Hilton Hotels Corp - Travel and
Tourism - World
Euromonitor International : Global Company Profile
January 2009
Hilton Hotels Corp - Travel and Tourism
World
List of Contents and Tables
Strategic Evaluation................................................................................................................................................ 1
SWOT analysis.......................................................................................................................................................... 1
12 Month Highlights ............................................................................................................................................... 2
2007-2008 ................................................................................................................................................................. 2
Prospects .................................................................................................................................................................. 3
Core Businesses ........................................................................................................................................................ 3
Growth Opportunities ............................................................................................................................................... 3
Limited Potential....................................................................................................................................................... 5
Table 1
Hilton Hotels Corp: World Sector Sales Performance 2007.............................................. 5
Table 2
Hilton Hotels Corp: Hotels Regional Sales Performance 2007 ......................................... 5
Company Strategy .................................................................................................................................................. 6
Strategic Objectives and Challenges......................................................................................................................... 6
Ownership Events ..................................................................................................................................................... 6
Table 3
Hilton Hotels Corp: World Shares & Rankings in Travel & Tourism by
Sector 2006-2007............................................................................................................... 6
Table 4
Hilton Hotels Corp: World & Regional Shares in Travel & Tourism by
Sector 2007........................................................................................................................ 6
Company Structure ................................................................................................................................................ 7
Hilton Hotels Corp.................................................................................................................................................... 7
Summary 1
Hilton Hotels Corp: Travel & Tourism Key Facts............................................................. 7
Production and Distribution ..................................................................................................................................... 7
Brand Assessment ................................................................................................................................................... 7
Brand Strategy .......................................................................................................................................................... 8
Hilton ........................................................................................................................................................................ 8
the Waldorf=astoria Collection ................................................................................................................................ 8
Hampton Inn & Suites............................................................................................................................................... 9
Conrad Hotels & Resorts .......................................................................................................................................... 9
Embassy Suites Hotels ............................................................................................................................................ 10
Doubletree .............................................................................................................................................................. 10
Hilton Grand Vacations .......................................................................................................................................... 10
Homewood Suites.................................................................................................................................................... 10
Hilton Garden Inn................................................................................................................................................... 11
Appendices............................................................................................................................................................. 11
Financial Summary................................................................................................................................................. 11
Table 5
Hilton Hotels Corp: Financial Summary 2003-2007 ....................................................... 11
Company Background............................................................................................................................................. 11
Summary 2
Hilton Hotels Corp: Historical Development .................................................................. 11
Summary 3
Hilton Hotels Corp: Subsidiaries 2007 ............................................................................ 14
Summary 4
Hilton Hotels Corp: Travel & Tourism Brands 2007....................................................... 15
Summary 5
Hilton Hotels Corp: Company Locations ........................................................................ 15
Summary 6
Hilton Hotels Corp: Websites.......................................................................................... 15
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HILTON HOTELS CORP
STRATEGIC EVALUATION
SWOT analysis
Strengths
•
Global leader – Hilton Hotels Corp is the second largest hotel chain in the global hotels market, losing only
to its major rival Marriott International.
•
Diversified portfolio – Hilton Hotels has a diversified product portfolio based on price and service,
comprising nine different brands: The Waldorf=Astoria Collection, Hilton, Conrad Hotels & Resorts,
Hampton Inn & Suites, Embassy Suites Hotels, Doubletree, Hilton Grand Vacations, Homewood Suites by
Hilton and Hilton Garden Inn.
•
Focused pipeline development – Hilton Hotels is aggressively pursuing a growth strategy to further
consolidate its presence in foreign markets and capitalise on the booming travel and tourism industries of
emerging markets such as India and China. In June 2008, it announced plans to build 300 hotels in the AsiaPacific region in the next decade.
•
Loyalty Programme – the Hilton HHonors programme is well-recognised in the travel and tourism industry.
In 2007, Hilton Hotels Corp extended its loyalty programme with the introduction of Experience Rewards,
offering its 17 million members more personalised and experience-oriented rewards options. Early in 2008,
Hilton also ended blackout dates, making the program more valuable to users. A strong focus on its loyalty
programme is pivotal not only to retain consumers but also and, most importantly, to create brand loyalty
among new ones and boost future revenues.
Weaknesses
•
Domestic market focus – the US alone accounts for approximately 85% of the entire Hilton Hotels Corp
system, making it vulnerable to any economic downturns in its domestic market.
•
Late international expansion – the fact that Hilton started its international expansion in the latter part of the
review period has hurt its prospects. This is particularly true given the challenges multinational companies
face when venturing abroad such as the lack of infrastructure, which make it nearly impossible to reach a
similar stage of development as first entrants.
•
Expensive real estate – the rising cost of real estate in dynamic markets like China, Vietnam, India and
Russia has made it harder to move lower cost brands into those countries.
•
Single owner – being privately owned means that Hilton Hotels Corp is susceptible to any decisions taken
by Blackstone, be it the divestiture of any hotel brand or the increase of daily rates to justify the high price
paid for the property.
Opportunities
•
Dynamic growth in emerging markets – improving economic conditions, developing infrastructures, the
development of the urban middle class and growing foreign tourism are driving strong growth in emerging
markets such as Russia, India and China – key target markets for Hilton Hotels.
•
Luxury brands – the global hotels category is seeing intense competition, with the major players exploiting
considerable resources to generate and maintain high-profile brands. Hilton Hotels is seeking to redefine
and revitalise its eponymous brand, as well as expand its portfolio through the development of The
Waldorf=Astoria Collection.
•
Unique travel experiences – the shift in consumer demand towards a unique travelling experience is
creating opportunities for hotel operators to develop distinctive brands, properties and services. Hilton is
investing in developing more sophisticated amenities and services, as well as building The Waldorf=Astoria
Collection around highly individual boutique, historic and landmark hotels.
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•
Technology revolution – the adoption of new technologies and the continued focus on global branding is
creating a larger commitment to the internet, with hotels and other travel accommodation continuously
enhancing online activities to minimise costs and better serve consumers.
•
Green appeal – recent studies have revealed that tourists are increasingly worried about business, social and
environmental responsibility. Therefore, the adoption of Green Buildings does make a difference. Hotels as
well as other travel accommodation which are able to maintain operational costs (energy, water and
residues) to a lower level and enhance services through the offer of healthier work environments and more
comfort to tourists are likely to strengthen their competitive advantage in the near future.
•
Health and wellness appeal – as a premium hospitality provider, Hilton Hotels is well-positioned to benefit
from the increased demand for health and wellness services. In 2007, Hilton formed a strategic partnership
with Guerlain to offer premium spas in its hotels. The initial enactment of the agreement entailed the
openning of a 15,000 sq ft (1,400 sq m) Guerlain spa, managed by Spa Chakra, along with a retail boutique.
Threats
•
The individuation of consumer choice – increased demand for unique lodging experiences is driving a trend
towards independent hotels, particularly in the US, thus presenting a threat to major hotel chains such as
Hilton. The company is looking to address this by adding more boutique hotels to its portfolio and focusing
on the historic and landmark qualities of its properties.
•
Downturn in business travel – Hilton Hotels is heavily reliant on business travellers, meaning that the
negative impact of a deterioration of economic conditions in business coupled with the ongoing pressure to
push costs down, particularly in the US and Western Europe, would pose a significant threat to its future
performance.
•
Potential downturns in air travel – rising fuel prices have forced airlines to cut capacity, which will help
airlines raise prices. This is especially true in the US market with some European airlines announcing cuts
for the winter season. This is likely to impact demand for hotel rooms and travellers may trade down to less
expensive brands.
12 MONTH HIGHLIGHTS
2007-2008
•
In June 2008, Hilton Hotels Corp announced plans to build 300 hotels in the Asia-Pacific region in the next
decade. Part of the plan involves the construction of seven new hotels in India: the Hilton Dwarka New
Delhi, (300 rooms), the Hilton Garden Inn New Delhi/Dwarka (400 rooms), the Homewood Suites by
Hilton New Delhi / Dwarka (100 rooms), the Hilton Residences Kolkata (100 rooms), the Hilton Garden
Inn Chennai/OMR (250 rooms), the Homewood Suites by Hilton Chennai/OMR (100 rooms) and the Hilton
Garden Inn Trivandrum (200 rooms).
•
Hilton Hotels signed a strategic development alliance with HLH Property Ltd in June 2008 to build 30 new
hotels in the UK in the next five years.
•
Hilton Hotels launched an Online Group Booking System, featuring main offers for time-strained travellers.
Initially available only to business travellers, the Personalised Online Group (POG) web portal allows
leisure travellers to customise a web page for group events.
•
Hilton Hotels extended its Hilton HHonors loyalty programme in 2007 with the introduction of Experience
Rewards, offering customers more personalised, experience-orientated rewards options.
•
2007 saw the company outline plans for the development of a number of its brands in the expanding
Russian market, which it has identified as being amongst the markets with the strongest growth potential in
the world. It sees the potential to open 70 hotels in Russia over the next decade.
•
At the end of 2007, Hilton Hotels Corp was acquired by Blackstone Investment Funds. With more than
100,000 hotel rooms in the US and Europe, Blackstone's extensive product portfolio complements that of
Hilton.
•
In April 2007, Hilton Hotels Corp sold the 128 hotel Scandic chain to EQT for approximately US$1.1
billion. The sale is part of Hilton's strategy to divest any brands that are not relevant to the company to
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eliminate some of the debt acquired following the purchase of Hilton International and to further develop
well-established brands abroad.
PROSPECTS
Core Businesses
•
Hilton Hotels Corp is engaged in the ownership, management and development of hotels, resorts and
timeshare properties, and the franchising of lodging properties. Between 2006 and 2007, its global value
share in hotels declined to just less than 4%, mainly as a result of the weak performance in maturing
markets like Western Europe. The sale of Scandic helped eliminate some of the debt acquired after the
purchase of Hilton International, but it was not sufficient to completely reestructure its financial results.
•
Facing maturity and intense competition in key markets, most notably the US, Hilton Hotels is looking to
diversify its consumer base beyond the business travellers, which have traditionally comprised the main
focus of its core, eponymous brand, and attract a wider range of travellers, including women, young people
and leisure guests.
Hotel development
•
North America remains at the core of Hilton Hotels Corp's operations, following the international expansion
resulting from the acquisition of Hilton International.
•
In general, the development of hotels providing a more individuated consumer experience founded on
aesthetic and emotional qualities is expected to be a central growth driver in North America in the
upcoming years. Hilton Hotels is looking to develop its offer in line with such changes in demand,
enhancing its services, redesigning hotels and focusing on the unique qualities of individual properties like
The Waldorf=Astoria Collection.
•
Hilton Hotels has in place an aggressive hotel development strategy, supported by key strategic alliances
with the Caribbean Property Group for development within Central America & the Caribbean; the London
& Regional Properties Limited in Russia; and the Shiva Hotels Limited in the UK and Ireland. Overall, a
total of 386 hotels were opened in 2007. There are 427 openings in line for 2008 and 552 for 2009 and
2010.
Marketing appeal
•
Through 2007 and in early 2008, Hilton continued to reap the benefits of its "Travel Takes you Places"
campaign, first launched in 2006. The campaign represents a US$1 billion effort through which Hilton
seeks to reconnect with its customers at an emotional level, and is true to the concept of travel facilitating
life's experiences. This campaign has been pivotal in boosting overall sales as it enticed guests to fully
explore Hilton's exclusive offers without worrying about location or price.
•
Its "be hospitable" advertising campaign was launched mid-2007 and is inclusive of all its brands. The
campaign relates to Hilton's core business strategy, which is based on the "be hospitable" philosophy started
by the hotel founder Conrad Hilton. So far, the campaign has proved successful, as it embraces the entire
Hilton organisational structure under a single concept – that of "sharing the light and warmth of hospitality"
– and transmits to guests its responsibility to provide superior customer service.
•
Early in 2008, Hilton Garden Inn launched its "Tomorrow's a big day" cable and advertising campaign,
which represents the biggest media advertising yet for the brand. Advertisements are expected to air
throughout 2008 and continue targeting customers for marketing purposes, a trend expected to continue
throughout the forecast period, and to be replicated in competitors' marketing plans.
Growth Opportunities
•
Travel accommodation sales are expected to maintain an upward trend but develop at a slower pace
compared to the review period, growing at a compound annual growth rate (CAGR) of 5%. By 2012, sales
are expected to reach US$684 billion. This is a very positive forecast, given a potential downturn in air
travel due to escalating fuel prices.
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•
In general, international expansion is a way for large US-based chains like Hilton Hotels to combat a
downturn in travel in the US, which has been hard hit by a decline in the economy, and cultivate loyalty
among travellers. As a result, the company is expected to continue to develop its international pipeline
aggressively.
•
In 2006, the US travel accommodation industry experienced significant increases in construction prices,
whereas in 2007 it held steady in this respect mainly because price increases had been so significant in 2006
and a general slowdown in demand for construction due to a collapse in residential construction. Projects in
the pipeline for 2007 have been for the most part executed, but the credit crunch and economic
circumstances cast a shadow on the viability of new projects, and the announcements of new projects
slowed in 2007.
Emerging markets
•
Asia-Pacific is forecast to be the fastest growing regional hotels market over the 2007-2012 period, with a
CAGR of 8%. The region's dynamic performance is set to be driven by major emerging markets, most
notably China and India, which are seeing economic expansion, developing travel infrastructures, growing
middle classes and an increase in foreign tourism generate demand for hotels.
•
While 90% of the hotels in Hilton Hotels Corp's development pipeline in 2007 were in North and Latin
America, the company expects to see international development comprise a growing proportion of its
pipeline within the next few years. In particular, Hilton Hotels is looking to exploit growth in major
emerging markets through the development of multi-unit deals.
•
Hilton Hotels had around 40 hotels in Asia-Pacific at the beginning of 2007. Its growing presence in the
region, particularly in China and India, is likely to push this number further in the upcoming years. In June
2008, it announced plans to build 300 hotels in the Asia-Pacific region in the next decade.
•
A joint venture with DLF Limited, for example, aims to develop hotel properties and serviced apartments in
India, with plans to develop and own 50-75 mid-scale and extended-stay hotels in the market by 2014.
Another alliance with Deutsche Asset Management and HQ Asia-Pacific is seeking to develop an initial 25
Hilton Garden Inns in Beijing, Shanghai and Tianjin in China. These are all expected to be franchised
hotels.
•
Hilton Hotels has also signed a management agreement with China Merchants Property Development
Company Limited for the Conrad Beijing, one of Beijing's newest and most luxurious hotel developments.
Scheduled to open at the end of 2010, the Conrad Beijing will join Conrad Hotels & Resorts, the global
contemporary luxury hotel brand of the Hilton Family of Hotels, as it expands its luxury portfolio in China.
•
The Russian hotels market is forecast to grow at a CAGR of 2% over the 2007-2012 period, as operators
invest in the development of properties and shift hotels away from the Soviet-style hotels that currently
represent a significant proportion of the available travel accommodation in the market.
•
Hilton Hotels has announced plans to introduce a number of its hotel brands in Russia in the next six years.
Overall, the hotel chain sees opportunities for a number of its brands in the Russian market, which has an
almost total lack of internationally branded properties throughout its regional cities.
•
Hilton Hotels anticipates that it could have more than 70 hotels in its portfolio across Russia over the next
10 years as it seeks to exploit improved access from key feeder markets such as Western Europe and the
US, and increased wealth and mobility amongst domestic travellers. To service the expected growth of the
Russian market, Hilton opened a dedicated development office in Moscow in January 2007 and is adding to
its team of developers.
Loyalty programme
•
The Hilton HHonors loyalty programme is a critical driver for future growth. Hence, in an attempt to
enhance overall brand loyalty and attract a larger number of travellers, Hilton is implementing a series of
actions to develop it further including the broadening of loyalty earn and redeem partners; the strengthening
of consumer analysis capabilities; and the ongoing revision of ownership options.
•
In 2007, Hilton extended its Hilton HHonors loyalty programme with the introduction of Experience
Rewards, offering its 17 million members more personalised and experience-oriented rewards options.
Early in 2008, Hilton also ended blackout dates, making the programme more valuable to users.
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Through an exclusive partnership with Signature Days, an online provider of experience gifts in the US,
HHonors members can redeem points for a selected range of Experiences, including sky diving, hot-air
balloon rides, private yoga lessons and wine tasting. Members can also redeem points for a Signature
Voucher, a gift card giving members access to all that is available at www.signaturedays.com. The
company states that Experience Rewards's focus on customisation represents a departure from the existing
Hilton HHonors programme and any other loyalty programme.
Pipeline development
•
Because it is mainly located in North America, the Hampton brand has been hardest hit by the slowdown in
the US economy. Not surprisingly, it registered much slower growth rates in 2006-2007.
•
Nevertheless, in 2009-2010, the Hampton brand is expected to see the strongest pipeline development with
a total of 214 hotel openings. The main goal is to exploit the strength of the Hilton eponymous brand in
markets where the Hampton brand is less well-known. The move does not affect hotels in the US.
Limited Potential
•
The mature Western European market is expected to post the slowest regional growth over the forecast
period, with a projected CAGR of only 1% for hotels. What growth there is, is expected to be driven by an
increase in the number of short breaks spurred by the growth in low-cost airlines and a rising number of
visitors from America and Asia. A strategic development alliance between Hilton Hotels Corp and HLH
Property Ltd signed in June 2008 is likely to offset the negative forecast with the opening of 30 new hotels
in the next five years. The ultimate goal is to steal shares away from independent hotels that make up the
majority of sales.
•
After Western Europe, Australasia and North America are both expected to develop at a CAGR of 4% over
the 2007-2012 period. Such slow growth is set to derive from general economic and business conditions,
which adversely impact the income levels of potential travellers and a rising lack of confidence in strong
markets like the US. This is likely to limit future operations, particularly given the strong presence Hilton
Hotels has in North America.
Table 1
Hilton Hotels Corp: World Sector Sales Performance 2007
US$ million
Hotels
Source:
Note:
Table 2
Market
size
Market
% CAGR
2002-2007
Market
% CAGR
2007-2012
% of
company
sales
Company
share
2007
Global
ranking
2007
392,199.9
8.3
4.7
100.0
3.9
2
Euromonitor International
Percentage of company sales in each sector is calculated from rsp sales within this market in 2007. This figure
may be slightly distorted by double-counting products which appear in more than one sector
Hilton Hotels Corp: Hotels Regional Sales Performance 2007
US$ million
Market
size
Market
% CAGR
2002-2007
Market
% CAGR
2007-2012
% of
company
sales
Company
share
2007
Regional
ranking
2007
Western Europe
Eastern Europe
North America
Latin America
Asia-Pacific
Australasia
Middle East and Africa
121,778.7
14,683.3
106,016.5
36,968.7
86,578.0
3,303.8
22,870.9
6.7
16.0
7.3
10.4
10.0
12.6
8.1
1.4
5.7
4.4
6.9
8.3
4.4
4.5
8.0
0.5
84.6
1.5
1.5
1.1
2.9
1.0
0.5
12.2
0.6
0.3
5.0
1.9
6
11
2
5
16
3
2
WORLD
392,199.9
8.3
4.7
100.0
3.9
2
Source:
Note:
Euromonitor International
Percentage of company sales in each region is calculated from rsp sales within this market in 2007
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Hilton Hotels Corp - Travel and Tourism
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COMPANY STRATEGY
Strategic Objectives and Challenges
•
Hilton Hotels relies on its scale, gaining members through its loyalty programmw and continuously
expanding its hotel network.
•
Hilton Hotels is also focusing on more individuated properties, targeted at an emerging class of travellers
who are seeking distinctive travelling experiences. Notably, The Waldorf=Astoria Collection presents
enormous future potential as it is strongly focused on the uniqueness of each hotel, with boutique, historic
and landmark hotels central to its development strategy. Until 2010, four new units are likely to be added to
The Waldorf-Astoria Collection.
Lack of infrastructure and higher costs hinder international expansion
•
Hilton Hotels is expected to face many challenges when building abroad, which could limit expansion or
force companies to partner with local companies. For example, corruption continues to hamper the business
environment in Asia-Pacific, being widespread in many countries in the region including Indonesia, the
Philippines, Vietnam and China. This imposes additional expense on businesses and raises the cost of doing
business. Consumers are also affected by corruption since higher costs translate into higher prices.
•
The lack of adequate infrastructure is another major obstacle to business and economic development in the
Asia-Pacific region. Apart from markets such as Hong Kong, Singapore, Japan, Taiwan and South Korea,
the rest face infrastructure problems. Growing urbanisation, increasing consumption and expanding
economic activities have put strains on existing infrastructure in these countries.
•
The rising cost of real estate in dynamic markets like China, Vietnam, India and Russia has made it harder
to find good property for less expensive brands. It is worth noting, however, that the entering of
partnerships with local real estate companies is helping with that, particularly in India. In an attempt to
avoid expensive prices, Hilton should consider moving into second tier cities.
Ownership Events
•
At the end of 2007, Hilton Hotels Corp was acquired by Blackstone Investment Funds. With more than
100,000 hotel rooms in the US and Europe, Blackstone's extensive product portfolio comprising ESA,
MeriStar, LaQuinta and Boca complements that of Hilton. Hence, future investments are expected to further
enhance hotel development strategies and the quality of services provided in the short term.
•
In April 2007, Hilton Hotels Corp sold the 128 hotel Scandic chain to EQT for approximately US$1.1
billion. The sale is part of Hilton's strategy to divest any brands that are not relevant to the company to
eliminate some of the debt acquired following the purchase of Hilton International and to further develop
well-established brands abroad. According to company sources, American-based brands such as Garden
Inn, for example, are more likely to performe well in the Nordic than the Scandic chain elsewhere.
Table 3
Hilton Hotels Corp: World Shares & Rankings in Travel & Tourism by Sector 2006-2007
% retail value rsp
Hotels
Source:
Share
2006
Ranking
2006
Share
2007
Ranking
2007
Sector
growth
2006/2007
Company
growth
2006/2007
4.1
2
3.9
2
4.9
0.3
Euromonitor International
Table 4
Hilton Hotels Corp: World & Regional Shares in Travel & Tourism by Sector 2007
% retail value rsp
WE
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EE
NA
LA
As
Au
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Hotels
1.0
0.5
Af/ME
WO
1.9
3.9
Hotels
Source:
Key:
12.2
0.6
0.3
5.0
Euromonitor International
WE=Western Europe; EE=Eastern Europe; NA=North America; LA=Latin America; As=Asia-Pacific;
Au=Australasia; Af/ME=Africa/The Middle East; WO=World
COMPANY STRUCTURE
Hilton Hotels Corp
•
Headquartered in Beverly Hills, California, USA, Hilton Hotels Corp is engaged in the ownership,
management and development of hotels, resorts and timeshare properties, and the franchising of lodging
properties. The company operates three reportable business segments: Hotel Ownership; Managing and
Franchising; and Timeshare.
•
As of January 2008, Hilton Hotels Corp's system comprised 2,970 properties with around 500,000 rooms in
70 countries and territories. Of these properties, 505 belonged to the Hilton brand, 18 to the Conrad Hotels
& Resorts, 185 to the DoubleTree, 190 to the Embassy Suites Hotels, 1,490 to the Hampton Inn & Suites,
347 to the Hilton Garden Inn, 11 to the Hilton Grand Vacations, 219 to the Homewood Suites by Hilton and
5 to The Waldorf=Astoria Collection.
•
In October 2007, Hilton Hotels merged with the Blackstone Group, an asset management corporation.
According to press material, the Blackstone Group has no intentions of dissolving or altering the Hilton
structure, but rather is interested in strengthening the group's presence in the industry. Blackstone expressed
its intent to run Hilton in the most cost-efficient way possible. Through this merger, Hilton will no longer
be a publicly traded company.
Summary 1
Hilton Hotels Corp: Travel & Tourism Key Facts
Company name & status:
Hilton Hotels Corp
Headquarters:
USA
Sector involvement (2007):
Travel Accommodation
Region involvement (2007):
North America, Western Europe, Eastern Europe,
Latin America, Asia-Pacific, Australasia, Middle East
and Africa
Source:
Euromonitor International from company reports
Production and Distribution
•
In 2008, Hilton Hotels launched an Online Group Booking System, featuring main offers for time-strained
travellers. Initially available only to business travellers, the Personalised Online Group (POG) web portal
allows leisure travellers to customise a web page for group events. This means guests will have privileged
access to special rates as the POG allows them to book and manage overall attendance at an event through a
password-protected page. Once a contract has been signed with a minimum of 10 rooms per night, a POG
can be set up to manage and coordinate an event online. Individuals using the POG can book
accommodations, download itineraries, check eBrochures and keep themselves informed about the event.
•
A year earlier, Hilton Hotels launched www.hilton.com in Spanish, German and Japanese to provide
travellers with a more tailored internet experience and allow them to search for hotel accommodation in
their native language.
BRAND ASSESSMENT
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Brand Strategy
•
Hilton Hotels Corp aims to offer a broad variety of hotel experiences, including 4-star city centre hotels,
convention hotels and conference centres, suites, extended stay and mid-priced hotels with high service
levels, as well as destination resorts, holiday ownership and airport hotels. Each brand offers differentiating
touches such as the Doubletree warm cookie welcome and the Hampton Inn's complimentary breakfasts.
•
It is worth noting, however, that while having a distinct positioning for each of its nine brands, Hilton
Hotels has not forgotten its origins and that it is its responsibility to "share the light and warmth of
hospitability" as stated by its founder Conrad Hilton. In an attemp to disseminate this philosophy across the
entire organisation and remind employees that Hilton is not in the hotel business but rather in the business
of hospitability, Hilton extended its "be hospitable" campaign through the "connections" campaign.
•
The new campaign emphasises the connections travellers make, how travel truly brings people together and
creates lasting memories. Hence, no matter the purpose of the trip, Hilton wants guests to "connect" with
any of the Hilton Family brands and create memories of a life well-lived.
•
This is a smart strategic move as it de-commoditise hotels and connects with customers at an emotional
level so that location and price are not the main determinant when choosing a travel accommodation.
Hilton
•
Hilton is the flagship brand of Hilton Hotels Corp, offering upscale, full-service hotels that typically include
swimming pools, gift shops and retail facilities, meeting and banquet facilities, restaurants and lounges,
room service and parking facilities, as well as other services. The Hilton brand also includes Hilton Suites
hotels, which are upscale, all-suite hotels.
•
The acquisition of Hilton International added 249 Hilton branded hotels to the company's system. At
January 2008, Hilton had a total of 505 hotels and 175,360 rooms and its target audience was divided as
follows: 32% business, 33% leisure and 35% groups.
•
Despite having a global presence, the Hilton brand is strongly positioned in North America, with recorded
sales of US$4,490 million in 2007. In the last three years, however, the region recorded slower sales
growth, mainly because of the economic slowdown observed in the US.
•
In 2007, Hilton remained the most popular brand in the Middle East and Africa, leading overall sales.
•
In its efforts to provide a unique experience to consumers and foster the emotional attachment that is an
increasingly important feature of hotel brand development, Hilton is completing the installation of its new
Hilton Serenity Collection of luxurious in-room amenities in all guest rooms.
•
The Hilton Serenity Collection includes: a high quality bed; an in-room coffee system featuring the
renowned Italian brand, Lavazza, and an exclusive Cuisinart dual-cup, single-brew coffeemaker; and a bath
collection offering the exclusive Crabtree & Evelyn La Source line of bath amenities. Moreover, the brand
is continuing to install flat-screen TVs in all of its North American guest rooms.
•
Furthermore, following extensive conceptual development, the Hilton brand launched home-theatre-like
Sight+Sound Rooms at two hotels, including 25 guest rooms at the Hilton Chicago International Airport
and 30 guest rooms at the Hilton San Francisco, in 2007. The new concept features a wide-screen, high
definition, television, a digital surround-sound system and an easy-to-use connectivity panel for music,
videos, games and laptops. Tom Keltner, CEO – Americas and Global Brands, Hilton Hotels Corporation,
emphasised the growing focus on individuating the consumer experience, stating that the Sight+Sound
Rooms "underscore (Hilton's) overall strategy of providing a more personalised experience in-room –
giving guests choice and control over their surroundings".
the Waldorf=astoria Collection
•
Introduced back in January 2006, The Waldorf=Astoria Collection is the newest hotel brand within Hilton
Hotels Corp. It capitalises on the individuation of the consumer experience, promising guests "discovery
and unique experiences". Additionally, the brand is known for its architectural significance, unique décor
and original artwork, historic or landmark status and a reputation for product and service excellence.
•
The new designation originally consisted of New York's Waldorf=Astoria, which is wholly owned by
Hilton Hotels Corp, along with three luxury resorts – the Grand Wailea Resort Hotel & Spa in Hawaii, the
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Arizona Biltomore Resort & Spa in Arizona and La Quinta Resort & Club in California – which are
managed under long-term agreements.
•
In June 2007, The Waldorf=Astoria introduced its new website, www.waldorfastoriacollection.com, which
offers impressive visuals and comprehensive information and highlights the uniqueness of each property.
•
As of January 2008, The Waldorf=Astoria Collection had five hotels with 3,780 rooms. Four hotels were
located in the US and one in the Kingdom of Saudi Arabia. There are four new openings scheduled for the
next three years: the Dakota Mountain Lodge (2009), the Waldorf=Astoria Orlando (2009), the
Waldorf=Astoria Sarasota (2010) and the Waldorf=Astoria Beverly Hills (2011).
•
The company's development of The Waldorf=Astoria Collection represents a response both to the
expansion of the upscale segment and the increasing focus on the less tangible, aesthetic and emotional
aspects of brands as consumers demand something beyond a widely expected level of amenities. This
individuation of the consumer experience is particularly important in the elite segment, in which a brand's
image is built on prestige rather than uniformity.
•
Hilton Hotels Corp enhanced the elite positioning of The Waldorf=Astoria Collection in 2007 through an
agreement with the French luxury skin care, fragrance and beauty line brand, Guerlain. The
Waldorf=Astoria Collection partnered with Guerlain to offer premium spas in its hotels. The initial
enactment of the agreement entailed a 15,000 sq ft (1,400 sq m) Guerlain spa, managed by Spa Chakra,
along with a retail boutique.
Hampton Inn & Suites
•
The Hampton brand, which includes both Hampton Inn and Hampton Inn & Suites, is a mid-priced hotel
aimed at business travellers. Hampton Inn hotels offer limited food and beverage facilities. Hampton Inn &
Suites offer both traditional hotel room accommodations and apartment-style suites within one property. At
the beginning of 2008, there were nearly 1,4900 Hampton hotels in 49 US states, the District of Columbia,
Canada, Latin America and the Caribbean.
•
Hilton Hotels has sought to boost the Hampton brand's international development by the addition of the "by
Hilton" tag to the brand name in Canada, Latin America and the UK. The company is looking to exploit the
strength of its eponymous brand in markets where the Hampton brand is less well-known and the move
does not affect hotels in the US. This involves multiple steps, with the most immediate and noticeable being
the introduction of new signage at most existing hotels, as well as selected graphics on collateral materials.
Secondary steps will occur at the sales and marketing level. Considering the strong brand positioning of the
Hilton brand name outside North America, such a strategy is expected to positively impact international
pipeline developments for the Hampton brand in the near future and enhance market penetration.
•
Because it is mainly located in North America, the Hampton brand has been hardest hit by the slowdown in
the US economy. Not surprisingly, it registered much slower growth rates in 2006-2007.
•
Having focused predominantly on the Americas, the Hampton brand is looking to enter the UK. In 2007,
Hilton Hotels announced that it had signed a letter of understanding for a major development alliance with
the experienced hotel franchise owner and operator, Somerston Hotels UK Limited. The company intends
to introduce 25 Hampton hotels, comprising 3,000 rooms, across the UK by 2012.
•
As a result of its expansion strategy through franchising, the Hampton brand has a total of 401 hotel
openings scheduled between 2008 and 2010.
•
Hampton Inn offers a variety of complimentary services including the popular On the House hot breakfast,
On the Run Breakfast Bags, high-speed internet access in all rooms, wireless internet access in the lobby
and meeting rooms, 24 hour coffee in the lobby, local calls and in-room film channel. All of its services are
backed up by a 100% Hampton Guarantee, which means that if guests are not 100% satisfied, they are not
expected to pay.
Conrad Hotels & Resorts
•
Founded in 1982, Conrad Hotels & Resorts is aimed at operating a network of luxuty hotels and resorts
located in major business centres and top resort destinations. According to company sources, the Conrad
brand is the most global luxury brand within Hitlon Hotels. It is headquarted in the UK.
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•
Conrad Hotels & Resorts's main competitors are Four Seasons, Madarin Oriental and Hyatt Park. Because it
focuses on luxury accommodation, the brand has managed to achieve positive growth in 2007, particularly
in the face of increased industry polarisation and the fact that more affluent consumers are the least
impacted by economic slowdowns.
•
As of January 2008, Conrad Hotels & Resorts had a total of 18 properties or the equivalent of 6,120 rooms
in key global destinations such as North America, Asia-Pacific, Europe and Middle East and Africa. There
are a total of seven new hotels in the pipeline over the 2008-2010 period.
Embassy Suites Hotels
•
Embassy Suites Hotels is focused on branding "spaces", characterised by open-air atriums and spacious
suites. It is targeted at business as well as leisure travellers that look for spacious accommodation when
travelling. In 2007, its market share maintained an upward trend thanks to its huge structure, which is able
to host major business and large group events.
•
The hotel chain offers its guests a wide variety of amenities including fitness centre, high-speed internet
access in the suites and public spaces and complimentary 24-hour Embassy BusinessLink Business Centres
with PrinterOn remote printing. The EmbassyDirect registration kiosk allows guests to check-in, check-out
and print airline boarding passes directly from the hotel lobby.
•
As of January 2008, Embassy Suites Hotels had a total of 190 properties or the equivalent of 45,951 rooms
in key global destinations such as the US, Canada and Latin America. There are a total of 35 new hotels in
the pipeline over the 2008-2010 period.
Doubletree
•
Doubletree offers upscale travel accommodation for business as well as leisure travellers. In 2007, it
recorded a stable share and benefited from the increased industry polarisation.
•
As of January 2008, Doubletree had a total of 185 properties or the equivalent of 46,308 rooms in more
than 150 cities located in the US, Canada and Latina America. There are a total of 35 new hotels in the
pipeline over the 2008-2010 period.
Hilton Grand Vacations
•
Hilton Grand Vacations operates a system of high-quality holiday ownership resorts mainly located in the
US. Despite having a strong competitive positioning, its holiday ownership business remains limited as the
majority of US buyers do not want to travel far from the US during holidays.
•
Its main competitors are Marriott Vacation Club and Starwood Vacation ownership.
•
As of January 2008, Hilton Grand Vacations had a total of 11 properties or the equivalent of 3,540 rooms.
There are a total of four new hotels in the pipeline over the 2009-2010 period.
Homewood Suites
•
Homewood Suites is an upscale brand of residential-style hotels by Hilton. According to company sources,
it is designed to make business and leisure travellers feel close to home, with the comfort, convenience and
privacy of home for the price of a traditional hotel room. The positive performance achieved in 2007 is
directly related to its ability to capitalise on generational travel and the fact that consumers belonging to this
niche often look for residential-style accommodation.
•
In 2007, it registered total sales of US$728 million, up from US$634 million in 2006. It is mainly located in
North America and its main competitors are Residence Inn by Marriott, Hawthorn Suites, Summerfield
Suites, Staybridge Suites, Courtyard by Marriott and Candlewood Suites.
•
This residential-style hotel offers amenities such as spacious studios, one- and/or two-bedroom suites with
fully equipped kitchens and complimentary in-suite high-speed internet access at all locations. Guests also
enjoy a daily complimentary Suite Start hot breakfast and a Welcome Home reception featuring a
complimentary light meal and beverages.
•
As of January 2008, Homewood Suites had a total of 219 properties or the equivalent of 24,119 rooms.
There are a total of 128 new hotels in the pipeline over the 2008-2010 period.
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Hilton Garden Inn
•
Hilton Garden Inn are mid-priced travel accommodation aimed at offering guests the best service at
affordable prices. Its main competitors are Courtyard by Marriott, Four Points by Sheraton and Holiday Inn
Select.
•
Unique attributes of this hotel include microwave, refrigerator and coffee maker in every guestroom. Guests
can also purchase a beverage at The Pavilion Pantry convenience mart, which sells snacks and sundry items
24-hours a day at every location.
•
As of January 2008, Hilton Garden Inn had a total of 347 properties or the equivalent of 47,493 rooms.
There are a total of 205 new hotels in the pipeline over the 2008-2010 period. Most are mainly located in
North America and Europe.
APPENDICES
Financial Summary
Table 5
Hilton Hotels Corp: Financial Summary 2003-2007
US$ million
Net sales
% growth net sales
Operating profit
% growth operating profit
Net profit
% growth net profit
Operating margin (%)
Net margin (%)
Shareholders' equity
Long-term debt
Long-term debt/equity
ratio (%)
Earnings per share (US$)
Number of employees
Net sales per employee
Source:
Note:
2003
2004
2005
2006
2007
3,819
0.1
515
-14.6
164
-17.2
13.5
4.3
4,139
-
4,146
8.6
658
27.8
238
45.1
15.9
5.7
2,568
3,647
142.0
4,437
7.0
805
22.0
460
93.0
18.1
10.4
2,811
3,572
127.1
8,162
84.0
1,274
58.3
572
24.3
15.6
7.0
3,727
6,556
175.9
121
-78.8
9,725
21,177
-
0.43
n/a
-
0.60
70,000
0.06
1.13
70,000
0.06
1.39
105,000
0.08
135,000
-
Euromonitor International from company reports
Year end December
Company Background
Summary 2
Hilton Hotels Corp: Historical Development
Year
Topic
Description
2008
Hotel Development
Hilton Hotels announces seven
new hotel developments in India.
The ultimate goal is to have 75 new
hotels built in the next five to seven
years.
2008
Online Development
Hilton Hotels launches an Online
Group Booking System, featuring
main offers for time-strained
travellers.
2008
Hotel Development
Hilton Hotels announces plans to
build 300 hotels in the Asia-Pacific
region in the next decade.
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2008
Strategic Alliance
Hilton Hotels signs a strategic
development alliance with HLH
Property Ltd to build 30 new hotels
in the UK in the next five years.
2007
Hotel Development
Hilton Hotels announces plans to
introduce new properties across
Russia, Central and Eastern
Europe.
2007
Merger
Hilton Hotels signs a merger
agreement with Blackstone
Investment Funds.
2007
Strategic Alliance
In June, Hilton Hotels announces
key strategic alliances to foster
hotel development with the
Caribbean Property Group, London
& Regional Properties Limited and
Shiva Hotels Limited.
2007
Online Development
www.hilton.com becomes available
in Spanish, German and Japanese.
2007
Online Development
Hilton Hotels launches its new
eTravel Directory of hotels.
2007
Loyalty Programme
Hilton Hotels extends its Hilton
HHonors loyalty programme with
the introduction of Experience
Rewards.
2006
Merger
Hilton Group agrees to sell its
hotels division, Hilton International,
to Hilton Hotels Corp for US$5.6
billion. The deal will again unite the
Hilton brand in the US with more
than 260 Hilton properties in the
rest of the world.
2006
New Brand Development
Hilton Hotels announces it will
launch the Waldorf=Astoria
Collection through two initiatives:
new buildings in selected
international gateway cities and the
co-branding of existing luxury
properties. The brand would only
include exclusive properties in
gateway cities.
2004
IT Development
Hilton Hotels announces bookings
on its brand websites in October
and exceeds call centre bookings
from 800 call centre numbers,
representing a company first since
its start of website reservations.
2002
Other
WestCoast Hospitality Corporation
acquires Red Lion Hotels Inc from
Hilton Hotels Corp, including 41
Red Lion properties and two
Doubletree properties.
2002
New Brand Development
Hilton Hotel Corp launches a new
urban holiday ownership product
called The Hilton Club. This
concept establishes a distinctive
new niche in the holiday ownership
industry by incorporating an urban
setting and a collection of high-end
services and exclusive travel
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privileges tailored for Members
Only. The first project is located on
two designated floors of the Hilton
New York.
2001
Other
Affiliates Camino Real Hotels to the
Hilton brand.
2000
Joint Venture
Hilton Group and Hilton Hotels
Corp form joint venture,
headquartered in Brussels, to
expand the Conrad brand.
2000
Loyalty Programme
Hilton HHonors guest reward
programme expanded in April to
include all Hilton brands, including
those added with the Promus
acquisition.
2000
Other
Homewood Suites re-branded as
Homewood Suites by Hilton.
1999
IT Development
Launches US$30 million central
reservation system HILSTAR,
linking over 500 hotels.
1999
Strategic Acquisition
In November, acquires Promus
Hotel Corporation for US$4 billion,
with Hampton Inn, Doubletree,
Embassy Suites Hotels, Harrison
Conference Centres and
Homewood Suites brands.
1998
New Logo
Unveils new worldwide logo and
first global brand advertising
campaign for Hilton in over 30
years, "It Happens at the Hilton".
1998
Other
Spins off gaming operations into
separate publicly held company,
Park Place Entertainment
Corporation.
1997
Other
Hilton International and Hilton
Hotels Corp begin joint promotion
of Hilton brand worldwide, with
several brand and marketing
alliances.
1996
Strategic Acquisition
Acquires Bally Entertainment
Corporation, to become world's
largest casino gaming company.
1995
IT Development
Debut of Hilton's website
www.hilton.com.
1995
Other
Hilton becomes first hotel company
to join with American Express to
offer a no-fee co-branded credit
card.
1994
Loyalty Programme
Introduces HHonors Reward
Exchange, enabling guests to
exchange hotel points for air miles
and vice versa.
1992
Other
Establishes the Hilton Quality
Service Institute at headquarters in
California.
1991
New Brand Development
Establishes Hilton Grand Vacations
Company to develop holiday
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ownership resorts.
1989
New Brand Development
Opens first all-suite property under
Hilton Suites brand in California.
1987
Loyalty Programme
Launches Hilton HHonors frequent
guest reward programme.
1985
Pipeline Development
First Conrad International hotel
opens in Australia.
1982
New Brand Development
Founds Conrad Hotels, offering
luxury hotels and resorts in leading
destinations.
1973
Other
Creates HILTRON, centralised
reservation systems uniting all
Hilton Hotels.
1970
Other
Enters US casinos with purchase
of Las Vegas Hilton and Flamingo
Hilton.
1967
TWA Acquires Hilton International
Hilton International acquired by
TWA.
1965
Other
Forms Statler Hilton Inns (now
Hilton Inns) to create a network of
franchise hotels bearing the Hilton
name.
1964
Other
Hilton Hotels Corp creates Hilton
International as a separate, publicly
owned corporation, with exclusive
use of Hilton name and trademarks
outside the US.
1959
Hotel Development
Pioneers concept of airport hotels
with the opening of the San
Francisco Airport Hilton.
1953
Pipeline Development
First Hilton opens in Europe, with
The Castellana Hilton in Madrid.
1946
Other
Becomes the first hotel company to
list on the New York Stock
Exchange.
1942
Other
Moves corporate headquarters to
Los Angeles.
1925
Hilton Brand Launched
First hotel under the Hilton name
opens in Dallas.
1919
First Hotel Established
Conrad Hilton purchases first hotel,
The Mobley, in Cisco, Texas.
Source:
Euromonitor International
Summary 3
Hilton Hotels Corp: Subsidiaries 2007
Company
Country
Conrad Hospitality LLC
Belgium
Hilton Inns, Inc
USA
Hilton Grand Vacations Company
USA
Hilton Hotels Corp
USA
Hilton Reservations Worldwide
USA
Hilton Supply Management
USA
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Hilton HHonors Worldwide
Source:
USA
Euromonitor International
Summary 4
Hilton Hotels Corp: Travel & Tourism Brands 2007
Brand Name
Sector and subsector(s)
Doubletree
Travel accommodation (Hotels)
Embassy Suites
Travel accommodation (Hotels)
Hampton Inn
Travel accommodation (Hotels)
Hilton
Travel accommodation (Hotels)
Homewood Suites
Travel accommodation (Hotels)
Scandic Hotels
Travel accommodation (Hotels)
Source:
Euromonitor International
Summary 5
Hilton Hotels Corp: Company Locations
Location
Country
Activity
Western Europe
Belgium
Travel Accommodation
North America
USA
Travel Accommodation
Source:
Summary 6
Euromonitor International
Hilton Hotels Corp: Websites
Name
Country
Website address
Main corporate website
USA
www.hilton.com
Conrad Hotels & Resorts
USA
www.conradhotels.com
Doubletree
USA
www.doubletree.com
Embassy Suites Hotels
USA
www.embassysuites.com
Hampton Inn & Suites
USA
www.hamptoninn.com
Hilton Garden Inn
USA
www.hiltongardeninn.com
Homewood Suites by Hilton
USA
www.homewoodsuites.com
Hilton Grand Vacations
USA
www.hiltongrandvacations.com
The Waldorf=Astoria Collection
USA
www.waldorfastoria1.hilton.com
Source:
Euromonitor International
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