A marketing strategy analysis for Hilton Hotel in the UK market (318 – Hospitality and Tourism Marketing)


A marketing strategy analysis for Hilton Hotel in the UK market (318 – Hospitality and Tourism Marketing)

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The global hospitality and tourism industry has seen drastic changes over the past years as brought about by changing economic and technological trends. One of the main features that has created a revolution in the hospitality and more significantly the hotel industry is the application of technology in day-to-day interactions with the customer. This has led to among other consequences reduction of distribution costs and creation of rather competitive edges. Hilton Worldwide, being a market leader in the hotel industry, is not exempt to these forces. It is from such insight that this report sought to analyse the marketing strategy that Hilton Worldwide has applied to stay afloat in the UK market segment. In order to achieve this, the report analysed the target market by doing a review of the customers and their trends and competitors and their trends including opportunities and threats. Further, the report analyses the firms itself in order to bring out the strengths over competitors. The report then suggests possible marketing strategies for the hotel as well as marketing tactics to help achieve the marketing strategy. Lastly the report addresses the issue of implementation, evaluation and control of these strategies. The findings indicate that the UK market is headed towards low cost tourism and a complete transition to online platforms for marketing and customer engagement. Thusly, to capture this the suggested market strategies include product repackaging to fit the current and projected consumers – millennial and middle-income earners and aggressive engagement of online social media. The evaluation of such should be done through marketing audit. Lastly, contingency marketing plans should be prepared to cater for any failure in the current plans.

1. Introduction

Hilton hotels and resorts is an international chain of hotels and resorts that was founded in 1925 by Conrad Hilton. Hilton started out as a single hotel in Texas and has seen significant growth over the years. The hotel currently runs under the brand ‘Hilton worldwide’ and has managed to be established in over 540 locations all over the world. An attribution to the success of Hilton Hotels and resorts is the commitment to excellence, proper leadership and constant innovation (Hilton Worldwide, 2015). These three factors culminate to the ability of staying relevant through revising and improving capabilities as well as strategically positioning the brand in the market – marketing strategy. Shankar, Farley and Carpenter (2012) define marketing strategy as an integrated pattern of decisions in an organisation that determine its (organisation’s) course regarding marketing activities and the allocation of marketing resources among different market segments. In the dynamic business world it is imperative to constantly revise the marketing strategy to fit the market trends. To this end, this report seeks to analyse the marketing strategy of Hilton Hotels and Resorts in the UK market and offer recommendations. To achieve this, the report does and analysis of the market, the customers and the firm then recommends a marketing strategy and marketing tactics and lastly discusses the implementation  and control of the same.

2. Industry analysis

2.1. Customer analysis

In order to understand the target customers for London hotels, it is important to profile the kind of visitors that flood into London year after year. Essentially this means demystifying the various benefits that London has to offer to outsiders. Firstly, London has a great historical heritage. It is home to the British museum – the greatest urban history museum worldwide. The Tate Modern art gallery is also found here. The O2 arena comes in as the most visited music venue in the world. In addition to this, London hosts almost all renowned fashion designers in the world itself being a fashion capital. Lastly, there are a host of stadiums – Wembley, Wimbledon and Twickenham (Massow, 2015). The capital has host the Olympics three times. As such, the customer motivation for visiting London is indeed wide. It integrates physical, cultural, status, personal development and personal aspects of motivation as discussed by Uysal, Perdue and Sirgy (2012). According to Gordon (2014), in 2013 London received a record breaking 16.8 million visitors with most of them spending on shopping, hotels and restaurants.

Figure 1: Tourist motivators

Source: Lecture slides

The tourism industry in London presents great opportunities for investors with the increasing prospects for growth. According to the Department for culture, media and sports (DCMS) (2011), the average growth for the tourism industry in the UK is predicted at 3.5% per year until the year 2020. The number of visitors is constantly on the rise throughout England but much so in England’s tourism hub, the capital London. DMCS (2011) insists that with a burgeoning tourism business, hotels stand a better chance at not only improving but diversifying their services throughout the UK. A study conducted by Kyte and Moroney (2013) reveals that a vast majority of visitors in London stay in hotel rooms. Essentially, hotels are the largest stakeholders in offering room for visitors as shown below.

Figure 2: Visitors accommodation in London (Kyte and Moroney, 2013)

The major threat that is facing the UK as a target market for hotels is Britain’s inability to maintain and improve its rank as a world class tourism destination (Kyte and Moroney, 2013). The danger is that the market will be seen as high-end, high-cost player by customers. In addition, predictions indicate that in the coming years the majority of visitors will be form middle-income economies such as Brazil, Russia and china. As such, if the market will not be competitive in the price-quality balance, the current growth will be relegated (DMCS, 2011). Other notable trends in the UK market include increase in millennial customers and their love for technology, return of selected services – home switching, hotel  room optimization et cetera – return of meeting, incentives, conferencing and exhibitions market and re-definition of hotel menus (BDO International, 2015).

2.2. Competitor analysis

In London alone, there are over, 2,175 establishments including hotels, bed and breakfast and campuses offering accommodation services (DMCS, 2011). This creates high competition. It is imperative to note that tourism industry in England is controlled by small and medium size enterprises. However, this trend changes when it comes to central London. Here, established luxurious hotels remain the key drivers of the industry. This is evidenced by opening of new establishments in London by Park Plaza and Westminster Bridge (BDO International, 2015). It is factual to thus posit that the competition in London is characterised by established luxurious hotels including Hilton Worldwide, Hyatt Hotels and resorts, InterContinental Hotel Group, Marriott International Group, Starwood Hotel and Resorts among others. The strategic competing group for the Hilton group is thus the luxuries hotels. It is also factual to point out that with the purported increase in tourists, the Hilton Worldwide will also face competition from lower ranking hotels in the UK. According to Big Hospitality, an online hospitality industry analysis website, the competitive trends in the UK hotel industry for the past decade have included social media and mobile marketing, online engagement, hotel promotions and free internet and renovations to improve appearances (Heller, 2011).

The main competitors of Hilton Worldwide such as Sheraton, Holiday inn, InterContinental group among others have similar woes as Hilton Worldwide of fighting to stay relevant. According to Murasiranwa, Nield and Ball (2010), the hotel industry is dynamic and visitors may not be entirely loyal. As such, competition to understand and take advantage of market trends is on the rise. A report by the Royal Bank of Scotland (RBS) (2014) indicates that competition in the UK hotel industry is majorly about creating a portfolio that will capture the entire market in terms of visitor demographics and needs. As such, location issues and quality of services offered would rank on the list of any serious competitor. The edges of differentiation are also narrowing down as the market becomes defined by factors that are accessible to most hotels such as technology, visitors’ health and security concerns, level of services among others (RBS, 2014).

3. Firm analysis

Hilton Worldwide has been around for a long time and therefore tags along some core competencies and unique resources that enable it to compete effectively. For starters, Hilton hotel is renowned for luxury (CNN Travel, 2013). It has managed to explore this niche by focusing on high-end markets throughout the world by opening Hotels and resort is high-profile locations in major cities. As such, Hilton Hotels and Resorts is associated with class. As Pauwels-Delassus and Mogos Descotes (2013) posit, a brand name comes with customer trust and loyalty benefits. This means that of all the visitors to UK hotels, there are a percentage loyal to Hilton hotel and that will keep creating repeat business. It important to note that a unique brand such as the one that Hilton has created over the years acts as a differentiating factors from competitors and as such offers the hotel competitive advantage. This is attributing to Romaniuk, Sharp and Ehrenberg’s (2007) research on brand perception in which they indicate a good brand offers the customer a high value perception of the firm.

Another aspect that emerges as unique and competitive for Hilton Hotels and Resorts is the market experience garnered over time. Armed with an understanding of market trends and dynamics, Hilton has rolled out programs that specifically target its immediate market. One of the main areas that Hilton has focused on is capturing the loyalty of customers by offering them what they want – in ways not exploited by competitors. An example is the ability of ‘gold customers’ – those that have been loyal to Hilton for most number of years – to select rooms of their choices using an App on their mobile phones and check-in using the same (Hilton Worldwide, 2014). However this may not be an ultimate competitive edge as competitors are bound to adopt the same in the near future. Further, innovation seems to be a fort of Hilton Worldwide as evidenced by not only the introduction of App bookings but also usage of mobile devices as hotel keys, for Check-in, customization and check-out (CNBC, 2015).

Hilton Worldwide also enjoys a firm financial base. One of the major barriers to entry into markets such as the UK is the huge initial capital involved. This leaves a few firms to be dominant in the market. Financial capability comes into play as it affects investor confidence as well as sustainability. Hilton hotel has managed to transcend financial woes and overpowering its competitors in this aspect. According to Yu, Picker and Ruhle (2013) Hilton managed to recently outdo Marriot group, Hyatt group and Starwood group – which are its major rivals – in a recent initial public offering.

4. Marketing Strategy

The UK offers a lucrative market for hotels as evidenced in the above discussion on the specific dynamics of the market. Hilton Worldwide thusly needs an apt strategy that will ensure its dominance of the UK market given the prevailing and predicted market conditions. This report, in reference to the analysis of the firm, the market and the customers, recommends the adoption of the following elements as part of the marketing strategy. Firstly, the report suggests the maintenance and improvement of the brand image. Secondly, the report suggests strategic positioning of the firm’s brand to lure in more customers. In addition, customers should be engaged through online social media and using the same for rigorous advertising. Essentially, the aim of the marketing strategy is to improve on the ‘usage of the product’ offered by Hilton in the present market.

For starters, strategic positioning of Hilton Hotel has been achieved in the past years. The hotel’s brand is well known for luxury (CNN Travel, 2013). However, the UK market as discussed in the threats facing the market is on the verge of being dismissed as high-cost, high-end destination (Kyte and Moroney, 2013). This would affect the flow of customers to the UK and to the hotels as well. It is therefore important for Hilton to emphasize the quality-price balance as it pushes for the luxurious brand image. This will be crucial in helping customers relate the hotel with fair pricing even for premium services. This is also attributing to the fact that, as Back (2005) notes, customers tag brand images to a certain perspective. Prices and brand image are fundamental factors that a general customer would consider before switching between brands (Manhas and Tukamushaba, 2015; Kwun and Oh, 2004).

In addition to carrying out strategic brand positioning, the hotel needs to market itself through advertising and more so on a personal level (personal marketing). One major reason for this is because as seen in the market analysis, hotels in the UK market are competing on quality of service, cost and latest trends including technology. As such, advertising and mainly personal advertising is the only way the hotel can ensure customers are aware of its services. Through personal advertising, Hilton Worldwide can make specific advertisements for particular target markets. For example in the UK, the general trend in visitor demographics is the rising number of the millennial generation customers replacing older generations (Morrissey, 2013). Therefore, the hotels can tailor advertisements that offer appeal to this generation. As seen in the firms analysis, the hotel has embraced technology as part of its core competencies as attributing to being a technology leader among its competitive peers such as Sheraton (Cnbc, 2015). Additionally, as the millennial has evidenced love for technology, tailoring advertisements offering highlighting the latest technology should be a winning market strategy.

In Ansoff’s matrix product development strategies for new products can be done through improving the current products, extending the portfolio of products or developing a new product altogether (Gianos, 2013). The analysis of the UK market revealed that the customer motivations for visiting are largely varied ad encompass almost all elements of customer motivation as discussed by Uysal, Perdue and Sirgy (2012). This means that there is more room for diversification of products. An example is for the hotel to engage in constant redefinition of menus to cater for various cultural backgrounds. The reason behind this is because contemporary market trends in the hospitality industry indicate that menus forms part of competitive strategies, as evidenced by (BDO International, 2015). Further, the UK market is likely to be attracting customer from the middle-income economies such as China, Brazil and Russia (DMCS, 2011). In order to accommodate these customers, creation of new products such is also essential. An example of such is introduction of cheaper holiday packages that are within the reach of middle-income earners.

Using the above elements of marketing strategy, Hilton Worldwide will have achieved strategic positioning as driven by uniqueness in price, product, promotion, distribution and branding. Hooley, Saunders and Piercy (2011) discuss these elements as invaluable in positioning.

5. Marketing Tactics

Marketing mix comprises of the activities that a firm undertakes in actualisation of its marketing goals. According to Ashok (2009), marketing mix can never be a constant phenomenon keeps changing in view of the surrounding environment. In addition, the marketing mix is a long term concept that develops over time as it is dependent on the internal and external environment. In light of these, the report recommends the following marketing mix activity. This is also in consideration of relevant trends in the technology world.

In the previous section when highlighting the overall strategic direction, this report has inferred the use of personal marketing as a marketing tactic. This is an important element in the case of Hilton because personalisation equates brand loyalty (Hochgraefe, Faulk and Vieregge, 2012). However, the first step towards this should be focus on the product. This is because selling an ‘unimpressive’ product can be much harder. According to Owomoyela, Ola and Oyeniyi (2013), the product is the core of the marketing mix as it influences the performance of the other marketing activities.

In the case of Hilton Hotel the focus shall be on both the product and the services offered. For starters, tailoring the product to suit the market is crucial. This means for example, offering package that are specifically aimed at middle-income earners because that is a prediction of the hospitality market in the UK (DMCS, 2011). In this sense the firm will be exploiting an effective pricing strategy. In a research done by Rohani and Nazari (2012) on pricing and customers in the hotel industry, the results revealed that customers are more drawn to dynamic pricing – those adjusting to their needs – as opposed to uniform prices. Secondly, the diversity of visitors that is expected to increase in the UK means adjusting the menus to fit different foreign cultures. This is also part of the UK hospitality market prediction (BDO International, 2015).

Evidently, there are many avenues for sales promotion activities; however, contemporary marketing practices call for integration of online social media to achieve personalised selling and more relational customers (Clark and Melancon, 2013). As evidenced earlier, the millennial generation forms a great part of the current consumers in the UK hotel industry. Additionally, the millennial generation is well known for their love for technology (Murray, 2011). The marketing tactic that Hilton should adopt in regard to this should be engaging the customers on online platforms and still offer their superior products.

Currently the platforms available include Pinterest, Twitter, Facebook, blogs, micro-blogs et cetera. On these platforms, the Hotel marketing team needs to create online account profile for example ‘Hilton Hotels and Resorts UK’ then engage in online discussions. Similarly, creating of blogs or micro-blogs then establish online communities under these blogs or micro-blogs is equally important. After earning the trust of members in online platforms then it can be possible to use such for marketing even at personal levels. One of the crucial elements here is for the firm to participate in rather than disrupt the ongoing discussions in online arenas (Chui et al., 2012). An accruing benefit in online engagement of customer, other than exercising promotion mix, is that customer feedback is obtained easily and can imperative in designing even more customised packages for the UK market. In addition to this, the chartered institute of marketing (CIM) (2009) also posits that the internet, via e-marketing, offers coverage for the ‘place’ aspect in the marketing mix. It is through the internet that a firm such as Hilton can massively cut on distribution costs.

6. Implementation and Control

In Lamb, McDaniel and Hair’s (2011) discussion of the implementation and control of marketing activities, the main argument put forth is the realistic nature of the strategies and tactics suggested (practicality) and the capacity to actualise the same. In addition, the issues of control, monitoring and evaluating the chosen strategies appears as paramount to every organisation (Lamb, McDaniel and Hair, 2011). Among the major specific concerns includes financial capacity of the organisation. There is also availability of contingent plans in case the chosen path is not successful. In addition, the availability of measures of success that not only capture success in terms of sales volume matters. Lastly there is the concern for capacity to control or rectify deviations from the intended performance.

Firstly, in the case of Hilton Hotel, the marketing strategies suggested above are practical. This is basing on the fact that the different elements suggested are in light of the market trends. Firstly, the strengthening of the brand image is a continuous process that proves inevitable to a world-class luxurious hotel. As suggested by Gartner (2014), image is everything given that customers will look at the image amongst other product elements. As noted in the discussion of the marketing strategy, the price-quality balance in important in making customers feel the fair treatment involved. The concern for price is attributed to the trend in the UK hospitality industry where the projected future shows more customers will be from middle-income economies (BDO International, 2015). In regard to online marketing also, it is part of the contemporary marketing practices targeted at the millennial generation and the entire market as a whole. E-marketing, specifically social media marketing is an invaluable tool in the contemporary organisation (Akyol, 2013). It is thus factual to point out that the marketing strategies and tactics this report suggests for Hilton Hotels and Resorts are practical and actionable.

The financial viability in the implementation comes from the fact that Hilton Hotels enjoys a stable financial base. In a recent stock floatation, the Hotel management to garner enough capital to outdo the finances of competitors Sheraton and Starwood hotels (Yu, Picker and Ruhle, 2013). It is thus possible for the hotel to commit more financial resources to elements such as online marketing. In fact, in the recent past the hotel invested heavily in mobile application technology to enable customers to book hotels using their mobile devices (CNBC, 2015). Therefore, the implementation of the suggested strategies is but an improvement of the current tactics Hilton hotel is applying. Further, the hotel has numerous locations and thus it can carry out price discrimination measure to finance the UK location while targeting improving the customer base in the UK.

In order to measure deviations, the report suggests regular stakeholders meetings (a marketing audit meeting) that will enable them to review performance against objectives. In addition, deliberations can be made on how to rectify performance. The specific area of focus should be success indicators. This include the conversion rate for customers in the case of interactive social media marketing, the cost versus response balance, repeat visits to the hotel, consumer feedback from the planned online platforms and the changes in brand image as seen through different stakeholders. It is also important for the firm ro have contingency plans that would include alternate and parallel marketing campaign that would achieve the main organisational objectives.

7. Conclusion

In order for a firm to stay relevant in the industry, there is need to understand the trends in the market and the capabilities the firm has. Additionally, this knowledge needs to be used to gain a strategic position in the market. Hilton hotel has thus far managed to be a market leader in the UK market but due to the ever changing circumstances, the firm has to change marketing strategies constantly as to remain relevant. The trends in the UK market include the rise of low cost tourism and increase in the millennial customers. This report, in response to this market changes, suggests more aggressive engagement of online social media and repackaging of services and products at Hilton UK to fit middle-income tourists. These strategies are deemed viable given the financial position of Hilton Hotels. Lastly on their evaluation and control, the report suggests a marketing audit by stakeholders and the creation of contingent marketing plans should the suggested plans fail.

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