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Factors impacting Hospitality Industry- Hilton Hotel

University: Stanford University

  • Unit No: 12
  • Level: Post Graduate/University
  • Pages: 14 / Words 3593
  • Paper Type: Assignment
  • Course Code: MOD0004056
  • Downloads: 23
Organization Selected : Hilton Hotel

INTRODUCTION

In the recent times, UK hospitality business is growing with the very high pace. Statistics shows that total turnover of hospitality business reached on £98 billion at the end of 2017 which in turn too high in comparison to past years. Hence, aspects pertaining to effectual operation management are highly significant in the context of UK hospitality businesses. By managing business activities prominently UK hospitality firms can attain success and make contribution in the economic development as well growth. This report is based on Hilton which offers quality and luxurious accommodation services to the customers. In this, report will provide deeper insight about the factors which in turn impacts demand, spending power and customer’s perception within concerned hospitality firm. It will shed light on the aspects that affect pricing decision, revenue and profitability of Hilton. Report also presents how qualitative and quantitative techniques are applied for ensuring effectual operation management within Hilton.

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TASK 1

1.1 Analyzing the nature of hospitality product and service areas

Products and services which are offered by hospitality firms including Hilton are perishable, intangible as well as inseparable in nature. Moreover, services offered by the hospitality firms include accommodation, bars, pubs, food, Gym, pool etc. Hence, services pertaining to the food & drinks are perishable in nature. Further, services such as laundry, gym etc is intangible in nature. Thus, it can be presented that hospitability businesses offer several services but one can feel them through using the same.

Service areas in hospitality businesses includes following:

  • Room division: Hotel unit such as Hilton provide customers with several room categories as per their expectation level.
  • Food & beverage: This is one of the most effectual parts of hospitality business which offer several foods and beverages to the customers (Davis and et.al., 2018).
  • Conference and banqueting: Hospitality firms also organize several events, seminars and small celebrations with the motive to attain high profit margin.

1.2 Evaluating factors affecting patterns of demand within hospitality operations

From assessment several factors has been identified which in turn impact demand pertaining to the products or services offered by Hilton such as:

  • Seasonality: It is recognized as one of the main factors which influences demand level to a great extent. London’s mild spring and fall weather attracts more tourism during mid-September to November. Hence, during this season more tourists visit UK and thereby create demand for the services and vice versa.
  • Healthy living: Now, people lay more focus on luxurious and innovative service aspects. Further, tourists give high level of importance to hygiene and peacefulness (Masa’deh and et.al., 2017). Hence, demand will be affected negatively if Hilton hotel fails to comply with such aspects.
  • Economic factors: Inflationary and deflationary situation of economy is highly associated with the purchasing power of customers. Thus, disposable income is one of the main factors which influence demand regarding Hilton’s services. Moreover, Hilton charges high prices for the luxurious accommodation services provided by it.

1.3 Comparing customer profiles and their varied expectations as well as requirements in the context of hospitality provision

Under hospitality business, customer profiles can be explained in terms of high, middle and lower status. Hence, significant differences take place in both requirements and expectations towards the services offered by Hilton in the following manner:

Basis of difference / customer profiles High status group Middle income group Lower income level people
Spending power Such group of people having high spending power. In this group, customers spend money in the luxurious services as per their disposable income. Low
Price consideration They do not give too much importance to price. Focus is laid by high income group people on quality of services and luxury aspect (Patiar and et.al., 2017). Middle income group people considers both quality and price aspect while making selection of hotel unit. Price is the main factor which considered by lower income group people while choosing hotel.
Expectations and requirements High income people expect luxurious and innovative services from Hilton. In this, customers make focus on getting luxurious accommodation services at cost effective prices. Lower income segment expects that Hilton design specific services for them as per their budget or spending criteria.

1.4 Analyzing factors affecting average spending power (ASP) within hospitality businesses

In the hospitality sector, there are several factors which have an impact on the spending power of customers. Hence, Hilton needs to keep in mind following factors while developing strategic framework for influencing the decision making of customers such as:

  • Income: Earning level of the people having high impact on average spending power of customers. Moreover, individuals make focus on experiencing luxury services offering by Hilton only when they are earning good.
  • Status: This is also one of the main factors which influence average spending power of customers to a great extent. Usually, average spending power of high income and social status group is high over others (Altin and et.al., 2018). They prefer to spend more money on luxury as compared to other groups.
  • Economic condition: During stable economic condition disposable income of customers are high, In regard to Hilton hotel’s services, customers prefer to spend high only when their disposable income is high. Thus, condition which takes place within an economy has significant impact on the spending power of customers.

Referring overall evaluation, it can be presented that spending power of customers are highly influenced from three factors such as income, status and economic condition.

2.1 Evaluating the key stages in product and service development applied in Hilton

For the purpose of product & service development Hilton undertakes following stages such as:

  • Idea generation: In the first step, emphasis is placed by Hilton on assessing ideas for new product development by identifying gap.
  • Idea screening: Once idea been generated thereafter emphasis is given by the firm on the selection or rejection of ideas.
  • Concept development and testing: At this stage, concept is developed and tested by the firm. Hence, Hilton makes focus on assessing whether consumer will understand or accept the new offerings or not.
  • Business analysis: In this, company makes evaluation of new product cost, commercial profitability, demand, sales and competiveness (King, 2017).
  • Product development: Hilton develops new product at this stage by taking into account the outcome of business analysis or evaluation.
  • Test marketing: Hilton introduces new products or services in the specific segment for assessing viability.
  • Commercialization and launch: At the last stage, on the basis of test marketing results Hilton introduce new services in the market (8 Step Process Perfects New Product Development, 2018).

2.2 Analyzing features which contribute towards the customers’ perception pertaining to the products and services

Perception level of customers towards the products or services, under hospitality sector, is getting influenced from several factors. In the context of Hilton’s products or services brand image, resource availability, standardization and style of services are recognized as the main factors which influence perception level of the customers. Moreover, prominent brand image level entices decision making of visitors or tourists significantly. The rationale behind this, visitors laid focus on making their vacations memorable. Thus, good brand image creates positive perception in the mind of customers towards Hilton’s services.

Along with this, style in which Hilton is offering accommodation and other complementary services to the customers having great impact on the perception level of target market. Unique style of presenting and offering services helps in developing distinct image in the mind of customers (Ogbeide and et.al., 2017). Further, level of standardization pertaining to hospitality services also has significant effect on the mindset of customers. Moreover, aspects pertaining to the standardization and satisfaction level of the customers are highly associated with each other. Hence, customer satisfaction and perception as well as brand image of Hilton will be affected negatively in the case of lack of standardization.

2.3 Assessing opportunities and constraints affecting product and/or service development in Hilton hotel

In the hospitality businesses, both opportunities and constraints are available which influences product and service development within Hilton such as:

Opportunities:

  • Maximization of profitability: Product and service development enables firm to provide customers with amazing accommodation services. Hence, through offering innovative services to the customers Hilton can develop satisfied customer base and thereby maximizes both sales as well as profit margin.
  • Improvement in accommodation facilities: Hilton has opportunity to enhance the level of services through the means of development strategy (Lashley, 2018). Hence, through quality services business unit can evolve high level of satisfaction among the customer and thereby improves brand image.

Constraints: Factors which inhibit product or service development within Hilton are enumerated below:

  • Resource availability: For the purpose of product or service development business unit requires enough resources such as human, financial etc. For example: In the case of new hotel establishment, pubs etc firm requires enough financial resources. Thus, in the case of not having enough funds Hilton would not become able to implement its plan effectually.
  • Space utilization or requirement: In the case of product development Hilton requires space for the plan execution. For instance: Business unit needs enough or more space pertaining to bar development plan. In this, unavailability of enough space act as a constraint in the growth aspect.

2.4 Evaluating different merchandising opportunities regarding hospitality products and services

Hilton focuses on doing advertisements with the motive to develop awareness among the customers regarding services offering by it. Advertisements enable firm to show merchandise and thereby influence the decision of target market. Social media marketing offers opportunity to Hilton in relation to displaying luxurious room and other facilities provided by it. This in turn helps in developing awareness among the customers regarding brand (Law, Buhalis and Cobanoglu, 2014). However, on the critical note, when other or some people do negative comments on the services of Hilton then it negatively impacts brand image.

In addition to this, through the means of company’s website Hilton shows it merchandise to the customers. Hilton uploads images pertaining to pool, pub, rooms, bar etc on company’s website for providing information to the customers about their intangible nature of merchandise. Such technique assists in developing image of the services in the mind of customers. Further, it also helps in encouraging both consumer as well as brand loyalty.

TASK 2: QUESTIONNAIRE

3.1 Evaluating different methods of pricing and additional consideration in the context of Hilton

There are several methods which can be used by the hospitality firms including Hilton for setting prices for the products or services offered.

  • Cost oriented pricing: As per this method, prices are setting down by taking into account cost factor. In other words, under such method both cost of production and profit margin is considered by the firm.
  • Market oriented pricing: On the basis of such method, prices are determined by referring competitor’s strategy (Evans, 2015).
  • Service, cover and minimum charge: At the time of setting prices, hospitality businesses should consider aspects in relation to service and other minimum charges.

Question 1

a. Presenting pricing and additional considerations which are applied by Hilton

Hilton undertakes market oriented pricing method for setting prices of its offerings or accommodation services provided by it. Referring this, it can be stated that Hilton offers services at competitive prices with the motive to entice decision making aspect of the customers (Randhawa and et.al., 2016). In addition to this, business unit also considers factors pertaining to including minimum and other service charges in the price for generating desired profit margin.

b. Stating, if any of the methods above is not applicable then need to justify the one

In the context of Hilton, cost oriented pricing method is not strictly followed while determining prices. Moreover, hospitality sector of UK is also filled up with the high level of competition. Due to this, it is not possible for the companies like Hilton to set prices using cost-oriented method (Yuan, Li and Zeng, 2018). The reason behind this, now customers select hotel unit after doing comparison of price and services via online. Thus, business unit will lose customers in the case of cost oriented pricing rather than competitive.

3.2 Assessing factors which affect revenue generation and profitability aspect in the context of hospitality operations

By doing evaluation, several factors have been identified which significantly impacts aspects regarding sales and profit attainment in hospitality businesses such as:

  • Labor Intensity, skills or competencies
  • Standardization
  • Price
  • Elasticity of Demand
  • Portion Control
  • Procurement

Question 2

Presenting the manner in which different factors influence sales revenue and profitability

In Hilton, price, standardization and labor skills or competencies are assessed as main factors which influence both sales and profit margin of the firm. Under service sector, personnel are the one who develop satisfaction among the customers by providing them with quality services. Thus, Hilton can generate high sales and profit margin by employing competent workforce. Along with this, prices charged by the hotel unit also have effect on both sales and profit. If Hilton will charge high prices then it negatively impacts sales and profitability aspect (Filimonau and Delysia, 2019). Further, standardization factor also has greater impact on customer decision making. Moreover, service standardization facilitates high customer satisfaction and increases demand for the services as well as sales. It is important for every students to score best grades in their assignments, failure to do so can affect their final grades, that's why it is important for students to take teaching assistant coursework help from experts.

TASK 3: INDIVIDUAL RESEARCH

4.1 Applying a range of performance measures and appraisal techniques in the context of hospitality operations

Now, wide range of techniques is available which can be used by Hilton for measuring and appraising performance.

  • Quality Management: By applying total quality management technique owner of Hilton can measure as well as evaluate existing offerings. Hence, such technique assists firm in identifying loopholes and thereby offers opportunity in relation to making improvement in the existing products or services.
  • Speed of Delivery/ Customer Service: Hilton can ensure better operations by taking feedback from the customers regarding existing product portfolio or customer services (Davis and et.al., 2018). Moreover, it helps in making suitable changes in the services as per the needs and wants of customers.
  • Developing & analyzing Qualitative and Quantitative data: With the help of both qualitative and quantitative data set business entity of Hilton can evaluate performance effectually. Qualitative data helps in understanding needs, wants and expectation of the customers. On the other side, quantitative data give indication about monetary performance. Thus, by developing and analyzing both the data set Hilton can manage its operations in the best possible way.
  • External comparison: Hilton can identify gap in existing services by comparing the same with competitor’s product portfolio (Masa’deh and et.al., 2017). This in turn enables Hilton to gain competitive edge over others by offering innovative services to the customers.
  • Sales performance/gross profit/ net profit: Though doing comparison of financial aspects such as sales, gross and net profit over the years Hilton can measure its performance effectually. Such technique helps firm in assessing growth level and helps in developing strategic framework for the near future.

4.2 Determining the usefulness and limitations of quantitative and qualitative appraisal techniques and their application

Manager of Hilton should keep in mind uses and drawbacks of performance appraisal techniques while making selection of the same.

Qualitative appraisal techniques

Quality Management

Usefulness

Limitations

  • Helps in gaining competitive edge
  • Enhancement of customer satisfaction
  • High cost
  • Requires continuous monitoring

Customer service

Usefulness

Limitations

  • Ensures high customer satisfaction and loyalty
  • Increases word of mouth publicity
  • Continuous monitoring of customer’s feedback is required
  • Impose cost because firm needs to invest in R&D

External comparison

Usefulness

Limitations

  • Assists in identifying opportunities
  • Facilitates innovation within the firm
  • Time-intensive exercise
  • More resources required

Quantitative appraisal techniques

Data analysis and evaluation

Usefulness

Limitations

  • Helps in setting strategies for the near future
  • Gives idea about product or service development
  • Time consuming activity

Sales performance/gross profit/ net profit

Usefulness

Limitations

  • Helps in developing promotional strategies
  • Gives input for developing sound financial framework
  • Need competent personnel for financial analysis or evaluation
  • Varied economic conditions also impact the outcome of financial analysis

4.3 Presenting approaches to business analysis, evaluation and planning in the context of hospitality business

  • Business analysis: It implies for the practice in relation to introducing change within an organization. In other words, aspects of business analysis place emphasis on recommending solution which in turn delivers more values to the stakeholders (Business analysis, 2018).
  • Business evaluation: This refers to the process which firm undertakes for identifying gap in the existing performance in comparison to organizational goals & objectives.
  • Business planning: It may be defined as a plan which contains strategic objectives pertaining to both current and future, innovative plans and time frame.

In the context of Hilton, all the above depicted aspects from analysis to planning are highly significant. Through this, business unit would become able to make evaluation of several aspects such as own strategic framework, offering and strategies of rivals, market gap etc. By undertaking all such aspects Hilton can develop compete framework for the upcoming time period. This in turn helps concerned hotel unit in getting desired level of outcome or success to a great extent.

Related Sample: Business Activities in Hospitality Industry- Hilton Hotel

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CONCLUSION

By summing up this report, it has been concluded that services offered by Hilton having intangible nature. It can be summarized from the report that demand pertaining to Hilton’s accommodation facilities is highly affected from seasonality, income level etc. Further, it can be seen in the report that requirements and expectation level of customers differ significantly in regards to price, spending power etc. Besides this, it can be inferred that disposable income, social status and economic conditions affect average spending power of the customers. Along with this, it has been articulated that Hilton can develop positive customer perception through adopting standardization aspects. It can be stated that at the time of planning business unit should keep in mind the factors which in turn have high level of influence on company’s profitability. It also has been articulated that by laying emphasis on quality management aspects Hilton can offer better services to the customers and thereby enhances brand image.

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