Hilton case study
Therefore, considering Its relative high distribution costs, Its Inefficient allocation of all rooms available and the arise of new market opportunities, this system has turned out to be unsustainable and a change In the company’s distribution strategy Is urged. In order to decrease distribution costs and enhance profits, the company needs to focus on a strategic planning based on environmental analysis such as PEST or SOOT analysis (Solomon, Marshall, Stuart, Barnes, Mitchell: 2009).
These market evaluations (focused on the study Political, Economical, Socio-cultural,Technological, Legal or Environmental factors)will identify the opportunities and threats that the market presents and the strengths and weaknesses the company has, in terms of economical and human capital (SOOT).
This research will reveal the increasing popularity of third-parties websites and explain the change in customers’ behavior in booking.
But moreover will invasive the need for Hilton to seriously consider this market opportunity and develop growth strategies that enable the company to penetrate the website booking market. Then in a second place Hilton will need to elaborate the proper Marketing mix (a good blend of the 4 As of Price, Product, Place and Promotion) that might fit the target market chosen and stimulate customers to insider Hilton as an option.
The first option of keeping the traditional distribution channels will keep the the Hotel out of reach for the booking website users and, apart from maintaining the relationships with existing and trusted distributors, will lead to a less profitable distribution system (without considering the massive employment of human resources), failing to allocate efficiently rooms with the pre-allocation system and consequentially to meet the objectives.
The second choice of persuading supplier to sign new standards contracts and allowing them to access the central booking yester will offer a more efficient allocation of rooms and a decrease In Inventory delivery costs. But, penthouse Hilltop’s prominent reputation, not all distributors will agree with new conditions as an eventual margins reduction will not compensate the opportunity profit they have earned by acting as Expedite as an online booking site. The third solution of engaging with new distributors (such as Expelled, etc. Will Introduce Hilltop’s offers to all the booking website users ,Welch are a considerable high amount, and at the same time It will satisfy traditional customer by enabling hem to book via traditional channels (tour operators, etc. ). The latter strategy will keep existing distributors still as market opportunity, but at the same time it will allow Hilton to evaluate ten restiveness AT tense wheedles and, In case AT success, start developing a growth strategy.
The only side effect of this strategy is that individual hotels might suffer the switch from old distributors, but, considering the decrease in distribution costs and the rise in profit it will bring in addition to the entrance in a growing market, it is the only strategy that exploit all the opportunities offered by the market.