business report
Strategies for accommodating overseas travelers required to quarantine: The Case of Hilton UK
Group Members: Kyle Rennie, Lucy Tregoning. Nianqiao Wang, Nivedha Swamy, Syed Yazdan Haider, Yen Xin Fong
yazdan
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Introduction to Hilton
102 years in the hospitality sector
Own 4800> hotels + 15 brands under them
Revenue per room – 109.65 USD
Industry-defining new strategy of "Clean Stay" partnership with Dettol, Rb and Lysol
Re- opened most of their hotels in China
Donated 1 million rooms to frontline medical professionals
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Overarching Strategies for Hilton's continued success
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Customer service excellency
Digitalization of services
Localization strategy
Overarching uniformity of brand image
Diversification
Diversification strategy
Market Segmentation and diverse product offering based on
Purpose of Visit
Price Sensitivity of Customers
Service Range and Quality
Location
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Create segmentation visual of these brands
Luxury customers : Waldorf astoria hotels and resorts, conrad hotels and resorts (close to beaches)
Vacation line: Hilton Grand Vacations
Family packages middle class
Business travellers – closer to airport : Hilton hotels and resorts, double tree, embassy suites
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Overarching Strategies for Hilton's continued success
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Customer service excellency
Digitalization of services
Localization strategy
Overarching uniformity of brand image
Diversification
Covid-19 and its impact on UK Hospitality sector
As of December 2020, 41% of hospitality businesses had temporarily closed, compared to 13% across all industries in the UK (ONS, 2020)
Impact on UK Hospitality described as "catastrophic", "hardest hit", "broken", "collapsed" & "long-lasting"
Until an effective vaccine comes, road to recovery is never-ending
"Ongoing fixed costs and accumulating debt alongside persistent lower revenues and low cash reserves are a major concern for the sector" (House of Commons, 2020)
Impact of covid on UK --> hospitality sector
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All international arrivals from 33 high-risk countries subjected to 10-day hotel quarantine
16 hotels given ASQ license, including Hilton & Marriot
Nearly 2000 guests daily
Security patrols to guard hotels
" The contracted hotels are “less than enthusiastic” about the quarantine scheme as the Department of Health and Social Care is only offering to pay £50 a night per guest"
Heathrow warns of significant gaps in "quarantine policy"
Introdution of quarantine rules -> implications for Hiltons strategy and leadership now
Give na overview of what will be focjused on
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Selection and Justification of Tools
Restrictions on dynamics of hospitality tourism brings need for reinvigorating and rethinking strategy and leadership, with an abductive line of thought
Whittington's Model of Strategy Formulation
Leadership as a Strategic Performance Enabler
Spender's Framework
Leadership styles
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Changes will need to be made to these historical strategies as the context of the dynamic of hospitality industry is completely changed and forced to be narrowed down now. Some of the new strategies in response to COVID-19 By Hilton
Changes due to pandemic and restrictions on dynamics of hospitality tourism = need for reinvigorating and rethinking strategy and leadership in conjunction . An abductive reasoning to be used as there is so much uncertainty. Hilton is a large international firm with years of success, but their continued success is determined by its ability to leverage its strategies, tools and processes whilst also looking outside the box in this unprecedented time.
Because of dramatic changes from the pandemic:
1. Need to build capabilities for safety
2. cannoy rely on tangible touchpoints of customer service anymore which was their primary strategy nor can they diversify and do multi-brand level of sales
We have carefully selected the best set of strategy and leadership tools and frameworks in order to enhance the critical analysis of the situation. This will be:
1. strategy Tools –
SWOT analysis - As strategy is a p0rocess according to Pettigrew, we must analyze the environmental landscape and present a resource-based view of Hiltons stance currently. This is the context level of Pettigrew.
Whittingtons – to craft strategy that takes into account the changing climate and collates the numerous sztrategies of firms into 4 broader categories as it reveals there isnt one single strategic tool that can be used in a situation but a broader strategic framework under which processes can be formulated and flexibly adopted
An abductive thinking will be used at all times because of uncertainty here
Spenders is the framework used to create a link in both and create a strategic leadership that aligns with strategies used – since Hilton is international a broader outlook must be also adopted in order to draw inferences from successess. We will finally finish with the style of leadership that is believed to be best used.
Through the exploration of the situation and analysis using these tools, certain limitations within these tools will also be revealed.
1. Hilton International is very well versed with what they are doing and why – hence we critically analyze the strategies that are being employed by the firm using the Whittingtons tool
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SWOT
Porter's 5 Forces
Hilton's Internal Capabilities
SWOT analysis
| STRENGTHS International Brand presence Tried & trusted business model Global network of suppliers Top ranking administration and service quality Digital hospitality as a USP Dedicated and skilled staff High level of investment and expertise that isnt easily duplicatable | WEAKNESSES Over dependence on US markets Have strides to take in innovation due to their over dependence on their trusted models "playing it safe" |
| OPPORTUNITIES Innovation and Digital capabilities as a key cornerstone post-pandemic Financial resilience Can cater to the influx of quarantine Allow premium pricing for quality quarantine services Need for service and hygiene assurance Access to high levels of credit\ | THREATS Elimination of major core competencies due to COVID: diversified market segment & tangible touchpoints of customer service Risk of virus spread UK government's failure to respond to COVID quick Inevitable financial loss due to massive decline in travel Existential crisis due to no signs of recovery in near future Uncertainty on insurance cover |
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Porters 5 Forces
EXISTING RIVALRY
THREAT OF NEW ENTRANTS
BUYER BARGAINING POWER
SUPPLIER BARGAINING POWER
THREAT OF SUBSTITUTE
Strategic Framework for Analysis – Whittingtons Model
"Hilton's strategic management in response to COVID-19 has seen a balance in achieving short-term stability to provide quarantine services and help communities transition globally whilst thinking about the long-term road to recovery" - CEO
Processual:
- bottom up
- play safe what you are used to and go with the flow
- maintain status quo
- flexibility according to situation
- customer experience
- degree of structure
- more democratic and pluralistic
the processual pursue pluralist goals as it seeks more than profit maximization as the expected outcome of strategy. This is a messy approach which places emphasis on bottom-up approach in which strategy emerge from individuals in the organization seeking to include their personnel objectives as part of the organizational goals (Batamuriza et al, 2006).
- not looking ahead!!
Evolutionary:
- autocratic and visionary leader firm
- survival mode
- similar to contingency planning - keep your costs low and your options open
- explore new opportunities to unprecedented environment
the evolutionary believe in allowing the market to determine the choice strategy, while the processual require the organization to maintain the status quo and work with it (Whittington, 2001).
"The deliberate process produces the intended strategy while the emergent process produces an evolved strategy from unplanned changes in either the organization or the environment (Mintzberg & Waters, 1985)
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Hilton's COVID-19 strategies
Play Safe
Innovative Partnerships
Shared value for
all stakeholders
Leverage selective segments
Standardization of selected processes
Follow situation then adapt
Create Vision & Lead
New Hygiene Tech
Automation
Processual:
- stick to what you know – staff management pluralistic
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Evolutionary:
- cost minimization and profit max using technology to replace so much manpower }+ safety enhanced too
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Processual
Evolutionary
Check In/ Out Procedures
Hilton’s Honours App
Provide check-in and check-out services
Allows consumers to choose their room
Able to access their room with a digital key card
Communicate with Hotel Team Members with minimal contact
Hands-free service excellence as aim
Lucy
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Clean Stay
Our research showed that three of the top four actions a hotel can take to make guests currently feel safe relate to additional cleaning measures
- perfect way to combat the need for assurance of no comrpomise on service quality whilst in lockdown --> Hilton owns 4-5 star hotels near almost every major airport within the UK with amenitikes and dacilities already built – in to use
SETTING INDUSTRY BENCHMARKS
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Partnering with Reckitt Benckiser (RB), the manufacturer of Lysol and Dettol
Guest Room Cleaning
After the usual cleaning procedures, the hotel team will use their partnering products to perform an additional disinfecting measure for several surfaces within the room
A housekeeping inspector will verify the room after the cleaning is done and place a Hilton CleanStay Room on the door
Public Area Cleaning
Set up multiple disinfecting stations throughout the property
Both public and the hotel team member areas are cleaned at schedule intervals
Housekeeping
Guests are able to tailor their housekeeping services to their comfort level during their stay
When guests request additional amenities such as linens and toiletries, the hotel staff will deliver them in protective packaging and place it at the guest room door.
Management
Our research showed that three of the top four actions a hotel can take to make guests currently feel safe relate to additional cleaning measures
- perfect way to combat the need for assurance of no comrpomise on service quality whilst in lockdown --> Hilton owns 4-5 star hotels near almost every major airport within the UK with amenitikes and dacilities already built – in to use
SETTING INDUSTRY BENCHMARKS
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Partnering with Reckitt Benckiser (RB), specialists in health processes for special employee training
Meetings on rundown of healthy & safety procedures
Investments in hygiene stations and equipment for all staff
Hands-on management that also carry equal risk as staff to produce a strong united front
Need for a Mixed Approach
PROCESSUAL MANAGEMENT
EVOLUTIONARY MANAGEMENT
Introduce how this is linked to leadership to transition
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Clear and firm management
Control and rigorous to manage critical point and create new norm
Communication is critical
Can cause disassociation
Outside the box
Pluralistic approach where opinions and alignment is needed
Time consuming
Lack of clear management stance = enhanced fear and uncertainty = reduce morale
Blurred processes
Constantly crafted and everchanging
Spender's Framework (2014)
Keyword: Dynamic
Knowledge Gaps must be accepted
Develop solutions to the opportunities that these uncertainties open up
Communication of reasoning behind decisions is crucial
Exemplar: India's Leader
Objectivist v Constructivist
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Leadership styles (Kurt Lewin, 1939)
Rapid execution needed to mitigate risks
Positive morale and teamwork
Lead with Vision
Supportive leadership
Diminish fears through conversation
Feedback based
FAMILIAL
TRANSFORMATIONAL
AUTOCRATIC
"The health and wellbeing of our teams and guests always comes first – and introducing Hilton CleanStay has been crucial to ensuring that. The program helps our guests feel confident about travelling, because they know that every Hilton property globally has implemented the same set of stringent measures. Likewise, our team members feel comfortable about being at work because they know that the program is as much about protecting them as about protecting our guests."
— John Rogers, Senior Vice President, Brands and Central Operations, EMEA, Hilton
How can Hilton proceed?
Digital leveraging, culture and automation = Customer service – Eg. Smoking rates so balcony space
draw from Thailand procedures for success
Transparency needed
Long term outlook
They need to be both profit maximizing and pluralistic (Supporting services, uplifting communities and social welfare!!)
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References
. Hutton, G. and Foley, N., 2021. Hospitality industry and Covid-19. [online] House of Commons Library. Available at: <https://commonslibrary.parliament.uk/research-briefings/cbp-9111/> [Accessed 24 March 2021].
Investor Presentation March 2021. (2021). [online] . Hilton. Available at: https://ir.hilton.com/~/media/Files/H/Hilton-Worldwide-IR-V3/presentations/hlt-investor-presentation-march2021.pdf [Accessed 24 Mar. 2021].
ITV News. (2021). “Significant gaps” remain in hotel quarantine policy, UK’s busiest airport warns | ITV News. [online] Available at: https://www.youtube.com/watch?v=wkc-IdCOD8w [Accessed 24 Mar. 2021].
Luenendonk, M. (2018). Business model of Hilton Hotels. [online] Cleverism. Available at: https://www.cleverism.com/business-model-hilton-hotels/ [Accessed 24 Mar. 2021].
Maake, K. (2020). Hilton Sells $1B In Debt Amid Covid-19 Pandemic. [online] Bizjournals. Available at: https://www.bizjournals.com/washington/news/2020/04/24/hilton-sells-1b-in-debt-amid-covid-19-pandemic.html [Accessed 24 Mar. 2021].
MBA Knowledge Base. (2012). Whittington’s Classical and Processual Schools of Thought. [online] Available at: https://www.mbaknol.com/modern-management-concepts/whittingtons-classical-and-processual-schools-of-thought/ [Accessed 24 Mar. 2021].
Skift. (2021). 5 Reasons Why Hilton Continues to Grow Its Global Footprint, Despite Covid-19 Challenges. [online] Available at: https://skift.com/2021/02/25/hilton-grows-global-footprint-despite-covid19/.
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