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These best practices or optimized approaches to first measuring guest expectations and then responding to them through a series of concerted strategies is the foundation of the strategic framework Hilton uses to manage its many brands (Dube, Renagham,1999).
Managing Expectations and Exceeding Them: The Mission of Hilton Management
Strategically then, the managing and exceeding of expectations are the most critical strategic set of processes that Hilton management continually refines and accentuates throughout their organizational culture (Balmer, Thomson, 2009). This effort to continually strengthen the practice of exceeding expectations is quantified through the use of SERVQUAL and balanced scorecards (Hosford, 2006) and has even permeated the management team's approach to creating and executing on learning programs and initiatives for employees (Baldwin-Evans, 2006).
Hilton management, across all of its brands, has also seen that guests form very solid levels of brand loyalty when their expectations are met the majority of the time, during the majority of interactions they have. This has been supported by empirical research into the foundations of how expectations are formed and reinforced over time (Hawes, Mast, Swan, 1989). Hilton management also has found that in the continual increasing of expectations, there must be a continual balance of commitments kept and trust strengthened over time. Without this aspect of expectation management, trust is lost. This is the factor that drives Hilton management to engrain the use of balanced scorecards into their daily management of all properties and also continually accentuate customer contact and face time (Munck, 2001) to all employees. They are striving to create a high level of ownership for customer expectations being met or exceeded, because in accomplishing that, trust will be retained. Once trust is retained and grown, loyalty to a brand is achieved (Young, Wilkinson, 1989).
For Hilton management, the frameworks used to measure and manage expectations are critically important to managing their brands. The fact that business travelers, the most profitable customer segment for Hilton, rely not on price but on loyalty to determine where they will stay on each business trip (Yesawich, 2006) underscores how critically important these dynamics are to the hotel chains' profitability as well. Consistent with the building of market segmentation models that are optimized not just for top-line revenue growth but for profits as well (Nordling, Wheeler, 1992), Hilton's approach to creating a culture that is based on continually teaching employees new technologies, procedures and approaches for better serving guests while at the same time exceeding their expectations has been shown to be directly linked to the company's profitability as well (Baldwin-Evans, 2006). While the company was taken private by Blackstone Group in 2007, using the filings with the Securities and Exchange Commission a table of the historical performance of Hilton Hotels has been created and is shown in Table 1, Historical Financial Performance Analysis shown in the Appendix of this document. Clearly Hilton from the results shown up until the point they were taken private, was seeing an increase in demand for their hotels across all brands. The final year of the analysis is 2006, when Hilton Hotels was able to attain an 84% increase in revenues and a 24% increase in revenues.
The leadership traits and management styles that serve as the catalyst of Hilton's competitive advantage emanate from their ability to infuse a very high level of ownership into the daily setting and exceeding of guest expectations. The Hilton culture strongly values measuring performance of expectations and looks to SERVQUAL as a means to continually monitor and evaluate performance against plans as well. This commitment to continually scanning expectations of customers to exceed them has also given them the flexibility of finding entirely new markets while gaining trust and loyalty in existing ones.
While Hilton Hotels excels at the basic processes critically important to business guests and has developed specific programs for leisure travelers, the company still has yet to move into the area of leisure travel, the company has yet to create a unique brand with younger, more upwardly mobile travelers who travel globally vs. just in the U.S. The global leisure and business traveler who wants to find good deals in Asia, Europe, throughout the rest of the world is not being captured as a result. Nowhere is this more apparent than in the company's strategies in Asia and throughout the Pacific Rim nations. This area could be the greatest potential area of growth for Hilton, including China, Hong Kong, Japan, Korea and India. These areas show the greatest potential growth for the long-term.
Table 1: Historical Financial Performance Analysis
Source: (Blackstone Group Investor Relations, 2009)
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Christopher Hosford. (2006, December). Hilton's dashboards graphically depict five 'value drivers' at hotel properties. B to B, 91(17), 18.
(Kim, Mauborgne, 2004)
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Nordling, Christopher W., &…[continue]
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