CASE 2
Hilton Hotels
Hilton Hotels Corporation owns, manages and/or franchises hotels, casino-hotels and inns; sells furnishings, equipment, and supplies to hotels, motels, and inns; and operates a computerized reservation system for the hotel industry. After two major takeover attempts in the early 1990s, Hilton Hotels decided that it had to change by becoming a more aggressive business operation. The result was the decision to move heavily into gambling. This change of strategic direction represented a significant shift in Hilton’s business focus and marketing objectives. Already the owner of four casinos in Nevada, the Los Angeles hotelier began pushing projects in New Orleans, Chicago, ...view middle of the document...
2 million in 1994 compared with $973.5 million in 1993. Casino revenue, a component of gaming revenue, was $480.6 million in
“Hilton Hotels,” by William J. McDonald, reprinted from Cases in Strategic Marketing Management, 1998, Prentice-Hall, Inc.
1600 1400 1200 Millions 1000 800 600 400 200 0 1990 1991 1992 Year
FIGURE 2–1 Hilton Hotels Total Revenues Source: Hilton Hotels Corporation 1994 Annual Report
1993
1994
140 120 100 Millions 80 60 40 20 0 1990 1991 1992 Year
FIGURE 2–2 Hilton Hotels Corporation Net Income Source: Hilton Hotels Corporation 1994 Annual Report
1993
1994
1994 compared with $502.1 million in 1993. Gaming operating income was $159.0 million in 1994, a 7 percent decline from $170.5 million in 1993. Excluding the results of the company’s gaming facilities in New Orleans and Windsor, both of which commenced operations in 1994, revenue increased 1 percent and operating income decreased 12 percent from the prior year. For 1994, Hilton hotels showed system-wide occupancy of 70 percent, a threepoint increase over 1993, while the U.S. hotel industry as a whole had occupancy of 65 percent. Equally as important as the increase in occupancy was the significant improvement in average daily rate. For the year, that rate jumped 7 percent over last year. As of the end of 1994, Hilton’s gaming segment included five wholly-owned Nevada hotel-casinos, equity income and management fees from partially owned hotel-casinos in Queensland, Australia and Istanbul, Turkey, and equity income and management fees from gaming operations in New Orleans, Louisiana and Windsor, Ontario, Canada. Its Nevada gaming operations offered a diversified product and service mix, which appeals to a broad spectrum of customers. The Flamingo Hilton–Las Vegas caters to the broad Las Vegas middle market, while the Las Vegas Hilton caters to premium players and the convention market. The Flamingo Hilton–Reno focuses on middle-market activity, while the Reno Hilton targets both convention and middle-market activity. The Flamingo Hilton–Laughlin targets the budget-market segment.
UNDERSTANDING HOTEL CUSTOMERS
The abundance of spare bed capacity means that hotels need to better target the needs of customer segments and offer distinctive services. Hilton’s efforts to customize hotel services by purpose of visit and origin of guest is instructive to all hoteliers who want to increase their service, and hence customer, levels. Hilton International provides a diversity of services to customers from 130 nationalities at 150 locations in more than 50 countries around the world. To determine the optimum service for the 1990s, Hilton undertook customer and employee surveys to identify market needs and expectations, the views of employees on job-related issues and, more importantly, what employees believed that their customers wanted them to provide. This work was instrumental in shaping a program designed to create a more contemporary service-led...
