hilton strategic management presentation
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HiltonAlex Mutch- Marketing Management
Brenna Adamski- Marketing Management
David Hong- Marketing Management
Edwin Chao- Marketing Management
Leslie Teater- Marketing Management
Hilton Worldwide Brands
Introduction Mission Statement Opportunity Statement Sustainable Competitive Adv.
Background and History
Background & History
1919
1927
Conrad Hilton bought
first hotel
First hotel to add
amenities
1946
Hilton Hotels
Corporation goes public
Multi-hotel reservation
system
1948
1957
Marriot enters
industry
Hyatt founded
1959
First airport hotel
opened
1929 - 1939
Great Depressio
n
Introduction Background & History Mission Statement Opportunity Statement
Background & History
1962
1964
Hyatt goes public
Hilton International Corporation splits to go
global
Barron Hilton
replaces Conrad
Hilton as President
1967
1973
Hilton has customer service
breakthrough
Introduces HHonors
loyalty program
1987
1995
First Hilton website launches
Hilton International
sold
Conrad Hilton passes
away
1979
Introduction Background & History Mission Statement Opportunity Statement
Background & History
1996
2006Stephen
Bollenbach is first
non-Hilton CEO
Hilton International reacquired
Blackstone Group buys
Hilton and goes
private
2007
2008
Airbnb founded
Lightstay introduced
2009
2013
Hilton returns to
NYSE
Christopher Nassetta becomes president and CEO
Become Hilton
Worldwide and
changes HQ
Hilton launches a vacation
subsidiary
2002
Introduction Background & History Mission Statement Opportunity Statement
Mission Statement
Mission Statement
“To be the preeminent global hospitality company - the first choice of guests, team members, and owners alike.”
Background & History Mission Statement Opportunity Statement Sustainable Competitive Adv.
Opportunity Statement
Opportunity Statement
The hospitality industry is highly competitive, filled with pricing and sales promotions, resulting in price wars. In this industry, Hilton possesses a pristine
brand image that has the ability to be further leveraged in order to differentiate itself from competitors in the future. With the current influx of consumers in the
lodging industry, Hilton is now presented the opportunity to further utilize its intellectual capital and create sustainable competitive advantage.
Mission Statement Opportunity Statement Sustainable Competitive Adv. Significance to Leadership
Definition of Sustainable Competitive Advantage
Sustainable Competitive Advantage
A long-term competitive advantage that is not easily duplicated by other competitors. This is developed by solidifying a pristine brand image, utilizing
intellectual capital, offering exceptional services, and strengthening customer loyalty.
Opportunity Statement Sustainable Competitive Adv. Significance to Leadership Research Methodology
Significance To Leadership
Significance To Leadership
Hilton is a part of a highly competitive and fast growing industry in hotel service.
As a result, we have uncovered new forms of underleveraged resources within the company and have developed detailed programmatic recommendations
that will maximize these forms of sustainable competitive advantage.
Sustainable Competitive Adv. Significance To Leadership Research Methodology Expected Outcomes
Research Methodology
Research MethodologySecondary research
Environmental scanning & monitoring
Trusted, peer-reviewed sources
Google Finance
Business Insider
Forbes
Wall Street Journal
Domestic focusSignificance to Leadership Research Methodology Expected Outcomes Leadership
Expected Outcomes
Expected OutcomesImproved customer database
Differentiated customers
Increase in customer loyalty
Increased customer share
Move to value-based pricing
Leverage strategic alliances
Movement away from third-party sources
Decrease in long-term debtResearch Methodology Expected Outcomes Leadership Corporate Culture
Leadership
Leadership● Three Presidents; Nine Executive Vice Presidents
● Most have worked with Hilton eight years or less
● High levels of experience in the hospitality industry
Joe Berger Kristin Campbell
Christopher Nassetta
Kevin JacobsIan Carter Jim Holthouser William Margaritis
Matt Richardson Martin Rinck Matthew Schuyler Chris Silcock Simon Vincent Mark Wang
Expected Outcomes Leadership Corporate Culture Human Resources Management
Conrad HiltonCEO & Founder of Hilton
Emphasis on innovation and empowerment
Focus on charity and developing the community
“Success seems to be connected with action. Successful people keep moving. They make mistakes, but they don't quit.
”
“Enthusiasm is a vital element toward the individual success of every man or woman.”
“The practice of charity will bind us... will bind all men in one great brotherhood.”
(CEO 1919-1967)
Expected Outcomes Leadership Corporate Culture Human Resources Management
Stephen Bollenbach Prior CEO of Hilton
Worked as Donald Trump’s CFO
Worked with Disney & Marriott as CFO & Treasurer
Recruited by Barron Hilton in 1996
Focused on making profit with every decision
“There are a lot of bargains out there, ... Every acquisition you make is accretive to earnings. It's a real value creator.”
“We want to continue getting out of the real estate business and more into the fee business.”
(CEO 1996-2007)
Expected Outcomes Leadership Corporate Culture Human Resources Management
Christopher NassettaPreviously worked for Host Hotels and Resorts as COO
Later became CEO
Hired by Jonathan Gray of Blackstone Group as President and CEO for Hilton in 2007
Made a worldwide Hilton tour
Began changes in organizational structure
“People were living in ivory towers. Some in Beverly Hills. We didn’t have the connectivity. The hotels were saying, ‘Leave us alone.
I don’t like you corporate types.’ We had become siloed.”
(CEO 2007-Present)
Expected Outcomes Leadership Corporate Culture Human Resources Management
Christopher NassettaImplemented a corporate wide CRM system
Emphasis on leveraging intellectual capital
Customer focused
“Even the posters listing corporate guidelines differed from hotel to hotel, driving Nassetta — who puts great stock in
business culture — crazy.”
“There was a lot of what he did that was simply listening to the customer.”
Expected Outcomes Leadership Corporate Culture Human Resources Management
(CEO 2007-Present)
Joe BergerExecutive Vice President and President of the Americas
Oversees the operations of over 350 corporately owned Hilton hotels in the Americas
Graduated with a masters degree in finance
Career in the Hotel Industry
Prior to Hilton, four years at LXR as Co-President
Worked internationally in operations and finance for Marriott
(VP 2007-Present)
Expected Outcomes Leadership Corporate Culture Human Resources Management
William (Bill) MargaritisOversees corporate branding, internal and external
communications, government relations, issues and crisis management, and corporate responsibility programs
Been with the company since August 2015
Spent prior fifteen years at FedEx as Senior Vice President, Global Communications & Investor Relations
One of the only Executives without hospitality experience
Graduated from Michigan State with a degree in business
(VP 2015-Present)
Expected Outcomes Leadership Corporate Culture Human Resources Management
William (Bill) Margaritis
"As we continue to gain momentum and accelerate our growth around the world, finding additional ways to reach, engage and connect with our most critical stakeholders becomes even more important. Bill’s breadth of experience and his broad understanding of global
business and markets will help us build, strengthen and execute an integrated strategy across Hilton that will enhance our industry leadership position and our ability to
differentiate ourselves in the marketplace.”
- Christopher Nassetta
Background & History Mission Statement Opportunity Statement Significance of LeadershipExpected Outcomes Leadership Corporate Culture Human Resources Management
Chris SilcockLeads the company's global commercial team, including
sales, revenue management, regional marketing and eCommerce, and Hilton reservations and customer care
Twenty years in Hilton
Began his career with Hilton as a catering and banquet waiter
Head of Sales and Revenue Management
Head of Online and Regional Marketing
Degree in Computer Studies from University of Essex
(VP 1995-Present)
Expected Outcomes Leadership Corporate Culture Human Resources Management
Corporate Culture
ValuesHospitality “We're passionate about delivering exceptional guest experiences.”
Integrity “We do the right thing, all the time.”
Leadership “We're leaders in our industry and in our communities.”
Teamwork “We're team players in everything we do.”
Ownership “We're the owners of our actions and decisions.”
Now “We operate with a sense of urgency and discipline.”
Leadership Corporate Culture Human Resources Management Operations
Corporate Culture
Leadership Corporate Culture Human Resources Management Operations
Hilton’s Diversity Statement “Our priority is to understand and embrace unique global cultures to ensure that our
Team Members are seen, heard, valued and respected. As a result, our senior leadership is committed to investing in programs that promote diversity such as, inclusion training and celebrations of international traditions and customs. Globally, we also aim to increase our presence in local communities through employee volunteerism, partnerships
and giving programs.”
“Ultimately, I have a very simple philosophy on diversity: It is what allows us to perform and deliver for our customers and, frankly, outperform the competition.”
- Christopher Nassetta
Internal Diversity ProgramsExecutive Diversity CouncilTeam Member Resource Groups
Diversity Compliance Training
Diversity, Inclusion You e-Training course
Internal Communications
“As a part of our commitment to diversity and inclusion, we created the Executive Diversity Council, comprised of the company's most senior leaders, and chaired by our President and CEO, Christopher J. Nassetta. The Executive Diversity Council provides oversight and direction to
the overall diversity strategy related to our culture, talent and marketplace.”
- Christopher NassettaLeadership Corporate Culture Human Resources Management Operations
Organizational StructureChristopher Nassetta
CEO
Jim HolthouserKevin Jacobs
Matthew Schuyler Simon Vincent Matt Richardson
Kristin Campbell Ian Carter
Martin Rinck
Mark Wang
William MargaritisEVP Corporate
Affairs
Joe BergerEVP, President, Americas
Chris SilcockEVP and CMO
Middle Management
Staff Members
Leadership Corporate Culture Human Resources Management Operations
Organizational Structure
Leadership Corporate Culture Human Resources Management Operations
“People were living in ivory towers. Some in Beverly Hills. We didn’t have the connectivity. The hotels were saying, ‘Leave us alone. I don’t like you corporate
types.’ We had become siloed.”
- Christopher Nassetta
Human Resources
Human Resources
Corporate Culture Human Resources Management Operations Finance
“You first have to get the right people on the bus, get the wrong people off the bus, make sure the right people are in the right seats before you decide where you’re driving the bus’
… that was a philosophy that I followed.”
- Christopher Nassetta
Human Resources: RecruitingCore School Alliances
16 schools where recruiters look for potential interns
Career page Indeed.com
● Hilton Worldwide University
Corporate Culture Human Resources Management Operations Finance
Human Resources: Hiring
Corporate Culture Human Resources Management Finance Marketing
Application is online
Resume sent to different departments
Corporate Culture Human Resources Management Operations Finance
Human Resources: TrainingPart-Time: 20 hours
Full-Time: 45 hours
Hilton Worldwide University
Five Different Colleges
Corporate Culture Human Resources Management Finance MarketingCorporate Culture Human Resources Management Operations Finance
Human Resources: Training
Corporate Culture Human Resources Management Finance MarketingCorporate Culture Human Resources Management Operations Finance
Human Resources: Retaining
“Our Team Members are at the heart of our success and we are committed to ensuring Hilton is a place where they can grow both personally and professionally.”
-Christopher J. Nassetta
Corporate Culture Human Resources Management Finance MarketingCorporate Culture Human Resources Management Operations Finance
Human Resources: RetainingProfessional development opportunities
Nassetta’s annual “Catch Me at My Best”
30 paid days of holiday/vacation
Tuition reimbursement of $1200
GED Assistance Program
Parental Leave Program
Corporate Culture Human Resources Management Finance MarketingCorporate Culture Human Resources Management Operations Finance
Operations
Operations: Overview HQ in McLean, Virginia
Previous HQ was in Beverly Hills, California until 2009
Total of 157,000 Team Members around the world
Human Resource Management Operations Finance Marketing
Operations: StatisticsBrand Hotels Total Rooms
Hilton 560 28.1%
Hampton 2,005 27.8%
Doubletree 410 14.1%
Hilton Garden Inn 618 12.0%
Human Resource Management Operations Finance Marketing
Operations: Ownership
Human Resource Management Operations Finance Marketing
Hampton Inn Franchise Ranking by Entrepreneur.com
Finance
Human Resources Management Finance Marketing Conclusion
Financial Introduction
Operations Finance Marketing External Analysis
Human Resources Management Finance Marketing Conclusion
Stock Price (2 Years)
Human Resources Management Finance Marketing External AnalysisOperations Finance Marketing External Analysis
IPO: $20; 117,640,624 Shares (NYSE: HLT)Current: $23.37; 1.232 M Shares
Human Resources Management Finance Marketing Conclusion
Stock Price (2 Years)
Human Resources Management Finance Marketing External AnalysisOperations Finance Marketing External Analysis
IPO: $20; 117,640,624 Shares (NYSE: HLT)Current: $23.37; 1.232 M Shares
Human Resources Management Finance Marketing Conclusion
Stock Price (2 Years)
Human Resources Management Finance Marketing External AnalysisOperations Finance Marketing External Analysis
IPO: $20; 117,640,624 Shares (NYSE: HLT)Current: $23.37; 1.232 M Shares
Human Resources Management Finance Marketing Conclusion
Income Statement - Numbers in Millions
Human Resources Management Finance Marketing External AnalysisOperations Finance Marketing External Analysis
Human Resources Management Finance Marketing Conclusion
Balance Sheet - Numbers in Millions
Human Resources Management Finance Marketing External AnalysisOperations Finance Marketing External Analysis
Current RatioMeasures a company’s ability to pay short-term obligations
Current Assets Current Liabilities
Human Resources Management Finance Marketing Conclusion
Short-Term Solvency
Human Resources Management Finance Marketing External AnalysisOperations Finance Marketing External Analysis
Cash RatioMeasures the ability to pay off debt obligation using cash on
hand
Cash and EquivalentsCurrent Liabilities
Human Resources Management Finance Marketing Conclusion
Short-Term Solvency
Human Resources Management Finance Marketing External AnalysisOperations Finance Marketing External Analysis
Total Debt RatioA conservative measure of
long-term solvency
Total LiabilitiesTotal Assets
Human Resources Management Finance Marketing Conclusion
Long-Term Solvency
Human Resources Management Finance Marketing External AnalysisOperations Finance Marketing External Analysis
Debt-to-Equity RatioA measure of debt leverage
Total LiabilitiesTotal Stockholder’s Equity
Human Resources Management Finance Marketing External Analysis
Long-Term Solvency
Human Resources Management Finance Marketing External AnalysisOperations Finance Marketing External Analysis
Total Asset TurnoverSales generated per dollar of
assets
SalesTotal Assets
Human Resources Management Finance Marketing External Analysis
Asset Utilization
Operations Finance Marketing External Analysis
Profit MarginShows what percentage of
every dollar is kept in earnings
Net IncomeSales
Human Resources Management Finance Marketing External Analysis
Profitability
Operations Finance Marketing External Analysis
Return on AssetsEarnings that are generated
from invested capital
Net IncomeTotal assets
Human Resources Management Finance Marketing Conclusion
Profitability
Human Resources Management Finance Marketing External AnalysisOperations Finance Marketing External Analysis
Price Earnings RatioAmount investors pay for one
dollar of earnings
Market Value per ShareEarnings per Share
Human Resources Management Finance Marketing External Analysis
Market Value
Operations Finance Marketing External Analysis
The percentage of all rental units (rooms) are occupied or
rented at a given time
Human Resources Management Finance Marketing External Analysis
Occupancy Rate
Operations Finance Marketing External Analysis
Marketing
Products
Finance Marketing Conclusion Finance Marketing External Analysis SWOT
Products
Finance Marketing External Analysis SWOT
Products
Finance Marketing Conclusion Finance Marketing External Analysis SWOT
Products
Finance Marketing External Analysis SWOT
Price: Average Daily Rate (ADR)
$141.52 $150.67$169.89Finance Marketing External Analysis SWOT
Price: Average Daily Rate (ADR)
$369.00 $357.00$349.00Finance Marketing External Analysis SWOT
Price: Average Daily Rate (ADR)
$111.21 $103.00$113.00Finance Marketing External Analysis SWOT
Price: Pricing Strategies
Finance Marketing External Analysis SWOT
● Premium pricing strategy○ High-level prices
■ Perceived to have excellent quality and additional characteristics and features
● Variable pricing
Price
Finance Marketing External Analysis SWOT
● Guaranteed lowest price
● Why book directly with Hilton?○ Always find the lowest price on our
websites or we'll give you $50.
PlaceWebsite booking on
hilton.com
Third-party booking
Finance Marketing External Analysis SWOT
Place4,440 hotels
Over 730,000 rooms
97 countries and territories
All 50 states
Finance Marketing External Analysis SWOT
PlaceThree major factors when a new Hilton location is considered:
Where - The Geographical location must be convenient
When - Timely response to a customer’s schedule
How - Events and meetings tailored to customer’s needs
Finance Marketing External Analysis SWOT
Promotion
Advertising
Finance Marketing External Analysis SWOT
Average: $246 Million per Year
Public Relations
Finance Marketing External Analysis SWOT
● “Nassetta Inducted into Hospitality Industry Hall of Honor”- 10/21/2015
● “Hilton Hawaiian Village Prepares Thanksgiving Meals for Hundreds in Need”- 11/25/15
● “Hilton Atlanta Sells for $146 million”- 10/30/15
● “Hilton Hotel Reports POS Data Breach” 11/26/15
● “Hilton Brings Digital Key to Android”- 10/6/15
Sales Promotion
Finance Marketing Conclusion Finance Marketing External Analysis SWOT
Personal Selling
Finance Marketing Conclusion
● “Globally Motivated, Individually Focused”
● Over 700 sales professionals in 34 regional offices around the world
● Strategic Account Management team dedicated to negotiating customizable deals with customers
● Drives profit and leads to stronger and more committed relationships
Finance Marketing External Analysis SWOT
Direct Marketing
Finance Marketing Conclusion
● HHonors program and app○ Various tiers
● Developed customer database● Strong social media presence and
interaction
Finance Marketing External Analysis SWOT
Direct Marketing
Finance Marketing Conclusion Finance Marketing External Analysis SWOT
Direct Marketing
Finance Marketing Conclusion Finance Marketing External Analysis SWOT
External Analysis
Macroeconomic Factors● Volatile industry● Changes in demands for hotel rooms, occupancy levels, and room rates
○ High dependency on the economic cycle● Changes in the consumer location preference● Dependent on transportation industry● Cyclical and seasonal● Environmental laws● Government regulation
Marketing External Analysis SWOT Sustainable Competitive Adv.
Macroeconomic Factors
Finance Marketing External Analysis
● War, political conditions or civil unrest● Decreased corporate or government travel-related budgets and spending● Statements, actions, or interventions by governmental officials● Negative media exposure in certain locations (Ebola, Sars, H1N1, Avian flu)● Cyber-Attacks● Natural or man-made disasters
Marketing External Analysis SWOT Sustainable Competitive Adv.
Industry Competition: Direct
Finance Marketing Conclusion
● Current Stock Price: 71.11 per share○ P/E Ratio: 26.45○ Average Volume of 26.2 M
● Social Involvement● “We Embrace Change”
○ Innovation has always been part of the Marriott story
Marketing External Analysis SWOT Sustainable Competitive Adv.
Industry Competition: Direct
Finance Marketing Conclusion
● Current Stock Price: 50.06 per share○ P/E Ratio: 27.42○ Average Volume of 440,492
● Environmental Friendly● “We make a difference in the lives of
those we 'touch' every day.”
Marketing External Analysis SWOT Sustainable Competitive Adv.
Industry Competition: Indirect
Finance Marketing Conclusion Marketing External Analysis SWOT Sustainable Competitive Adv.
Industry Technology● Apps● Digital Key● Website
Marketing External Analysis SWOT Sustainable Competitive Adv.
Industry Consumer
Finance Marketing Conclusion
● According to “Small Business” by Demand Media, “Trend Watching”, and “Hospitality Technology”, the industry consumer is:○ Looking for value○ Typically possesses disposable income○ Appreciates option of Rewards program○ Prefer self-service check-ins and online transactions○ Interested in personal health and wellness
Marketing External Analysis SWOT Sustainable Competitive Adv.
SWOT Analysis
Positive Negative
Internal Strengths Weaknesses
External Opportunities Threats
SWOT Analysis
StrengthsCorporate leadership
Corporate culture
Strong intellectual capital
Ethnic diversity amongst employees
Organizational structure
HRM
HHonors database & app
Industry leader in market share
Premium brand image
Positive Negative
Internal Strengths Weaknesse
s
External
Opportunities Threats
External Analysis SWOT Sustainable Competitive Adv. Viable Alternatives
WeaknessesLack of advertising measurability
High long-term debt
Decreasing timeshare profitability
HHonors promotions
Underleveraged HHonors database
Underleveraged strategic alliances
Lack of room standardization
Research and Development department
Positive Negative
Internal Strengths Weaknesse
s
External
Opportunities Threats
External Analysis SWOT Sustainable Competitive Adv. Viable Alternatives
OpportunitiesExclusive booking to Hilton.com
App & technology development
Economic recovery
Increase in consumer disposable income
Decreased transportation costs
Growing availability of strategic alliances
Reduced threat of disease
Increased credit card security
Positive Negative
Internal Strengths Weaknesse
s
External
Opportunities Threats
External Analysis SWOT Sustainable Competitive Adv. Viable Alternatives
ThreatsIncrease of competition (direct and indirect)
New forms of travel stay
Growth of third-party booking sites
Marriott’s recent acquisition of starwood
High market volatility
International civil unrest
Decrease in international travel
Industry wide cyber attacks
Increase in government regulations
Positive Negative
Internal Strengths Weaknesse
s
External
Opportunities Threats
External Analysis SWOT Sustainable Competitive Adv. Viable Alternatives
Sustainable CompetitiveAdvantage
Sustainable Competitive Advantage
A long-term competitive advantage that is not easily duplicated by other competitors. This is developed by solidifying a pristine brand image, utilizing
intellectual capital, offering exceptional services, and strengthening customer loyalty.
SWOT Sustainable Competitive Adv. Viable Alternatives Minor Recommendations
New Sources of Sustainable Competitive Advantage
Develop our database asset
Comprehensive loyalty program and application
Leverage intellectual capital
Empower front-line employees
Promote and enhance positive consumer perception of brand image
SWOT Sustainable Competitive Adv. Viable Alternatives Minor Recommendations
Viable Alternatives
Viable AlternativesImplement an on-going immersion program
Management develops a stronger connection to employees and customers
Expensive and time-consuming
Initiate a Business Leadership Summit
Collaborate with and learn from leaders in other industries
Difficult to implement
Sustainable Competitive Adv. Viable Alternatives Minor Recommendations Major Prog. Recommendation
Viable AlternativesStandardize, renovate, and modernize all rooms
Provides brand continuity
Expensive
Create a new Research & Development department
Leverages new opportunities and fosters innovation
Costly undertaking
Sustainable Competitive Adv. Viable Alternatives Minor Recommendations Major Prog. Recommendation
Minor Recommendations
Minor RecommendationsStreamline distribution channels
Utilize our leverage in relationships with third party sources
Strengthen and create strategic alliances
Establish Matrix structure
Develop an Employee Service Representative position
Connect with employees
Viable Alternatives Minor Recommendations Major Prog. Recommendation Areas of Future Study
Major Programmatic Recommendation
Customer TiersBlue (0 Points) Silver (1,000) Gold (7,000) Diamond
(12,000)
● Room selection
● Digital key● Room
customization
● Blue rewards● iPads● Premium Wi-fi● Spa access● Premium
Spotify & Hulu access
● Late check-out● Digital check-in
● Silver Rewards● Personal
assistant● Premium Starz
access● VIP parking● Exclusive hors
d’oeuvres
● Gold Rewards● Exclusive
concert access
● Sleep Number bed
$1 of hotel = 1 Point$1 of spa = 2 Points
$1 of event space = 2 Points
Minor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?
A continuation of some of the services from HHonors
Selecting a specific room
Digital room key
Additional customization options that Hilton can store in database
Number of pillows
Housekeeping times
Temperature of the room
Shampoo type
Drinks upon arrival
Blue Tier
Minor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?
(0 Points)
Premium Wi-fi
Exclusive spa access
Pool, sauna, and shower access
Spotify & Hulu access
Late check-out
Digital check-in
iPads
Silver Tier
Minor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?
(1,000 Points)
Minor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?
Menu of options
Per geographic location
Uncovered during research
Personal assistant per Dwell floors (as needed)
Digital access to assistants
Starz premium access
VIP parking
Exclusive hors d’oeuvres upon arrival
Gold Tier
Minor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?
(7,000 Points)
Exclusive event access
Meet and greets
Concert access
Red carpet access
Sleep Number beds
Diamond Tier
Minor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?
(12,000 Points)
Cultural FeasibilityCorporate philosophy
Positive attitudes toward change and innovation
Customer focus
Eager to improve
“We were complacent. There was no culture of innovation. It was more a culture of do it at a relatively slow pace and do it the way we’ve always
done it... It just wasn’t organized in the right way.” - Christopher NassettaMinor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?
Financial Feasibility44 million HHonors members
50% of guests are HHonors members
$720 Million spent in 2014 for HHonors
Additional profit loss from redeemed reward nights
$730 Million of Cash flow in 2014
Minor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?
RolloutIn January 2016:
150 strategic, domestic locations with varying demographics
Opt-in for current HHonors members
One year of data gathering
Survey
In January 2017:
One year to redeem points
Six-months of final point accumulation
Phase out HHonors program
Minor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?
RolloutIn July 2017:
One year to redeem points
Six-months of Dwell points
Final phase out HHonors program
In January 2018:
Full implementation of Dwell program
Minor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?
Expected OutcomesImproved customer database
Differentiated customers
Increase in customer loyalty
Increased customer share
Move to value-based pricing
Leverage strategic alliances
Movement away from third-party sources
Decrease in long-term debtMinor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?
MetricsEnrollment Data
Carry over from HHonors
New Dwell members
Changes in tier population
Member retention rates
Member Satisfaction Survey
Time spent on app and with value-added programs
Track spa revenue
Metrics based on geographic location
Third-party booking changes
Minor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?
5 Golden QuestionsAs an enrolled Hilton Dwell Member…
How did you hear about Dwell?
What did you like about the Dwell?
What did you dislike about Dwell?
Will you be using the Dwell Program more often?
Would you like to opt-in for more loyalty member information?
Minor Recommendations Major Prog. Recommendation Areas of Future Study Would You Invest?
Areas of Future Study
Areas of Future StudyHRM program
Differentiate employees by valueFurther utilize matrix structure and diversity
High school and college curriculumBrand expansion opportunities
Major Prog. Recommendation Areas of Future Study Would You Invest? Spiritual Implications
Would You Invest?
Would You Invest?
Yes!
Areas of Future Study Would You Invest? Spiritual Implications Conclusion
Spiritual Implications
Spiritual Implications1 Timothy 6:10
“For the love of money is a root of all kinds of evils. It is through this craving that some have wandered away from the faith and pierced themselves with many pangs.”
Colossians 3:23
“Whatever you do, work heartily, as for the Lord and not for men”
Would You Invest? Spiritual Implications Conclusion
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Would You Invest? Spiritual Implications Conclusion
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Would You Invest? Spiritual Implications Conclusion
HiltonAlex Mutch- Marketing Management
Brenna Adamski- Marketing Management
David Hong- Marketing Management
Edwin Chao- Marketing Management
Leslie Teater- Marketing Management
Extra Slides
Additional Finance PointsBlackstone acquired Hilton Hotels in 2007
Purchased at $26 billion including debt
“Right now, income is being used to service debt and not invest in the business. This could hamstring Hilton for a while.”
- Michelle Grant, A Travel and Tourism Manager at Euromonitor (2007)
2006 Revenue
$730 Million Cash
2006 DebtFrom Hilton’s 2006 Annual Report:
“At December 31, 2006, we had total debt of $6.97 billion (net of approximately $500 million of debt and capital lease obligations resulting from
the consolidation of certain joint-venture entities and a managed hotel, which are non-recourse to us). Subsequent to the acquisition of Hilton International, we
reduced our indebtedness by approximately $1.6 billion. A focus of our financial strategy for 2007 is further debt reduction through operating cash flow and the proceeds of asset sales. Total cash and equivalents (including restricted
cash of approximately $293 million) were approximately $431 million at December 31, 2006.”
Timeshare● Introduced in 2002
○ Invested $60 million on new development● Collaboration with premier timeshare real estate
development firms● 240,000 Club Members● A collection of 60 club affiliated resorts
○ Includes those developed, managed, and franchised by Hilton Worldwide
● According to 2014 Annual Report:○ Pulling away from timeshares
■ High cost, low demand = deteriorating profit margin
Timeshare● Three main areas of revenue:
○ Timeshare sales■ Does so with Hilton and third party
vendors○ Resort operations
■ HGV club■ Rental revenue, enrollment fees, annual
fees, and transaction fees○ Financing
■ Interest from the provided loans for customers buying timeshares
Timeshare CompetitionCompete with other hotel and resort timeshare operators for sales based on:
Location
Quality of accommodations
Price
Financing terms
Quality of service
Terms of property use
Opportunity for timeshare owners to exchange into time at other timeshare properties or other travel rewards
Brand name recognition and reputation
Resale companies and owners reselling existing timeshare intervals
Timeshare Competition (Cont.)Primary competitors:
Hyatt Residence Club
Marriott Vacations Worldwide Corp.
Starwood Vacation Ownership
Wyndham Vacation Resorts
A Customer’s JourneyDecembe
r 2015January 2016
July2016
November
2016
February2017
61,000 HHonors
Points
Silver HHonors Tier
61,000 HHonors
Points
Blue HHonors Tier
1,000 HHonors Points
(60,000 HHonors points redeemed for 2 free nights)
Blue HHonors Tier
1,000 HHonors Points
1,000 Dwell Points
Blue HHonors Tier
Silver Dwell Tier
0 HHonors Points
4,000 Dwell Points
Silver Dwell Tier
HHonors Blue Tier
HHonors Silver Tier
HHonors Gold Tier
HHonors Diamond Tier
HHonors Details
“When points are earned by Hilton HHonors members, the property or affiliated partner pays Hilton HHonors based on an estimated cost per point for the costs of
operating the program, which include marketing, promotion, communication, administration and the estimated cost of award redemptions… We provide Hilton
HHonors as a marketing program to participating hotels, with the objective of operating the program on a break-even basis to us.”
- Christopher Nassetta, 2014 Annual Report
R&D Expense
Overview of U.S. Franchise Fees
Hampton Inn Franchise
Uber Partnership
J.D. Power Guest Satisfaction
J.D. Power Guest Satisfaction
J.D. Power Guest Satisfaction
J.D. Power Guest Satisfaction
J.D. Power Guest Satisfaction
Background & History● 1962: Hyatt became a public company
● 1964: Hilton began to expand his operations outside of the United States and renamed the company
○ It became one of the largest hotel businesses in the world. The company expanded its operations into credit cards, car rentals, and other services
● 1965: Launch of Lady Hilton, the first hotel concept designed exclusively for women travelers
● 1967: Conrad Hilton resigns his presidency to become chairman● 1968: Hyatt International was formed● 1969: Marriott opens its first international hotel in Acapulco, Mexico● 1970: Hilton becomes the first NYSE-listed company to enter the domestic
gaming business
Additional History1972: Marriott named J.W. Marriott, Jr. Chief Executive Officer
1972: Hugh M. Friend, Jr because the new president of Hyatt
1973: Hilton develops the first centralized reservation service using computer technology, a breakthrough in customer service
1979: Conrad Hilton died on January 3, in Santa Monica, California
1985: J. Willard Marriott, Sr. passes away, and J.W. Marriott, Jr. is elected Chairman of the Board, Marriott
1987: Hilton introduces Hilton HHonors™, its guest loyalty program
1989: Hampton Hotels is the first hotel company to promise 100% Satisfaction Guarantee
1994: Hilton HHonors™ surpasses competing hotel loyalty programs by offering members both points and air miles
1995: The first Hilton website launches: www.Hilton.com
Additional History2007: The average daily rate for a hotel room surpasses $100
2009: Hilton launches its first application for mobile devices
2011: Hampton Hotels, part of the Hilton brand, is named the #1 franchise opportunity by Entrepreneur Magazine
2013: Becomes the first hotel brand to earn over 1 million Facebook likes
Hilton Worldwide At-A-Glance
Kristin CampbellResponsible for leading Hilton Worldwide's global legal,
compliance and government relations functions
Graduated from Cornell with a Law degree
Prior to Hilton, worked with Staples for eighteen years, serving as the company's senior vice president, general counsel, and corporate secretary
Ian CarterWas Chief Executive Officer of Hilton International prior to its
re-acquisition by the company in 2006
Graduate of the University of West London, School of Business and Management, and received an honorary doctorate from the University for his industry accomplishments and ongoing support of the development of future hospitality leaders
Prior to Hilton, served as Officer and President of Black & Decker Corporation, Middle East, Africa and Asia
Responsible for all International operations
Prior to Black & Decker, served as President of General Electric Specialty Chemical, after working his way up in the company
Jim HolthouserCompany's global leader for brand management and customer
marketing across nine consumer brands
MA in economics/political science from the University of Louisville and international MBA from the American Graduate School of International Management
Series of senior management positions within Hilton Worldwide in the branding, franchising and marketing arenas
More than 20 years of experience in the lodging, restaurant and gaming industries
Kevin JacobsOversees all of the company's global finance functions, as well
as its global information technology function and all real estate and asset management aspects
Joined the company in 2008 as Senior Vice President, Corporate Strategy
Elected Treasurer in 2009
Appointed Executive VP and Chief of Staff in 2012
Prior to Hilton Worldwide, served as Senior Vice President, Mergers & Acquisitions and Treasurer of Fairmont Raffles Hotels International
Prior to Fairmont, spent seven years with Host Hotels & Resorts, Inc., leading the company's strategic planning and investor relations functions
Matt RichardsonOversees the company's global efforts regarding new build
projects, capital improvements, technical advisory services, interior design and construction
Prior to Hilton, served as Senior Vice President and Chief Development Officer for Host Hotels & Resorts, Inc., where he oversaw all of the company's design and construction activities
Bachelor's degree in Urban Planning and his Master's degree in Business Administration from the University of Virginia
Martin RinckResponsible for the operations of over 90 trading hotels in
the 18 countries across Asia Pacific
Includes expansion plans - Doubling in the next year
Been with Hilton since November 2008
Was Executive Vice President and Chief Development Officer for The Rezidor Hotel Group, where he drove significant growth for The Rezidor Hotel Group's hotel portfolio in Europe, the Middle East and Africa
Experience in the global hospitality and restaurant industries
MBA from Brunel University
Matthew SchuylerChief Human Resources Officer for Hilton Worldwide and leads
the company's global human resources organization
Been with Hilton for past seven years
Prior to Hilton, spent five years as Chief Human Resources Officer at Capital One Financial Corporation
MBA from University of Michigan
Serves on the Board of Directors for the Make-A-Wish Foundation of America
Member of Penn State's College of Information Sciences and Technology Advisory Board
Simon VincentExecutive Vice President & President, Europe, Middle East &
Africa for Hilton Worldwide
Based in London
Been with company for eight years
Overseen the opening of more than 100 hotels and spearheaded growth in the multi-brand proposition
Includes Hampton and DoubleTree
Twenty-year veteran of the leisure and travel industry
Spent 13 years at the Thomas Cook Group, latterly as Chief Operating Officer of the UK Travel Division
Mark WangPresident, Hilton Grand Vacations for Hilton Worldwide and
oversees all of the company's global timeshare operations
Been in role for seven years
Previously Head of Hilton Grand Vacations, Asia
Joined Hilton Grand Vacations in 1999 as Managing Director, Hawaii
Held various positions since
Prior to Hilton, founded and co-founded multiple hotel and hotel-consulting companies
Ronen NissenbaumVice President of Operations for Luxury Hotels, America
Hilton announced his appointment in November 2015
Previously worked in senior management for global corporations such as DIsney and InterContinental Hotel Group
“Ronen’s ascension to this newly created role reflects our strong commitment to the luxury sector and to growing our
luxury portfolio within the Americas,” - Joe Berger
Christopher NassettaMost recently CEO of Host Hotels & Resorts, inc.
Also served as Executive Vice president and COO for this companyCo-founded Bailey Capital Corporation in 1991Served as Chief Development Officer at the Oliver Carr Company, a commercial
real estate firmUnder Nasetta’s leadership, Hilton launched the Travel With Purpose
initiative, a corporate commitment to diversity and inclusion, cultural awareness, community building and sustainable living
Christopher Nassetta“A balanced guy,” according to Edward Walter Relationally oriented, prioritizes family, talkative, loves traditionFocused on Employees
Still visits many locations personally“With all his success in business, he always has stayed a really good guy,” -
Jonathan Gray, Blackstone Group
Christopher NassettaGot rid of ⅔ of executive leadership,
“I was committed to look them in the eye, tell them what I’m doing, give them the reasons why and answer questions for as long as they wanted.”
Improvement of business processes which saved a lot of money“We were able to save a ton of money without affecting performance one bit,” said
Jacobs
Believed his task was risky but possible“I went through the rationale. I said we’re all in this together and, if we don’t take
steps to ensure our future, the risks of material damage to the business are significant.”
“A lot of people were thinking we were going to fail,” Nassetta said. “And frankly, a lot of people were wanting us to fail. And we didn’t.”
● Hilton created the Conrad N. Hilton Foundation in 1944, which awards an annual prize to exemplary organizations that work to end suffering in the world. It also supports programs for the blind and the homeless as well as education initiatives
● Team Member Resource groups
○ African American Team Member Resource Group○ Asian and Pacific Islander Team Member Resource Group○ Women's Team Member Resource Group○ Hispanic/Latino Team Member Resource Group○ LGBT & Friends Team Member Resource Group
Team Member Resource Groups
Diversity Compliance TrainingDiversity Compliance Training
Recognize the unique insights, perspectives, and background of othersCreate competitive advantages for ourselves by leveraging the diversity of
our Team MembersDevelop an environment of trust, respect, and inclusion; andAvoid discrimination and disrespectful behavior
Diversity AwardsExternal Recognition for Diversity (2013)
Black EOE Journal – Top Diversity Employer (2013)Black EOE Journal – Top Supplier Diversity Program (2013)DiversityBusiness.com - Top 50 Organizations for Multicultural Business Opportunities,
45th Place HispanicBusiness.com – Top 25 Leaders in Supplier Diversity – Fred Lona, S. Director,
Supplier Diversity (2013)DiversityBusiness.com - America 's Top Diversity Champions for 2013 – Fred Lona, Sr.
Director, Supplier Diversity (2013)DiversityInc – 25 Noteworthy Companies (2013)DiversityInc – Top 10 Companies for Supplier Diversity (2013)DiversityInc – Top 10 Companies for Latinos (2013)
Diversity Awards (Cont.)External Recognition for Diversity (Cont.)
Hispanic Network Magazine – Top Diversity Employer (2013)Hispanic Network Magazine – Top Supplier Diversity Program (2013)LATINA Style Magazine – LATINA Style 50 Best Companies for LatinasMan About World – 2013 Editors Choice Award for Very Best in Gay Travel (2013)MBN USA 75 Leading Men in Corporate Supplier Diversity – Fred Lona, Sr. Director,
Supplier Diversity (2013)Professional Women’s Magazine – Top Diversity Employer for Women (2013)Professional Women’s Magazine – Top Supplier Diversity Program for Women (2013)Working Mother Magazine – Best Company for Hourly Workers (2013)HRC Corporate Equality Index – 100 percent
Hilton’s View of AirBNBNassetta considers AirBNB to be in a different segment of the market than
Hilton
"The bulk of the demand is in higher rated, high-occupancy urban markets. It is longer length of stay with a predominantly leisure and value focus and stay occasions where customers are willing to accept inconsistent product with very limited
services."
“AirBNB doesn’t scare us.”
"But I suspect over time everybody will see it for what it is: a really good business but a business that is largely distinct from what we do. There is every opportunity for both of
us to have really successful business models."
Hilton’s Differentiation from Competition
“We believe that our position as a multi-branded manager, franchisor, owner and operator of hotels makes us one of the largest and most geographically diverse
lodging companies in the world.”
- Christopher Nassetta, 2014 Annual Report
The Marketing BreakdownHilton has many direct marketing that they implement
Telemarketing
Postal Mail
“... hospitality intermediaries generally employ aggressive marketing strategies, including expending significant resources for online and television advertising campaigns to drive consumers to their websites.”
-Hilton 2014 Annual Report
Profitability, HRM, & Renovations
“We have focused on maximizing the cost efficiency and profitability of the portfolio by, among other things, implementing new labor management practices and systems and reducing fixed costs. Through our disciplined approach to asset
management, we have developed and executed on strategic plans for each of our hotels to enhance the market position of each property, and at many of our
hotels we have renovated guest rooms and public spaces and added or enhanced meeting and retail space to improve profitability.”
- Christopher Nassetta, 2014 Annual Report
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