in 1919 by Conrad Hilton and present in over eighty five countries, Hilton Properties has its headquarters in Virginia, the United States of America. The hotel chain operates globally through franchisee model or through independent operators. Hilton Hotels and Resorts is a public company listed on New York Stock Exchange and its stock index stands at 65.34 as on May 25, 2017 (Stock Quote, 2017).

The mission statement of the international hotel chain is to be the biggest name in the hospitality industry which aims to create memorable experiences for guests. The hotel group provides opportunities to its employees to grow professionally. It seeks to maximise the value of the shareholders and owners. The international chain hotel chain strives to contribute towards social development thought its operations (hiltonworldwide.com, 2017). The international chain attracts the rich upper class society which spends a huge amount of money in the tourist spots. Thus, Hilton Properties help the development of local and international tourism by attracting the rich tourists to places. This way it helps the stakeholders local government and artisans generate more revenue by selling services(like passport) and goods(local handicrafts) to these rich tourists.

Franchisisng is a model when a company allows a third party identity to conduct business and market its products using the former’s brand name. The franchisor enters into contract with the franchisee on the basis of contract which defines the areas like profit sharing and provision of training to the latter’s employees.

A hotel management contract or management agreement is a model where a hotel owner enters into contract with another company to run a hotel. The owner unlike a franchisor who enjoys full control over the franchisee, enjoys limited control on the operations of the third party company. The hotel owner usually enjoys the rights to control only on the basis of the quality of operations and assumes lesser business risks than in the franchisee model (Ivanova & Ivanov, 2014).

Hilton Hotels and Resorts acts through management contract model by entering into agreement of running its hotels with other companies, mostly hospitality companies. The international hotel chain has a strong brand equity which allows it to partner with several companies worldwide. Hilton Properties allows the companies to enter into management contract to start their hotel business using its high brand value and market share. The management contracts extend up to more than thirty years with management fees as low as three to five percent of the gross profits. An example for such a management contract is the partnership with Fideicomiso Santa Marta Hotel to build and operate a new property of Hilton Hotels and Properties in Santa Maria, Caribbean Islands (newsroom.hilton.com, 2017).

Management contract model allows Hilton Properties to extend its business into new markets which contributes to its international competitive advantage in enjoys in the hospitality industry. The management contract followed by Hilton Properties is so successful and profitable that it is adopted by many hotel chains all around the world today. It allows the international hotel chain to hold properties luxurious hotel properties all around the world and control them bearing minimum business risks (Noordzy et al., 2016). The management model stands on sustainability policies of Hilton Properties and concentrates on local acquisition of resources. The model allows Hilton Properties to diversify its operations all around the world with its prime focus on the emerging global economies of India and China. The hotel chain has a very strong financial base and knowledge in real estate management which enables it to control its properties owned through management contracts (news.waldorfastoria.com, 2017).

Hilton Hotels and Resorts is a transnational hotel company with its headquarters in Virginia, the United States of America. The company’s flagship chains of luxurious and premium chains of hotels are present in North America, Asia, Europe, South America and Africa. The company owns several luxurious brands of hotels like Conrad, Curio and Hilton Grand Vacations (Hilton Hotel and Resort Locations, 2017).

The need for managing across borders:

The need for managing across borders arise from the need to sustain in the face of stiff competition and retain high position in the market. An analysis of the macro environment of Hilton Properties shows that the company is under continuous threat from other luxurious chains of hotels like J W Marriot. Global operations help the hotel chain to operate at economies of scale in order to reduce its expenses and maximise its profits.  It also helps the hospitality companies to diversify its risks and cater to the needs of the stakeholders. The global operations help Hilton to diversify its business risks and earn huge revenue required to follow CSR initiatives(Martínez, Pérez & Rodríguez del Bosque, 2013).

Difficulties of Managing Across Borders:

Sustainability and Green Hospitality:

There has been an increase in emphasis on sustainability in the hospitality which requires the international hotels chains like Hilton Properties to concentrate on three Ps, profits, people and planets. Sustainability has before a part of law and mandatory for all the companies. It requires Hilton Properties to acquire sustainable raw materials from the local suppliers which may not be up to its quality standards. This faces the company the difficulty to maintain its standard of offerings in all its branches spread worldwide and promote development of the local suppliers by acquiring products from them simultaneously (Jones et al, 2016).

Increasing in Labour Issues:

Baum (2015) in his work pointed out the changes in the labour market which are leading to increase in labour expanses making it more difficult for the international hotels to operate globally. The author in his work states that there has been increase in the number of people working in the hospitality industry by 5.4 percent. The educational qualifications of the people working in the hospitality sector have improved to post graduation and more specialised qualification. This requires the international chain of hotels pay them more salary which results in large expenditure. Hilton Resort employs hundreds of employees in the whole world which means it has to bear this increase expenditure towards employee salaries. This poses difficulty to the international hotel chain to operate in the whole world.

A publication by International Labour Organisation state that seventy percent of all hospitality graduates leave the industry and the sector experienced a turnover rate of more than fifty percent. The analysis shows that Hilton Properties face difficulties in operating globally because it affects the quality of service the hotel chain intends to give to its customers. The analysis of both the problems show that increase in salary and lack of trained manpower capable of retaining in hospitality industry places huge pressure on the financial capital of the international hotel chain (Ahmad & Daud 2016).

Multicultural Issues:

 Hilton has its operations in all the major markets in the world which brings it in contact with customers and employees from diverse cultures. This puts immense difficulty on the American hotel chain to blend the perceptions of multiple cultures in its operations while serving customers. For example, an American customer view direct eye contact of the receptionists as positive sign while a Chinese may feel uncomfortable. This requires the international chain to train its staffs to adapt to various cultures which again attract huge expenditure (Jin-zhao & Jing, 2009).

Hilton Properties is under continuous pressure of matching the industry requirements of the customers as per the standard of the hospitality industry. O'Fallon and Rutherford (2011) in their work mention that hotels consider relationship with their customers indispensible part of their operations. This necessitates the hotels to train their staffs and operate in the highest standard of performance. Hilton Properties provide training to its staff members to ensure that they are skilful and adept at building relationship with the customers and provide them high quality services.

The organisation acquires its supplies from the sustainable sources to confirm to the emphasis on sustainability in the hotel industry. The properties are constructed or chosen keeping in the comfort and facilities of the guests into consideration. The managers control the operations in order to increase the pleasure of the guests and increase their satisfaction (Sturman, Corgel and  Verma, 2011).

Hilton Resort and Properties provide superior lodging experience and services to the guests and is considered as standard in the hotel industry worldwide. The hotel offers high quality cuisine to the guest from all around the world. The company hotel group also sells merchandise like pillow, skin care products and mattresses (Hilton to Home Hotel Collection, 2017).

Hilton Properties exploits a combination of products and services differentiation to attain dominance over the market. It positions itself as an international chain of hotel brand serving the rich who love luxury. The hotel chain provides high end luxurious hotel services to the guests who are ready to spend huge amount of money to afford its services. The rooms and the ambience are kept highly luxurious to suit the lifestyle of the upper class society. The superior services and product differentiation allow the hotel chain to attract the luxury loving rich people and earn huge revenue. The international chain sells down pillows, linens and beddings which also follow the high standard parameters of Hilton. The luxurious services, the comfortable rooms, product differentiation and price differentiation make Hilton Properties a standard in the international hospitality industry.

Cost leadership is the systematic approach of analysing the strengths, weaknesses, financial capabilities and business requirements of a company to form business strategies. These business strategies ensure that the company is able to derive maximum advantage from the market and maintain its competitive advantage.

Product differentiation unlike cost leadership refers to forming product strategies to offer the most ap[ropriate products to customers which generates high revenue for the company. Hilton Properties is a transnational hotel chain which offers luxurious lodging and fooding with world class facilities. It offers premium hospitality to the rich who love and can afford luxurious accommodations and food. The company keeps the prices of its services and products like pillow very high which acts as guarantees for their premium quality. The product differentiation allows the company to maintain high price for the products which lends it cost leadership in the market (Bordean & Borza, 2014).

Hilton Properties is adept at providing superior satisfaction to customers worldwide.  The hotel chain is present in six continents, five hundred and seventy locations to cater to customer expectation. The hotel chain has a deep knowledge about changing customer behaviour and keep on evolving to surpass its own standard of performance.

The hotel chain evolves to cater to changing customer demands and provide maximum satisfaction. The international chain is a leisure,  holiday and official accommodation destination. The inflow of customers in hotels is affected adversely by rise of air prices and visas fares between countries. The hotel chain caters to the upper class customers who are not affected by the rise in air fares or visa charges. Those customers are ready to pay for the expensive food, accommodation and services of the resorts. The hotel chain trains its staffs so that they are able to changing customer demand and ensure customer satisfaction. Hilton Properties does not have active presence in Australia and New Zealand unlike its tough competitor Starwood Hotels owned by Marriott International. The international chain must spread into New Zealand to cater to the customer demands in Australia and New Zealand.

Hilton Resorts is a luxury hotel which is influenced decision making of the customers and management based on variety of choices. A variety of factors like air price, migration charges, economic conditions and competitors’ strategies influence the decision making of the customers. This decision impact the inflow of visitors at Hilton Resorts and impact the revenue generation. Business strategies like shift from management contract to franchisee model, change in prices and competitive strategies also influence decision making process of the customers. Terrorist attacks hit the business of the international chains like Hilton very badly. The internal and external factors have a deep impact on decision making.

Modern technology has a deep impact on the operations of Hilton Properties and helps it to integrate its functions. It implies that the company can reach its customers better using technology and online booking platforms.

Technology is going to be a boon to modern tourism in the future and help the industry identify future demands and requirements of customers. Hilton Properties can use online survey method to know about the future trends of customer demand using social networking portals like Twitter. Customers are increasing demanding environment friendly accommodations with integrated facilities. The hotel chain is bringing about innovation ways of operations using technology as per their changing needs.

Hilton Properties is spreading into new markets to expand its customer base and generate more revenue.

Hilton is expanding into new markets which are vaiable. The hotel chain is eyeing to expand into new markets of Asia, Latin America and should expand into New Zealand. The international market is acquiring new properties to cater to more rich customers.

What is the potential for the luxury hotel market in New Zealand and the Pacific?

New Zealand is a developing economy and a sizeable population of the rich people. The country has a large number of foreign tourists every year who visit the country. The market is very profitable and has a great potential to grow. New Zealand is already an important market for the Marriott Group of Hotels and other international hotel chains. This shows the country has a great potential for luxury hotel market.

Can 5 star hotels compete profitably with 4 star hotels?

Five star hotels can compete with the 4 star hotels in a profitable way because their target group of customers are different. The 4 star hotels attract customers for whom both money and comfort are equally important. These customers prefer affordable properties with good facilities, room service and so on. The 5 star hotels like Hilton serve customers for who are very rich and prefer only luxury accommodations. Thus, 5 star hotels can compete with their 4 star counterparts and both can thrive profitably.

The above study shows that Hilton Properties is an international hotel chain leading the market. The chain functions successfully in Asia, Europe, Africa and the Americas but has no presence in New Zealand and Australia. The international chain of hotels must enter New Zealand and cater to the upper class customer of the country.

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