Hilton Hotels - Case Study

In an attempt to become a more aggressive business operation, Hilton Hotels decided to change its strategic direction by venturing into the gaming industry. With this strategy came not only new opportunities but also large elements of risks and competition. In 1994 the growth in the gaming segment declined with gaming operating income down by 7% from 1993. The Hilton Hotels however had a 3% increase in occupancy from 1993. In view of this, it is important to understand market needs and develop marketing strategies in tune with creating customer value for long-term performance. A few of the key issues facing the Hilton Hotels is as follow:

• The need to better target the needs of customer segments

• To customize hotel services based on these needs

• Competition with lower rates are a threat

• Maximize market trends

• Effectively attracting people to gaming segments through entertainment

Customer Needs

Customer-centric marketing pervades the core of the hotel and gaming industries. Therefore, opportunities in marketing increase when segmented groups of clients and customers with varying needs and wants are recognized. Markets can be segmented or targeted using a variety of factors. The bases for segmenting consumer markets include:

• Demographical bases (age, family size, life cycle, occupation)

• Geographical bases (states, regions, countries)

• Behavior bases (product knowledge, usage, attitudes, responses)

The profile for Hilton Hotels’ customers consists of the following geographic, demographic, and behavior factors:

Geographics

• Hilton Hotels provides services to 130 nationalities at more than 150 locations.

• Operates in more than 50 countries.

• Major gaming operations in the U.S., Canada, Australia and Turkey.

Demographic

• Gambling budget market.

• Gambling middle market

• Premium high rollers

• Convention Market

Behavior Factors

• Creating entertainment to draw people to the gaming tables and slot machines.

• Gaming market is very variable.

• People are attracted to casinos that pay-out and offer incentives to play.

Identifying specific groups of customers by these factors and other dimensions will enable The Hilton Hotels to promote to them more effectively based on their needs. For instance, an increase in the cautious business spender, price-sensitive traveler would prompt a possible expansion of the mid-priced segment to accommodate and serve both work-week business travelers and weekend vacationers.

Competition

As pursuing the gaming market is relatively new to The Hilton Hotels, an additional strategy would be to analyze the competition and learn from their pitfalls. This would enable The Hiltons to make sure that their prices are competitive and that they respond to rival marketing campaigns with their own initiatives. This knowledge can create marketing strategies that take advantage of competitors' weaknesses, and learn ways to improve their own business performance. These weaknesses may be in the competitors’ product range or service, marketing or distribution, even the way they recruit and retain employees.

Several large hotels and casinos have the bulk of their rooms crowded in the upscale hotel market. The three main competitors for Hilton Hotels are:

• Mirage and Excalibur casinos as they upgrade their casinos to be competitive.

• Westin and Sheraton hotels are actively expanding their network of hotels and more price point competitive.

• Economy hotels are attracting the middle to budget class travelers. Lower prices for bare basics are becoming more popular.

Price, Distribution, Promotion, and Product Elements

Rates are one of the many variables that determine customer’s decision in staying at a particular hotel. Prices differ from