Hilton Hotel belongs to the hospitality industry, catering to the needs of customers through its 7,000 hotels, handling 20 million visitors. The company has headquarters in the US and operates hotels and resorts in 6 continents. The following PESTLE analysis of Hilton Hotel evaluates the external environment, examining the impact of different factors on the company.
Hilton Hotel Information
| Property | Description |
|---|---|
| Company Name | Hilton Worldwide Holdings Inc. |
| Headquarters | McLean, Virginia, United States |
| Founded | May 31, 1919 |
| Founders | Conrad Hilton |
| Number of Properties | 6,174 (as of December 31, 2021) |
| Brands | Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Curio Collection by Hilton, DoubleTree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton, Home2 Suites by Hilton, Hilton Grand Vacations |
| Revenue | US$7.15 billion (2021) |
| Number of Employees | 179,000 (as of December 31, 2021) |
| Website | https://www.hilton.com/ |
Political Factors
The political factors have a strong effect on the organizations that are a part of the hospitality industry. The Russian invasion of Ukraine has caused significant disruption to the political stability in the region. Considering the high degree of risk, the management of Hilton has decided to close its corporate office that was located in Moscow (Diller, 2022).
Another action that was taken after the war was that further hotel developments have been ceased. The established hotel locations have continued to be operational, however, further development plans were changed due to the ongoing crisis. The management also had to strategize the handling of the payment of the employees in the impacted region.
The government regulations pertaining to tax determines the final cost that would be offered to the customers of the hospitality segment. Hilton hotel had to make adjustment in the room charges through inclusion of the tax changes. Moreover, the number of visitors of Hilton is also effected by the travel barriers and immigration that has been imposed by government.
Economic Factors
The higher level of inflation negatively effects the economic activity in a country. Hilton hotels are exposed to the risk of high inflation as it would require the management to increase their service prices (Clark, 2021). This could decrease customer demand and restrict people’s expenditure in travel and tourism, leading to a decreased in the sales and revenues generated by Hilton hotel.
Income level of the people also formulates an important part of the economic environment for Hilton Hotel and Resorts. The company is considered to be a part of the luxury brand in the hospitality segment, therefore high disposable income of the visitors is of critical importance.
Unemployment is another risk that can disturb the revenues of Hilton. Higher unemployment indicates economic downturn and low disposable income of people. This economic pressure changes the buying power of people and they are less likely to consider spending on luxury hotels. In addition, decreased real estate prices have negative economic impact.
Social Factors
The travel and tourism trend determines the amount of revenues that would be generated by a company. Moreover, the lifestyle that supports tourism and a preference for luxury hotel and resort experience creates growth opportunities for Hilton. Furthermore, the company has been able to take benefit from positive word of mouth and brand image.
In addition, the customer taste and preferences drive the business operations and strategy. The services being offered and their quality is aligned with the customer preferences to retain relevance in the market. However, failure to provide the expected quality can result in dissatisfied customers that can damage the business (Hilton Worldwide Holdings Inc., 2022).
COVID was a significant social challenge for many businesses including the organizations operating in the hospitality sector. Hilton hotel faced the adverse impact of the travel restrictions arising out of pandemic and its related complications. In case of US operations, the management had to proceed with temporarily suspension of operations due to travel ban.
Besides the US, Europe and Asia had comparatively more stringent restrictions on travel and tourism. The pandemic has reduced the number of visitors in the hotels and resulted in lower profitability. However, from 2022 the business outlook has improved as there have been significant ease in travel ban.
Technological Factors
Technological advancements have enabled the organizations to incorporate self-service option as a part of the customer experience. The management at Hilton has aimed to create a frictionless experience for its visitors. This goal has been achieved through the implementation of relevant technology.
One example is of the digital key which allows the visitors to handle the check in process through their phone instead of visiting the front desk. This feature has been particularly favorable amidst the social distancing guidelines. Along with that, contactless payments have been implemented as a part of the self-service feature (Hilton, 2023).
The company needs to have updated and robust information technology systems to maintain cyber security and handle the business operations effectively. Furthermore, artificial intelligence has helped the management to understand factors that are critical to retaining its customer base. Social media discussions are also taken into consideration for analysis of customer feedback.
Legal Factors
The company has to make sure that the details of the customers are maintained in a secure domain and necessary steps are taken to protect the customer data. In cases where the protection of visitor’s data such as credit card information has been breached, the management at Hilton had to deal with a financial penalty of $700,000 (Roberts, 2022).
Customer safety needs to be at the core of the hotel operations as negligence in this regard can lead to legal claims and penalty. Furthermore, employment laws are applicable on the company, which are relevant to the region where the hotels are operating. One example of the employment law is the equal employment opportunity, which is being practiced at the organization.
Environmental Factors
The environmental framework at Hilton involves adoption of business practices that help the company in lowering the harmful impact to the environment. Some of the example of the eco-friendly practices are reflected in the form of carbon emission reduction, net zero targets and emphasis on use of renewable energy sources.
The management has developed a goal to reduce the carbon intensity by 61%, which will be supported by the integration of renewable energy across the hotels. Water stewardship and reduction of its wastage is also included in the sustainability goals of Hilton hotels. Moreover, sustainable suppliers are selected by the management to strengthen eco-friendly position (Hilton Worldwide Holdings Inc., 2022).
Conclusion
Hilton hotel is operating in a favorable business environment. There have been some disturbance in the company operations due to political turmoil associated with Russia and Ukraine war. Moreover, pandemic had resulted in low visitors leading to lower revenues. However after the travel bans were lifted, the environment became more favorable for the company.
References
- Clark, P. (2021). Hilton CEO Thanks Fed, Says Hotel Rates Can Rise With Inflation. Bloomberg. Retrieved from: https://www.bloomberg.com/news/articles/2021-10-27/hilton-ceo-thanks-fed-says-hotel-rates-can-rise-with-inflation#xj4y7vzkg
- Diller, M. (2022). Hotel brands are pausing development in Russia, but they aren’t pulling out completely. The Washington Post. Retrieved from: https://www.washingtonpost.com/travel/2022/03/15/hotels-russia-marriott-hilton-ihg/
- Hilton (2023). From Digital Keys to Contactless Payments, Here’s How Hilton’s Consumer‑Centric Tech Innovations Are Delivering a Frictionless Travel Experience. Retrieved from: https://stories.hilton.com/innovation/hiltons-consumer-centric-tech-innovations-delivering-frictionless-travel-experience
- Hilton Worldwide Holdings Inc (2022). Form 10-K. Retrieved from: https://otp.tools.investis.com/clients/us/hilton_worldwide2/SEC/sec-show.aspx?FilingId=16379047&Cik=0001585689&Type=PDF&hasPdf=1
- Roberts, P. (2022). Hilton Was Fined $700K for a Data Breach. Under GDPR It Would Be $420M. Digital Guardian. Retrieved from: https://www.digitalguardian.com/blog/hilton-was-fined-700k-data-breach-under-gdpr-it-would-be-420m