Ever year, the travel and tourism industry generates over one trillion dollars to the US economy. Lodging is the top contributing subsector in this industry. One specific leading global hospitality company is The Hampton Inn, owned by Hilton Worldwide. They operate over 3,900 hotels in 90 countries, and employ approximately 140,000 people (About Hilton, 2013). The ability of Hilton Worldwide to respond effectively and efficiently to the impact of their industry forces is a critical factor in determining their success. Hilton Worldwide is able to understand the effect of each of their industry forces by analyzing the level of rivalry among their competitors, the potential for entry into their industry, the power of customers, the power of suppliers, the threat of substitute service and the changes in demographics. The degree of rivalry determines the extent to which the value created by an industry is dissipated through head-to-head competition. Rivals are determined according to similarity of price, segment and proximity (Matthews, 2000). Hilton Worldwide decreases the degree of rivalry of existing hotels by differentiating their prices for hotel products and services. They have been successful by offering exclusive amenities and services, such as hotel loyalty program, full services for the business and luxury traveler, vacation ownership, and global services to stand out above their competitors. The lodging industry has a high barrier for entry such as a high investment cost and product differentiation. Hilton Worldwide is not intimidated if a newcomer enters the ring since they are a well-known brand name to fit every lifestyle and occasion by their wide range of services. In addition, they offer 100% satisfaction guarantee, if the customer is not happy with their visit, they will stay free. Therefor Hilton Worldwide has a good strategy to be able to defend themselves against new entrants. The purchase power of customers can...
References: About Hilton Worldwide. (2013, July 18). Retrieved from Hilton Worldwide: http://www.hiltonworldwide.com
Daley, J. (2013, January). Checking In - And Staying. Entrepreneur, p. 94.
Kim, B. O. (2004, January 16). How Do Hotel Firms Obtain a Competitive Advantage? International Journal of Contemporary Hospitiality Management, pp. 65-71.
Matthews, V. (2000, December 2). Competition in the International Hotel Industry. International Journal of Contemporary Hospitality Management, pp. 114-118.
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