Hilton International Hotel Corporation

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Introduction

This essay is focused at the analysis of co-branding and mergers in international organizations. Hilton International Hotel Corporation is selected for a detailed case study.

In the basic scenario, co-branding is termed as a joint project conceived to accelerate the concerns of two or many corporations or brands in a recommended planned approach. On legal terms, the partners in co-branding can stay as distinct units. The main aim of this approach is to adopt certain joint tactics for a new product, service, or for a new company. The objective is to synergize the individual competitive advantages in an efficient manner (see Anand and Singh 1997). The expertise and experience of all partners combine to generate multiple benefits in short or long terms. It has proved to be an effective technique for established brands but has showed a less potential of brand value creation for new brands and/or new businesses.

As far as mergers and acquisitions are considered, it is significant to realize the inspiration following unification of two or more companies, businesses, or brands. The charisma of mergers and acquisitions is likely a mirror image of the prevalent conviction amidst managers that incorporation verify to be fast and apparently very   straight forward path to achieve progress   and business diversification (Datta 1993). This enriched concept is often utilized to interpret the happening of mergers (Homburg and Bucerius 2005).  This idea suggests combining the activities of involved companies may encourage the businesses growth.

In the following discussion, the co branding and mergers strategies and impacts are analysed with the help of theoretical understandings on Hilton International Hotels (HIH).

Company History

Ladbroke Group plc was formed in 1967 and took over the original business termed today as Hilton Hotels. The business went into the hotel commerce in 1973 by opening three luxurious chains of hotels (Grant, 1998).  Ladbroke amplified hard-hitting in their hotel business by acquiring lucrative chains of hotels like Mercury Hotels and Comfort Hotels in the 80’s era. Ladbroke reorganized its business in 1986 to focus on four centre enterprises comprised on Hotels, retailing, racing, and housing. For Ladbroke, the large-scale break reached when it came by the Hilton International string of connections (Grant, 1998).  Consequently, the group renamed and advanced its initial UK inns to the Hilton sign and continued its development in hotel partition through trading and capital investment round the globe (Grant, 1998).  

In 90’s era, the restructuring of businesses and a couple of administration changes have enforced to restructure and to decrease costs. Some of the hotel properties have sold out and some new mergers have taken place along with the changes in top administration positions. This pulling out of investment from its financial house and retail business was performed in alignment to relocate hotels and original gaming businesses (Walter and Barney 1990).   Ladbroke acquired Stakis corporation as its first ever acquisition after change of name, this action gave Hilton the second world rank in hotel industry (Kotler 1999).  This action also changes the name of the corporation permanently to Hilton Group.

 In new millennium, Hilton International proceeded to elaborate its hotel business by a merger with Hilton Hotel Corporation to direct a global development of the magnificent brand of Conrad (Keller 1999).   Scandic Hotels were the next to add in the chain, which gave the Hilton Hotels a consistent entry in to North Europe (Homburg and Bucerius 2005). Presently, Hilton has more than 2800 hotels and excess of fifteen thousand workers globally. These branches have over 48000 rooms and brand portfolio of Conrad, Embassy, Doubletree, Hampton Inn, and Hilton Garden Inn  a part from many other co branded and franchised brands.

Co-Branding at Hilton International
 As co-branding is different from joint ventures and many forms of partnerships, the co branding of Hilton International and American Express business card is a good demonstration of this mode of leveraging the businesses.  Each business conducts the appropriate behaviour on part of its enterprise to make both brands fit for the card (Balmer and Dinnie 1999). The exceptional acknowledgement of this credit cardholders at chain of Hilton hotels and resorts, and transform their journeys to a memorable experience through premiums and entertainment. Also, the extra bonuses on purchases are facilitated on this card, which makes it more privileging as compared to other competitor brands. 

The major concerns for Hilton International in going through and co branding activity can be listed as follows:

  • The requirement of future investment in co brands promotion and extension.
  • The anticipation of difficulties and challenges to the associated brands.
  • The implications of various branding rules and disciplines on both brands act as a single indivisible unit after association.
  • The designing of co branding projects to carry out the tactics of short and long term business plans.
  • Important capital investment and deeper connections are required from both organizations in long term co branding decisions.
  • The decision for termination of the contract in case of the failure of co branding strategies in respective markets.

Along with the above major concerns, there are certain benefits lying in co branding decisions. Some of the main advantages are:

  • Extended markets and new products association generates additional earnings for both brands.
  • The capital expenditure in accessing new markets is low, as Hilton reaches Europe and Asian countries through co branding with the major chains in these continents.
  • The earnings through royalty increase the significance of high gains at low expenses.
  •  Customer awareness and brand assurance increased.
  • The competitive advantage like technology, service benchmarking and process efficiency of the partner can easily accessed in co branding to share the brand assts in a common market.
  • Marketing and promotion exposures increased due to combine campaigns of the two brands.
  • Decreased consumer buying risk and easy selection of products.
  • Similarity and standardization of branding rules and principles.
  • Future co branding chances in result of successful brand associations in long term.

 Similarly, along with all above mentioned benefits, certain co branding pitfalls are also faced by partner associations like:

  • Incompatibility of two brands as a result of wrong co branding decision, the brands might have different personalities and image and cannot go along with each other.
  • Expectations of high gains in short term investments.
  • The two businesses and their management are incompatible with each other.
  • Over enhanced brand extensions from one brand, whilst the other brand is not able to meet the same criteria.
  • Re launching and repositioning difficulties of one brand produce adverse affects on the progress of other brand also.
  • The change in economic and financial position or a threat of bankruptcy one business can increase the liquidity risks of the other business also due to sharing of assets in the joint venture.
  • The conditions of market and country’s economy can change the acceptance in the targeted consumer segments, as in recession, the demand for luxurious brands of Hilton International has decreased as compared to their four star and boutique hotels.
  • The risk of turning in to a generic brand after ling term associations, can liquidate the brand equity in association.
  • The legal problems can arise due to antitrust, partner liquidation, and/or host country’s legal requirements.

In summary, for the huge chains of hotels like Hilton International, the above benefits and discrepancies play a vital role in their decisions of joint ventures with local established brands during brand extension periods. Even though their expansions are quite remarkable in last decade of 20th century and first decade of 21st century, but they require further carefulness in these co branding associations. In best decisions, co branding would increase their brand’s worth without increasing further costs. On the other hand, in worse conditions, the doubtful and brand image contrary association might result in decreasing brand equity.
Mergers and acquisitions for Hilton International

For the mergers like that of Hilton, Walter and Barney (1990) recognises some causes for amalgamation including:

  • Achievement of economies of scale for both businesses with wider scope in ling term.
  • Interdependence increases as the companies merge or get acquired
  • Expansion in the lines and categories of various brands in new markets.
  • Easy access to new businesses and new markets with new innovative products.
  • Utilization and maximization of economic resources and competitive advantage.

In the outcome, amalgamating companies can decrease products charges in output, retaining of accounts, promotion, publicity, and circulation by incorporating same agencies and purposes (Howell 1970). Also, mergers are considered as entails to arrest the resources for new markets like brands management and/or sales forces.

Consumers’ perceptions and mergers

Consumers, being the most important stake holder of hospitality business, may feel uncertainty after a joint venture, merger, or acquisition of its preferred hotel chain. They may shift to the closest competitor in the business as a result of incompatibility of the merged brands. The restructuring of business assets after merger or acquisition can have a positive impact on consumers’ decision making (Capron and Hulland’s 1999). Also, the judgement of consumers normally reflects their mind set about the companies before their merger. They consider the compatibility of brands’ personalities after the merging activity.  Fost (2004) found that mergers reshape the companies in hospitality industry, as the concept of their favourite brands can change after merger with another different brand. Hilton International has experienced the same situation in attracting new consumers and retaining the old ones after the mergers and acquisitions. The diverse profile of their customers spread in all continents, where North America has the strongest brand equity as Hilton is the biggest hotel chain there (Clemente and Greenspan 1997).

Brand Equity Management

Brand management is the privilege given by consumers to the selection of a specific product on the basis of its name, logo, symbol or any other significant feature (Kotler 1999).  Investors may seem far behind a brand title or other features of an established organization, but consumers recognize mostly the brand names only. In hospitality and tourism industry especially, the brands and their respective equity is more important. The corporate and travellers mention their destinations with specific symbols and benchmarks of places. Hotel industry is the most vital component of this industry, which needs to establish and to strengthen its brand images in consumer perceptions.

It is simpler for proprietors and managers of an established enterprise to get access to to capital markets and thus achieve necessary capital for expansion, more brands worth in bookings, expertise, trading, visitor commitment plans and much more.  From these contentions, a brand title can be glimpsed as a foremost leveraging component in users’ alternative of goods and it should furthermore be seen as a trading issue for the business personality also.  The influence of brand is broadly identified and is apparent largely ahead of and following mergers and acquisition (M&A) activities.  

Numerous business titles alteration took location amidst the hotel businesses following their M&A actions.  Ladbroke changed their brand name to Hilton brands for achieving their worldwide status and altered the business title to Hilton Group public limited company. Branding has furthermore been broadly utilised as a procedure of development for a business during the additions of goods.  With in hotel commerce, variety of products is endorsed by celebrities, companies and other figures. 

Integration of Brands after M&A

M&A activities conceive exclusive prospects, amplified contributions, latest marketplaces, and economies of scale, comparable expectations, and many more features. If these integrations of two or more businesses do not addressed punctually, after M&A finalization, many issues can raised like  brand conflicts, market opposition to a brand move,  brand disarray,  mismatched trading and inappropriate sales methods, contradictory  insights of a deal amidst clients or employees approval conditions, create a disturbed  pattern  for M&A deal’s worth.%u2028

Hilton decision makers consider influenced brands or brand additions and goal markets, then develop and start applying a brand  value chain integration scheme in the critical 3 months period after a deal. They take prompt steps to assist them in maximizing long-term worth of brands in association after the deal.  They avoid business mistakes that can take place after diffusion of two enterprises normally, in order to successfully incorporate M&A decisions.

Customer satisfaction

Some modes are used by Hilton management to understand if a clientele has been persuaded by their premium services and items proposing to them, the objective of this outcome is to double-check that these clients approaching again and furthermore is to glimpse that clients answers should be affirmative always. Clientele demonstration visitors and hotel administration agents who visit diverse nations should be lodged by chain of Hilton Hotels.

A variety of personage encompassing leaders, ambassadors, civil servants, and executives normally  evolved the inclination of producing certain that they are registered to Hilton Hotels while they proceed, they displays their approval in the role of visitor of the hotels. The employees at Hilton branches are trained to double check the needs of their visitors in order to achieve their complete satisfaction. Co branding and M&A activities not only generated new visitors but also new employees from diverse cultures, it has created drastic challenges for the management to accommodate the needs of these multiple clientele and workforce.

Innovation

Hilton Hotels is a worldwide corporation with very good workers who have an enthusiastic vision of discovery, they arrived through schemes to double-check that hotel branches reside on peak performance standards, and variety of innovations encompass equipping the accommodation in an up to date mode producing certain that the clients’ desires are met. Innovative workers of the Hilton hotels are paid or granted possibilities to farther their  discovery  through learning in organisations that offer generosity techniques , the innovative worker are  furthermore granted possibilities to rendezvous and switch over concepts with other  workers  from other holiday resorts .

Expansion Strategies

Development of a enterprise is a superior signal that enterprise is managing just all right, when this enterprise occurs to be a inn enterprise which evidently is a very dainty enterprise then should be resolved that the administration of the enterprise is managing an unbelievable job. Hotel enterprise is a enterprise that is faced with so numerous dangers, such dangers encompass terrorism, awful climate mostly for those which are established beside seas and political volatility are challenges to any enterprise, if the management does not perform themselves with a very careful and a logical brain may shock away visitors who are the stamina of the inn business.

Hilton Hotels has applied over past decades and thus double-checks that workers are from the identical homeland they invest. They consider the local challenges of the host country also before finalizing the merger or co branding deal

Increasing Sales and Turnover

According to Perret (2000), the hotels of Hilton are one of very few chains which never have faced profit and expansion challenges even in difficult times of recession. Best services at competitive rates have always been the manifesto of the organization in all countries. Hilton has been chartering competent workers which decreases costs affiliated to hire incapable workers, they furthermore hire trusted workers to cultivate ethical behaviours in their associated brands also, as a result of this strategy, and they right fully anticipated huge profits.

Human Resource Development

The HRM in Hilton International devotes recommendations to the top administration to decrease costs, especially on side of workers; employees need to be taught and be retrained on how to hold their costs minimal in the hotel. The adaptation to the new environments of merged or joint ventured hotels, the employees at Hilton are regularly trained w.r.t the new challenges and opportunities. The mind set of the workers of the added chains are different from that of Hilton’s employee, therefore, HRD at Hilton arranges regular trainings to the newly inducted workers.

The human assets division should adept to hammer the issue of workers and requirements of the clients in a cost effective manner. Hilton Hotel's HRM scheme is designed in away that in significant costs which could be bypassed by the employees are deducted to them, this may appear rough but it encourages the employees to affect buying decisions of customers the best ways to utilize rudimentary facilities like electrical power, gas, and water in a cautious kind to reduce the costs substantially.

Impact of the strategies:

The managerial heritage of numerous businesses, either localized or worldwide resulted in establishment of diverse agencies .These agencies   are  recognized  by  diverse  jobs  as  asserted by teaching and know-how of individuals employed in these organizations. The  influences on the company’s organization of the schemes that were adopted by the Hilton Hotels are abundant. The advantages of taking up the schemes extremely surpass the discrepancies.

A business is adapted to amalgamate numerous business houses and have workers in these companies employed for a widespread purpose. The employees are human assets in all   departments and persons from the community relatives sections of the Hilton Hotels records outnumber schemes simultaneously to glimpse so that the clients are satisfied.

When recruitment, selection, and retaining employees is considered, the assembly of companies boast utilisation of world broad web portal which is capable the charges  engaged  in leasing, the dangers arise when hired workers  turn out to be incapable, and their work performance decreased continuously. Therefore through the world broad web founded program of chartering, the influence proved to be marvellous in an affirmative manner which is quite probable to be imitated by competitors.

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