Situational Analysis on Hilton Hotels Corporation

Market Summary

Based in Beverly Hills, California, in 1946, Hilton Hotels Corporation presently owns, manages, and develops hotels, timeshare properties, and resorts. As of June 30, 2005, it had 2,311 properties, totaling approximately 364,000 rooms. Hilton also owns a 50% interest in Windsor Casino Limited, which operates the 400-room Casino Windsor in Windsor, Canada. The corporation comprises Hilton, Embassy Suites, Hampton, Doubletree, Hilton Garden Inn, Conrad, and Homewood Suites by Hilton. To give the corporation an even greater competitive advantage, the company has managed hotel properties internationally in Egypt, Belgium, Hong Kong, England, Indonesia, Thailand, and Mexico, to name a few. Hilton has, as well, franchised hotel properties internationally in Puerto Rico, Peru, Canada, Dominican Republic, Mexico, Ecuador, and Venezuela. Hilton Hotels is competing in the hospitality industry despite the negative impact of terrorist attacks, war, and other political upheavals.

Market Demographics

To better demographically serve, Hilton properties include full-service and limited service hotels in airport, resort, urban, and suburban locations. Hilton also provides design and furnishing services; such services include the purchase and distribution of furniture, food, beverage, furnishings, equipment, and operating supplies. These services are available to Hilton and its subsidiaries, which also utilize a computerized worldwide reservation system.

Market Growth

A total of 35 properties, primarily franchises, with approximately 5,800 rooms were added to Hilton during the first three months of 2005. In all, Hilton expects to add 130 to 150 hotels and 16,000 to 20,000 rooms to the corporation. This growth is expected to come to fruition through franchise and management agreements.

Market Needs

Eight properties, primarily franchises, with approximately 1,100 rooms were removed from the Hilton Corp. during the beginning of 2005, due primarily to product quality issues. Anticipated spending for maintenance comprises approximately $430 million, which includes $140 million for routine developments, $190 million on timeshare projects and $100 million in hotel renovation, ROI and special projects. Routine developments include monies for equipment, hotel furnishings, and coverings for the wall and floor.

Market Trends

One trend that Hilton has implemented is to review the hotel portfolio of owned properties for possible repositioning or re-branding opportunities. Hilton also tends to utilize information from their Liquidity and Capital Resources-Asset Dispositions. The disposition informs Hilton marketers on evaluating potential asset sales and selling particular hotel properties to obtain premium prices. It has been a successful trend of Hilton to retain a management or franchise agreement when selling; however, Hilton is not opposed to selling hotels without maintaining the Hilton brand.

SWOT Analysis

Strengths:

Proactive