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Posted on August 18th, 2012, by

Nowadays the hotel and leisure industry is progressing and the companies operating in this segment of the market are struggling for larger share of the market and for possibly larger numbers of customers. In such a situation, the position of the leaders of the industry is particularly important since it helps better understand the general trends and the current situation in the industry at large. In this respect, it is practically impossible to discuss Hilton hotel industry without mentioning the founder of the industry Hilton Hotels and such giants as the Marriott hotels and Starwood hotels, which are the main competitors in this industry and they obviously are able to define its future development. It is noteworthy that these companies are even in a better position, from a commercial point of view, than Hilton Hotel, which is obviously less successful than the two companies mentioned above.

This is why it is extremely important to thoroughly analyze the position of these companies in the market, the current situation, their achievements and perspectives that would help better understand the future of the Hilton hotel industry and develop possible recommendations as for the improvement of the operations of the leaders of the industry.

Historical background

Naturally, it is also extremely important to analyze the current situation and the position of Hilton Hotels, Marriott and Starwood hotels but it is practically impossible to make reliable research and arrive to objective conclusions without brief overview of the historical development of the companies. The historical background is of a paramount importance because it provides ample opportunities to trace the basic stages of the development of the companies and the factors contributing to their prosperous position in the contemporary economic situation.

First of all, it is necessary to say a few words about Hilton Hotels. Hilton Hotels was founded in 1919 by Conrad Hilton. Gradually the company progressed and spread its network worldwide. Basically, its operations were focused on luxury hotels that created a popular brand though traditionally the services of Hilton Hotels are considered to be quite expansive and oriented on a limited number of customers whose social status is high enough.

It is also quite noteworthy that in the US, Hilton Hotels was the first coast-to-coast chain hotels. Traditionally, the company placed a particular emphasis on business travel and owned and operated a number of resorts and leisure oriented hotels as well.

However, it is a remarkable fact that the Hilton brand was re-united internationally only in 2006 when the US based Hilton Hotels Corporation purchased the lodging arm of the UK-based Hilton Group PLC, which had acquired Hilton International operations in 1987.

As for Starwood hotels it should be said that the company has grew constantly during its history. In this respect, it is noteworthy that the policy of acquisition and mergers was hold by the company extremely successful since nowadays it comprises eight brands which are very popular and well known all over the world.

Basically, Starwood hotels in its present form was shaped in recent years and it was the result of the company’s acquisition of Sheraton, Four Points, and the Luxury Collection. To put it more precisely, the brands mentioned above were acquired in the result of the acquisition of one company, ITT Sheraton. At the same time, it should be pointed out that Starwood hotels continued its policy of acquisitions which could be characterized as quite aggressive. As a result, in 1998 the company inherited the original St Regis hotel on Fifth Ave. in the following years the new acquisition subsequently grew the name and franchise into more properties (Forsberg 2005).

Furthermore, it is also necessary to point out that the company also paid a lot of attention to its brand that in the contemporary economic situation is particularly important. It is not a secret that nowadays brand plays an extremely important role in the company’s commercial success. Not surprisingly that brand may constitute a significant part of the company’s market value because it contributes dramatically to the popularity of the company among customers and develop customer experience and preferences when they make a choice in favor of certain company.

Speaking about brand policy developed by Starwood hotels, it is necessary to point out that in 1999 the company launched the W’ brand which has been described as a fun, hip, and exciting hotel collection that happily marries boutique hotel flair with the quality and functionality of larger brand hotels (Forsberg 2005, p.217).

The latter is particularly important since it reveals the strategic policy of Starwood hotel that has been historically developed, according to which the company is focused on a combination of small boutique hotels with larger hotels.

As a result, the company has managed to occupy its niche of the market and it is even possible to say that nowadays it occupies, to a certain extent unique position.

In stark contrast, Marriott hotels traditionally focus their attention on value and luxury hotels which, being similar in a way to Starwood hotels, are basically oriented on limited circle of rich customers and may be characterized as exclusive lodgings. Speaking about the historical background of this company, t is necessary to point out that, unlike Starwood hotels, Marriott hotels is based in Zurich, Swizerland and in its present form it was shaped in 1993. Since that epoch the company is also focused on aggressive policy of acquisitions that provide the constant growth and enlargement. Not surprisingly that nowadays the company operates worldwide and is represented in many countries of the world, regardless relatively high prices for its services. In this respect, Marriott hotels are similar to Starwood hotels because the market expansion is the official policy of both competing companies.

As for Marriott hotels acquisitions, it should be said that the company has started to grow practically since the first years of its existence. To put it more precisely, in 1995 the company purchased 49% in Ritz Carlton and in 1998, the company purchased additional 50% interest in Ritz Carlton, giving them 99% of the ownership (Gilinsky 2005).

In this respect it should be underlined that in recent years the company basically focused on hotel ownership and management though it also operated in different segments of the market, such as timeshare or synthetic fuel. On realizing this new strategy, in 2002 the company initiated the major restructuring by spinning of Senior Living Services Communities and Marriott Distribution Services. The changes were completed by 2003 and the company could focus on hotel ownership and management mainly.

At the same time, it is necessary to point out that the company not only acquired other companies but also sold some of its parts. For instance, it is a well known fact that Marriott hotels owned Ramada International Hotels and Resorts until its sale on September 15, 2004 to Cendant. This fact obviously make the company different from Starwood hotels which prefer to acquire and not to sell, but, on the other hand, it is necessary to clearly realize that acquisitions and sales are natural parts of the contemporary business and they cannot define the position of the company in the market, if only the sales do not totally predominate over acquisitions that indicate at certain problems the company faces in the current situation. The latter obviously does not refer to the situation within Marriott hotels.

Furthermore, it is also necessary to say that Marriott hotels not simply acquired companies but, along with this, it also acquired brands which represented these companies. This is why nowadays Marriott hotels comprises several brands which are very popular in different parts of the world, as well as in the whole world at large. Among these brands may be named Renaissance Hotels and Resorts, Marriott Conference Centers, TownePlace Suites by Marriott, and some others.

Competitive analysis

Obviously, Hilton Hotels, Marriott and Starwood hotels are the companies operating in the same segment of the market and they are the main competitors in their niche of the market. Moreover, it is necessary to point out that they are the leaders of the industry and their position is quite strong, though it does not prevent them from competitive struggle and corresponding problems and difficulties both companies are constantly facing.

Primarily, it is necessary to describe the current situation within Hilton Hotels and the company’s position in the market that may be clearly understood from the following tables. Notably the table 2 rrepresents the current value of the company in the market:

Table 2

Hilton Hotels

VALUATION MEASURES

Market Cap (intraday):    10.88B

Enterprise Value (2-Jul-06)3:  19.48B

Trailing P/E (ttm, intraday):  22.97

Forward P/E (fye 31-Dec-07) 1: 20.79

PEG Ratio (5 yr expected):     1.70

Price/Sales (ttm):   2.19

Price/Book (mrq):    3.59

Enterprise Value/Revenue (ttm)3:    3.99

Enterprise Value/EBITDA (ttm)3:     16.636

 

Furthermore, it is also necessary to take into consideration the financial position of the company briefly described in the table 3:

Table 3

Hilton Hotels

FINANCIAL HIGHLIGHTS

Fiscal Year

Fiscal Year Ends:    31-Dec

Most Recent Quarter (mrq):     31-Mar-06

Profitability

Profit Margin (ttm): 10.25%

Operating Margin (ttm):   17.17%

Management Effectiveness

Return on Assets (ttm):   4.32%

Return on Equity (ttm):   18.28%

Income Statement

Revenue (ttm): 4.88B

Revenue Per Share (ttm):  12.782

Qtrly Revenue Growth (yoy):    41.20%

Gross Profit (ttm):  1.67B

EBITDA (ttm):  1.17B

Net Income Avl to Common (ttm):     500.00M

Diluted EPS (ttm):   1.231

Qtrly Earnings Growth (yoy):   62.50%

Balance Sheet

Total Cash (mrq):    163.00M

Total Cash Per Share (mrq):    0.424

Total Debt (mrq):    8.77B

Total Debt/Equity (mrq):  2.951

Current Ratio (mrq): 0.953

Book Value Per Share (mrq):    7.725

Cash Flow Statement

Operating Cash Flow (ttm):     317.00M

Levered Free Cash Flow (ttm):  4.97B

 

Finally, it is necessary to dwell upon the trading information concerning Hilton Hotels, presented in the table 4:

Table 4

Hilton Hotels

TRADING INFORMATION

Stock Price History

Beta:     0.9

52-Week Change3:     18.23%

S&P500 52-Week Change3:   6.34%

52-Week High (10-May-06)3:     29.22

52-Week Low (19-Oct-05)3: 18.78

50-Day Moving Average3:   27.2742

200-Day Moving Average3:  25.5847

Share Statistics

Average Volume (3 month)3:     2,791,710

Average Volume (10 day)3: 1,926,210

Shares Outstanding:  384.62M

Float:    359.89M

% Held by Insiders4: 6.41%

% Held by Institutions4:  80.60%

Shares Short (as of 12-Jun-06)3:    9.77M

Short Ratio (as of 12-Jun-06)3:     3.5

Short % of Float (as of 12-Jun-06)3:     2.60%

Shares Short (prior month)3:   6.19M

Dividends & Splits

Forward Annual Dividend Rate5: 0.16

Forward Annual Dividend Yield5:     0.60%

Trailing Annual Dividend Rate3:     0.16

Trailing Annual Dividend Yield3:    0.60%

5 Year Average Dividend Yield5:     0.50%

Payout Ratio5: 11%

Dividend Date3: 17-Mar-06

Ex-Dividend Date5:   07-Jun-06

Last Split Factor (new per old)2:   4:1

Last Split Date3:    26-Sep-06

 

In order to better realize the position of Hilton Hotels’ competitors in the market, it is necessary to compare them briefly on the basis of statistical data and the current achievements of both companies.

First of all it is necessary to say a few words about each company in general. Primarily, it should be said that Starwood Hotels is based in White Plains, New York, the US. Nowadays the company has about 145,000 employees who work on the company on full time basis (Forsberg 2005). Marriott Hotels, in its turn, is nowadays based in Besethda, Maryland, the US, though initially it was a Swiss company but due to the policy of acquisition and market expansion the company gradually transformed and started international business that forced the company to move to the US. In 2005 the company had about 143,000 of full time employees that is a bit less than its main competitor Starwood Hotels employs but the efficiency of work of the employees in both companies is practically relevant and similar to each other.

Furthermore, by the end of 2005 Starwood Hotels had practically double number of hotels more than 850 compared to Marriott Hotels where the number of hotels hardly reached 480 by the same period of time. In this respect, Starwood seems to be a larger company with a presumably larger potential but, it is necessary to remember that a significant part of Starwood hotels constitute smaller boutique hotels, though in recent years the company attempts to enlarge their hotels.

However, the real position of both companies in the contemporary situation may be briefly described in the table 1 (Gilinsky 2005):

Table 1

 

DIRECT COMPETITOR COMPARISON

SH   Pvt1 HLT  MAR  Industry

Market Cap:    13.08B    N/A  10.67B    15.61B    1.47B

Employees: 145,000   N/A  61,000    143,000   20.89K

Qtrly Rev Growth (yoy):   2.50%     N/A  41.20%    6.70%     11.30%

Revenue (ttm): 6.01B     N/A  4.88B     11.72B    431.91M

Gross Margin (ttm):  26.86%    N/A  37.28%    11.64%    48.50%

EBITDA (ttm):  1.28B     N/A  1.17B     816.00M   71.05M

Oper Margins (ttm):  14.15%    N/A  17.17%    5.04%     11.38%

Net Income (ttm):    421.00M   N/A  500.00M   693.00M   28.15M

EPS (ttm): 1.540     N/A  1.231     1.301     0.87

P/E (ttm): 39.10     N/A  22.53     28.99     30.03

PEG (5 yr expected): 1.67 N/A  1.62 1.58 1.67

P/S (ttm): 2.09 N/A  2.13 1.29 2.06

Pvt1 = Global Hyatt Corporation (privately held)

SH = Starwood Hotels

HLT = Hilton Hotels Corp.

MAR = Marriott International Inc.

Industry = Lodging

1 = As of 2004

 

Obviously, on analyzing the statistical data, it is possible to estimate that Marriott Hotels have a leading position in the market though the gap between the two companies discussed is note very significant. At the same time, in order to better understand the real financial situation within the companies and it is necessary to analyze some statistics referring to financial data as shown in Tables 5 and 6 (Gilinsky 2005):

Table 5

Starwood Hotels

FINANCIAL HIGHLIGHTS

Fiscal Year

Fiscal Year Ends:    31-Dec

Most Recent Quarter (mrq):     31-Mar-06

Profitability

Profit Margin (ttm): 5.79%

Operating Margin (ttm):   14.16%

Management Effectiveness

Return on Assets (ttm):   4.66%

Return on Equity (ttm):   8.45%

Income Statement

Revenue (ttm): 6.01B

Revenue Per Share (ttm):  27.61

Qtrly Revenue Growth (yoy):    2.50%

Gross Profit (ttm):  2.68B

EBITDA (ttm):  1.28B

Net Income Avl to Common (ttm):     421.00M

Diluted EPS (ttm):   1.54

Qtrly Earnings Growth (yoy):   -93.70%

Balance Sheet

Total Cash (mrq):    760.00M

Total Cash Per Share (mrq):    3.498

Total Debt (mrq):    4.23B

Total Debt/Equity (mrq):  0.868

Current Ratio (mrq): 0.993

Book Value Per Share (mrq):    22.514999

Cash Flow Statement

Operating Cash Flow (ttm):     850.00M

Levered Free Cash Flow (ttm):  337.88M

 

Table 6

Marriott Hotels

FINANCIAL HIGHLIGHTS

Fiscal Year

Fiscal Year Ends:    30-Dec

Most Recent Quarter (mrq):     24-Mar-06

Profitability

Profit Margin (ttm): 5.03%

Operating Margin (ttm):   5.04%

Management Effectiveness

Return on Assets (ttm):   4.60%

Return on Equity (ttm):   19.87%

Income Statement

Revenue (ttm): 11.72B

Revenue Per Share (ttm):  27.712

Qtrly Revenue Growth (yoy):    6.70%

Gross Profit (ttm):  1.31B

EBITDA (ttm):  816.00M

Net Income Avl to Common (ttm):     693.00M

Diluted EPS (ttm):   1.30

Qtrly Earnings Growth (yoy):   -55.20%

Balance Sheet

Total Cash (mrq):    172.00M

Total Cash Per Share (mrq):    0.416

Total Debt (mrq):    1.88B

Total Debt/Equity (mrq):  0.617

Current Ratio (mrq): 1.551

Book Value Per Share (mrq):    7.354

Cash Flow Statement

Operating Cash Flow (ttm):     917.00M

Levered Free Cash Flow (ttm):  -1.30B

 

On analyzing financial situation of both companies, it is necessary to point out that regardless higher profit margin of Starwood Hotels 5.79% compared to 5.03% of Marriott Hotels, the management effectiveness of the latter is still higher than that of Starwood Hotels. Obviously this fact indicate at the better perspectives of Marriott Hotels in the future since if the management effectiveness of Starwood Hotels remains lower, the gap between the two companies will constantly grow and eventually the financial position of Marriott Hotels will be significantly better compared to its main competitor.

In such a situation, it is not surprisingly that the current revenue per share of Marriott Hotels is still higher and constitutes 27,712 compared to 27,61 for Starwood Hotels. Nonetheless, the gross profit of the latter still remains higher (2,68 B) than the gross profit of Marriott Hotels (1,31 B). On the other hand, it is necessary to underline that the net income of both companies also differs significantly and it constitutes only 421 M for Starwood Hotels, while for Marriott Hotels it constitutes 693 M (Gilinsky 2005).

Furthermore, it is also necessary to briefly discuss valuation measures of both companies in order to better realize what the value of each company really is. In this respect, it is necessary to refer to statistical data from tables 7 and 8 where valuation measures are amply presented for both Starwood Hotels and Marriott Hotels (Gilinsky 2005):

Table 7

Starwood Hotels

VALUATION MEASURES

Market Cap (intraday):    13.08B

Enterprise Value (30-Jun-06)3: 16.55B

Trailing P/E (ttm, intraday):  39.10

Forward P/E (fye 31-Dec-07) 1: 22.38

PEG Ratio (5 yr expected):     1.67

Price/Sales (ttm):   2.09

Price/Book (mrq):    2.57

Enterprise Value/Revenue (ttm)3:    2.75

Enterprise Value/EBITDA (ttm)3:     12.947

 

Table 8

Marriott Hotels

VALUATION MEASURES

Market Cap (intraday):    15.61B

Enterprise Value (30-Jun-06)3: 17.32B

Trailing P/E (ttm, intraday):  28.99

Forward P/E (fye 30-Dec-07) 1: 20.61

PEG Ratio (5 yr expected):     1.58

Price/Sales (ttm):   1.29

Price/Book (mrq):    4.97

Enterprise Value/Revenue (ttm)3:    1.48

Enterprise Value/EBITDA (ttm)3:     21.222

 

On analyzing these statistical data, it is possible to estimate that currently Marriott Hotels is in a bit advantageous position compared to Starwood Hotels. For instance, Marriott Hotels’ Market Cap is higher for more than 1.5 B compared to that of Starwood Hotels, or, to put it more precisely, it constitutes 15.61 B for the former and only13.08 B for the latter.

Moreover, the enterprise value of Marriott Hotels is also significantly higher and constitutes 17.32 B compared to 16.55 B as for Starwood Hotels. Nonetheless, such a gap in the enterprise value between the two companies discussed can still be changed, taking into consideration the recent active policy of expansion developed by Starwood Hotels as a strategic direction of the further development of the company. The latter fact is particularly disturbing for Marriott Hotels in the context of its recent sale of Ramada International Hotels and Resorts to Cendants. Moreover, the higher enterprise value/revenue of Starwood Hotels 2.75 compared to 1.48 of Marriott Hotels is also quite disturbing, though enterprise value/EBIDTA is still higher for Marriott Hotels (21.222) than that of Starwood Hotels (12.947).

Finally, it is necessary to discuss trading information concerning both companies that is also of a paramount importance that is briefly described in tables 9 and 10 (Gilinsky 2005):

Table 9

Starwood Hotels

TRADING INFORMATION

Stock Price History

Beta:     0

52-Week Change3:     2.80%

S&P500 52-Week Change3:   6.82%

52-Week High (07-Apr-06)3:     68.87

52-Week Low (25-Apr-06)3: 52.41

50-Day Moving Average3:   59.64

200-Day Moving Average3:  61.71

Share Statistics

Average Volume (3 month)3:     2,105,890

Average Volume (10 day)3: 1,502,220

Shares Outstanding:  217.24M

Float:    216.98M

% Held by Insiders4: 0.12%

% Held by Institutions4:  9.40%

Shares Short (as of 12-Jun-06)3:    5.05M

Short Ratio (as of 12-Jun-06)3:     2.4

Short % of Float (as of 12-Jun-06)3:     2.30%

Shares Short (prior month)3:   5.92M

Dividends & Splits

Forward Annual Dividend Rate5: N/A

Forward Annual Dividend Yield5:     N/A

Trailing Annual Dividend Rate3:     14.11

Trailing Annual Dividend Yield3:    24.40%

5 Year Average Dividend Yield5:     N/A

Payout Ratio5: N/A

Dividend Date3: 07-Apr-06

Ex-Dividend Date5:   N/A

Last Split Factor (new per old)2:   3:2

Last Split Date3:    28-Jan-2006

 

Table 10

Marriott Hotels

TRADING INFORMATION

Stock Price History

Beta:     0.65

52-Week Change3:     10.58%

S&P500 52-Week Change3:   6.82%

52-Week High (09-May-06)3:     38.38

52-Week Low (27-Oct-05)3: 29.01

50-Day Moving Average3:   36.47

200-Day Moving Average3:  35.13

Share Statistics

Average Volume (3 month)3:     2,205,280

Average Volume (10 day)3: 1,497,720

Shares Outstanding:  413.91M

Float:    339.40M

% Held by Insiders4: 13.73%

% Held by Institutions4:  55.70%

Shares Short (as of 12-Jun-06)3:    8.01M

Short Ratio (as of 12-Jun-06)3:     3.3

Short % of Float (as of 12-Jun-06)3:     2.40%

Shares Short (prior month)3:   5.07M

Dividends & Splits

Forward Annual Dividend Rate5: 0.25

Forward Annual Dividend Yield5:     0.70%

Trailing Annual Dividend Rate3:     0.22

Trailing Annual Dividend Yield3:    0.60%

5 Year Average Dividend Yield5:     0.60%

Payout Ratio5: 12%

Dividend Date3: 21-Jul-06

Ex-Dividend Date5:   20-Jun-06

Last Split Factor (new per old)2:   2:1

Last Split Date3:    12-Jun-06

 

Thus, on comparing both Starwood Hotels and Marriott Hotels, it is possible to estimate that the latter is in an advantageous position than the former, or at least its current financial statistics is better than that of Starwood Hotels. Nonetheless, Starwood Hotels also occupies quite a good position in the industry and is still competitive to the extent that in the future it may eventually replace Marriott Hotels as the leader of the industry.

Generic and industry environment

On analyzing the current position and historical background of the development of Hilton Hotels, as well as Marriott and Starwoods Hotels, it is impossible to make any reliable conclusion or forecast the companies’ perspectives without discussion of generic and industry environment they have to operate in.

In this respect, it is necessary to say that the companies have chosen the correct strategy of market expansion and spreading of their business worldwide because the contemporary economic is characterized by the process of globalization which involves practically all countries of the world. As a result, the company that attempts to succeed has to develop and expand its traditional markets and enter markets of possibly larger number of countries worldwide.

It is particularly important for the hotels industry where Hilton, Marriott and Starwood Hotels are the leaders because this industry is constantly growing and the need in the hotels, where the services of the highest quality are delivered, are essential and not only due to the development of tourism and leisure industry but also due to the development of commercial contacts between different companies worldwide.

However, it is necessary to underline that leisure industry and tourism, especially in the US, suffered a lot from terror attacks of 9/11 but, nonetheless, the progress of companies operating in this industry is unstoppable and gradually they recover from the crisis they suffered from at the early 2000s.

SWOT analysis

Naturally, the efficient analysis of the position of any company in the market implies SWOT analysis. Speaking about Starwood and Marriott Hotels it is possible to start SWOT analysis from the discussion of strengths of both companies.

Briefly the strengths of both companies may be presented in the table 8

Table 8

Hilton Hotels Starwood Hotels Marriott Hotels
  • Popularity of the brand
  • Old traditions of the company
  • Traditional customers
  • Leading position in the industry
  • Continuing market expansion
  • Stable operation worldwide
  • Combination of boutique hotels with larger hotels
  • Leading position in the industry
  • Stable operation worldwide
  • Development of luxury larger hotels

 

 

On the other hand, there are certain weaknesses the companies suffer from presented in the table 9:

Table 9

Hilton Hotels Starwood Hotels Marriott Hotels
  • The development of the company is too slow
  • Concentration of the company’s attention on luxury hotels mainly, and corresponding infrastructure limits the company’s markets
  • Boutique hotels retard the development of the company due to lower number of rooms and relatively high number of employees
  • Permanent market expansion needs additional investments in newly acquired hotels
  • High prices limits the number of potential customers
  • Luxury hotels position the company as the company for a limited number of clients
  • Worldwide spread network needs sustaining of services on the highest level regardless the country the company is presented in that needs additional training for local personnel, and, consequently, additional financing

 

Furthermore, it should be said that both companies have good opportunities as shown in the table 10:

Table 10

Hilton Hotels Starwood Hotels Marriott Hotels
  • Company can still exploit the popularity of its brand for further transformation and expansion
  • Widely spread network may be a basis for the development of resort and hotel- business related industries
  • Company has a potential for further market expansion and development
  • Merger with any larger company operating in the same segment of the market would put the company to the leading position in the industry
  • Company has a potential for further market expansion and development

Company currently occupies the leading position in the market and has opportunities to influence the development of the industry and enforce its current position

 

Finally, it is necessary to say a few words about the potential threats both companies are currently facing:

Table 11

Hilton Hotels Starwood Hotels Marriott Hotels
  • Growing competition threats the company’s position in the market
  • Gradually the company looses its share of the market
  • Lack of flexibility threatens to result in a gradual degradation of the company, especially in the period of economic crisis
  • Deterioration of situation in leisure and hotels industry after 9/11 and potential threat of the repetition of the crisis
  • Growing competition and potential monopolization of the market by the main competitor
  • Deterioration of situation in leisure and hotels industry after 9/11 and potential threat of the repetition of the crisis
  • Potential merger of the main competitor with another larger company such as Hilton Hotels

 

Porter’s five force model

Finally, it is necessary to analyze both companies in the context of Porter’s five force model. In this respect, it is necessary to underline that both Marriott and Starwood Hotels possess a great supplier power they are constantly developing and progressing but still they cannot supply sufficient services for a larger number of customers because of their focus on luxury and boutique hotels. As a result, they supply their services only to a limited amount of customers who possess sufficient financial resources.

On the other hand, customers buyer’s power is also getting to be quite limited and particularly sensitive to significant economic changes or crisis. What is meant here is the fact that a serious economic crisis would decrease dramatically the buying power of customers of both companies.

Furthermore, in the struggle for the new markets both companies face numerous problems because of barriers to entry because some markets are really specific where traditional methods and management strategies should be changed, such as that of South-East Asia, or Middle East. On the other hand, many countries, regardless globalization, still attempts to protect national markets from foreign expansion and create financial barriers to entry.

Furthermore, there remains a potential threat of substitutes since the companies operating in hotel industry that are not oriented on luxury hotels only also progress and to a certain extent they can substitute Hilton, Marriott and Starwood Hotels, especially offering high level of services at lower prices.

Finally, it is necessary to remember about high degree of rivalry and competition that both companies suffer from and in the future there will remain less and less room for further growth.

Conclusion

Thus, in conclusion it is possible to say that Marriott and Starwood Hotels have achieved a great success to the extent that they became even more successful than Hilton Hotels, the company, which actually first entered the industry and has been dominated for years. Nonetheless, the brand popularity could not substitute the higher level of services, more competitive prices, and fast growth of the companies’ network worldwide. Since Marriott and Starwood Hotels turned to be more successful in these areas, logically they became the leaders of the industry, while Hilton Hotels remained backwarded in the third place.

Moreover, nowadays the companies still have good perspectives for further growth but still it is possible to recommend to stimulate the transformation of the companies in order to offer their services to possibly larger number of customers in order to attract mass customers to their services, while Hilton Hotels needs to be transformed even more than its main competitors in order to progress and not simply exploit its brand. Otherwise, the future progress would be at great risk since the niche of the market of leisure hotels is limited and too sensitive to economic or socio-political crisis.

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