hilton case study
CASE STUDY: Decision time at Hilton
Hilton’s current distribution policy is causing its original competitive advantage of being the industry leader to deacrease. As a matter of facts, the traditional channels Hilton is using (such as hotel wholesaler, tour operators, global distributors systems and third-parties websites) plus the increasing popularity of Expedia-like sites has led the company to loose market shares (caused by the introduction of smaller independent hotel chains). Therefore, considering its relative high distribution costs, its inefficient allocation of all rooms available and the arise of new market opportunities, this system has turned out to be unsuistainable and a change in the company’s distribution strategy is urged.
In order to decrease distribution costs and enhance profits, the company needs to focus on a strategic planning based on environmental analysis such as PEST or SWOT analysis (Solomon, Marshall, Stuart, Barnes, Mitchell; 2009). These market evaluations (focused on the study Political, Economical, Socio-cultural,Technological, Legal or Environmental factors)will identify the opportunities and threats that the market presents and the strengths and weaknesses the company has, in terms of technogical and human capital (SWOT). This research will reveal the increasing popularity of third-parties websites and explain the change in customers’ behaviour in booking. But moreover will enphasise the need for Hilton to seriously consider this market opportunity and develop growth strategies that enable the company to penetrate the website booking market.
Then in a second place Hilton will need to elaborate the proper Marketing mix (a good blend of the 4 Ps of Price, Product, Place and Promotion) that might fit the target market chosen and stimulate customers to consider Hilton as an option.
The first option of keeping the traditional distribution channels will keep the the Hotel out of reach for the booking website users and, apart
Hilton’s current distribution policy is causing its original competitive advantage of being the industry leader to deacrease. As a matter of facts, the traditional channels Hilton is using (such as hotel wholesaler, tour operators, global distributors systems and third-parties websites) plus the increasing popularity of Expedia-like sites has led the company to loose market shares (caused by the introduction of smaller independent hotel chains). Therefore, considering its relative high distribution costs, its inefficient allocation of all rooms available and the arise of new market opportunities, this system has turned out to be unsuistainable and a change in the company’s distribution strategy is urged.
In order to decrease distribution costs and enhance profits, the company needs to focus on a strategic planning based on environmental analysis such as PEST or SWOT analysis (Solomon, Marshall, Stuart, Barnes, Mitchell; 2009). These market evaluations (focused on the study Political, Economical, Socio-cultural,Technological, Legal or Environmental factors)will identify the opportunities and threats that the market presents and the strengths and weaknesses the company has, in terms of technogical and human capital (SWOT). This research will reveal the increasing popularity of third-parties websites and explain the change in customers’ behaviour in booking. But moreover will enphasise the need for Hilton to seriously consider this market opportunity and develop growth strategies that enable the company to penetrate the website booking market.
Then in a second place Hilton will need to elaborate the proper Marketing mix (a good blend of the 4 Ps of Price, Product, Place and Promotion) that might fit the target market chosen and stimulate customers to consider Hilton as an option.
The first option of keeping the traditional distribution channels will keep the the Hotel out of reach for the booking website users and, apart