The need of understanding complexity and strategy planning in current’s competitive marketplace play vital role in terms of organisational strategy in Hospitality Industry. The role of strategic planning in the Hotel industry has a wide range of impacts on organisation’s adaption, development and managing structure to ensure to exceed the guest satisfaction. Scenario Planning as a methodology is a widely accepted for employing strategic decision and devise strategies to manage with uncertainties in business environment. The blog will discuss and investigate the process and results of a four possible future scenarios, applied to the Hilton Hotels.
In addition, the blog will explore the challenges and limitations in applying it and it will suggest some recommendations that could be implemented to ensure the best achievement in terms of performance and competitive advantage
By exploring the topic, Lynch (2003) has stated that strategic planning is ability of organisation to predict, act and manage resources before the competitor, to maximise resources in terms of better position in marketplace. Following, Goodwin and Wright (2004) stressed importance of the identification of trends and the anticipation of changes in today marketplace in order to organisation become successful. By dealing and adapting creatively and quickly to major changes, organisation is taking advantage of unexpected opportunities and staying ahead in a challenging economy (Olsen et al, 2008).
In UK business context, Hospitality industry is essential part of challenging UK business environment with estimated turnover of £90 billion (Key Note, 2012).The UK Hotel Sector is now characterised by uncertainty and rapid change. Research by Mintel (2012) found that the performance of UK hotel market is affected by global economic uncertainties’ and different trends in the global competitive market. Despite of all global financial challenges, it is estimated that by 2016, growth and value of UK hotel sector will increase to £16.82bn (Key Note, 2012).
Hilton Hotels Group is one of the world market leaders with more than 71,000 employees, 3,400 hotels in 80 countries in all around the world (Hilton, 2013). In UK context, with 18 hotels in London, 69 in the UK and 11.000 employees, Hilton Hotels are major player and significant contributor to the UK economy.
In order to understand business environment in which Hilton Hotel Groups operates, analysis of business and customer trends and task plays significant aspect of analysis.
Hilton Group hotels was affected by challenging economic downturn and level of occupancy was affected which had effect on revenue. Also, the challenging global climates have impact on corporate travel market that has significantly affect Hilton hotel performance, because corporate or business travellers mostly compromise of Hilton’s customer base.
The social changes plays vital aspect in hotel operate as the high unemployment reduce income and cost of living increase it will result in reducing money spent on premium service and Hilton Hotels will be affected.
Hilton’s been first in hotel business gained LEED certification and emphasises power relationships with their guests and strongly focused to reduce environmental impact in business environment by implemented several “green projects” (Marketing, 2009). Similarly, Wade (2012) pointed out that brand consistency, recognition and diversified portfolio are significant Hilton Hotel’s strength in marketplace. Asian market makes up only 1.7 per cent in Hilton revenue which means that most of income and profit is made from USA and UK market, meaning that this lack of geographical spread is seen as a weakness. By compare Hilton Hotels with Marriott Hotels, lack of an information and technology infrastructure that would enable hotel employee’s to provide great guests’ service are significant weakness.
In Global context, there are opportunities in expand their customer base from Asia market and Brazil, because travel market of this part of world is growing. In terms of threats, Marriott, Accor and Starwood Hotel Group are one of the major competitors in the hotel business operate. In addition, rising costs and debt crisis in some part of Europe and budget hotels are increasingly recognised as a threat, because travellers with less discretionary income are looking for the cheaper alternatives like Premier Inn Hotels or Travelodge.
As a result of researching, micro and macro business environment, study has shown that source of competitive advantage of Hilton Hotels are location; brand alignment and exceptional customer care culture.
Given these trends and data by analysing Hilton hotels environment there are four scenarios that hotel industry will face in the future. It is critically important of linking these trends to the business environment (Wade, 2012).
Recent study by Global Travel Monitor (2012) argues that technology will make significantly change in hotel relationship management with 5 billion web users and new generation of intelligent web technology that could deliver virtual travel experiences.
Green Hotelier (2012) indicated that in current hotel business environment, 2.5 percent of hotel operating expenses are energy costs; with tendency in the future that it will increase, meaning that sustainability impact will become a significantly important priority for the Hotel sector in the future. Given rising price such as food, energy and water rates as a vital key of growing concerns about borrowing natural resources in the future and climate and natural change will impact hotel business (Green Hotelier, 2012)
UN (2012), forecast increase in society changing and it project that population over 60 will raise by 33 per cent by 2030. In contrast, World Bank (2012) predict shifting balance of spending and earning power will be in the female favour, by 2020. This implies that guests will be powerful, more demanding and expect perfection that hotels faces in the future.
Growing Asian or emerging markets produce new source of guests and these changes in global travel context will impact hotel industry in the future. Travellers from these markets will have different spending capacity and they will be cost conscious. The middle class from emerging markets particular from China, Brazil and India will grow to1.2 billion in 2025 and understanding of their needs will be vital for hotel positions and competitive advantage (World Travel Monitor, 2012).
Based on the research of business environment and dynamics of trends, Technological Advancement scenario is a more likely to happen in the future.
Global Travel Industry (2011) identified that more than 90 per cent of hotels emphasise importance of using new technology. Hospitality Technology (2010) recognised lack of IT infrastructure and lack of technological innovations in Hilton’s compared with competitors. In order to manage growing competition Hilton hotels launched smart mobile apps to enable increased, booking capacity. Recently, Marriot Hotels, the Hilton’s hotel comprehensive competitor, installed in USA and Canada hotels, interactive touch screen providing a wide range of information to guests such as; news, print travels and directions to local attractions (Hospitality Technology,2011), Following up, Global Travel Monitor (2012) argues that in the future, the key change will be creativity and adaptability in terms of information and entertaining, meaning that development in these fields will ensure that hotels in the future will have personal robots and holographs that could allow guests to virtually feel objects. Moutinho (2012) stressed importance of the using innovative technology during booking and price comparison that will empower Hilton’s to exceed guest satisfaction. But, the main challenge for Hilton hotels will be in field of understanding the storage and security implications and given the wide range of different technologies that are arriving, there are concerns how Hilton Hotels will absorb and evaluate benefits and manage cost in terms of implementing innovative strategy in the future.
To successfully, face global competition and build competitive advantage, Hilton hotels should offer their guests to use and get access an unlimited internet service, without any charge. It would make differences and it would be convenient way for hotel to enhance guest’s base and expand sustainability. Overall, Hilton Hotels should develop an intense focus on innovation strategy to generate new ideas and adopt crowd sourcing concept to enhance and manage guest experiences. Also, by putting in the place mechanism for effective evaluating and monitoring new development in the field of technology innovation, Hilton’s will gain retention and growth (Christou and Gretzel, 2012).To ensure effectiveness and eliminate barriers, Hilton Hotels should put in the place platform of training system for effective handling and protective data.
The research has showed that the scenario planning could help managers and policy makers to decide what kind of strategies organisation will develop and implement to survive different uncertainties’ of external development. It is evident, that current business environment of Hilton hotels are changing and complexity of these activities will grow in the future. Overall, for all scenarios, it is rather important to exploit the opportunities at marketplace in terms of gaining competitive advantage and increasing guest satisfaction. Following, it is important that Hilton Hotels should have a plan for future scenarios and be ready for all growth uncertainties.
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