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Hilton Hotel Sydney’s Business Environment

Introduction

The purpose of the current report is to brief management on the business environment for Hilton Hotel Sydney. The paper contains an analysis of political and legal, economic, social and cultural, technological, and environmental factors. The report also discusses the competitors of Hilton Hotel Sydney to identify its weak and strong sides. Looking ahead it should be said that the leisure facilities of the hotel, in comparison with hotels of other chains, are rather poor. The paper also provides a list of possible commercial partners and explains why they are relevant to the marketing efforts of Hilton Hotel Sydney. Finally, the report investigates tourists who come to Sydney, their purposes, the reason for arrival, and quantity.

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External Environment

Political and Legal Factors

Australia takes the 29th out of 195 places in terms of political stability (The Global Economy, 2018). Consequently, it is a safe destination, and tourists’ chances to become victims of mass disturbances are comparatively low. At this point, the present Black Lives Matter (BLM) movement should not be ignored since it led to mass destruction in the USA and causes social unrest in Australia. However, the last protests that happened in Sydney two months ago and were ended peacefully, without victims (Bavas, 2020). Thus, tourists are not threatened by the political situation in Australia, and, particularly, in Sydney.

Another important aspect of the political environment in Australia is that the federal government is actively engaged in the support of the tourism industry. More precisely, the government practices the Pacific Labor Scheme that allows the citizens of Pacific countries “take up low and semi-skilled work opportunities in rural and regional Australia for up to three years” (Tourism Australia, 2020, par. 24). It should be noted that such labor is relatively cheap, and Hilton Hotel Sydney could benefit from participation in this program. To receive this governmental support, the Hotel must provide its Australian Business Number, workplace policies, and guarantee that work requirements are fair (Australian Government: Department of Foreign Affairs and Trade, 2018).

The Australian government also has established special legislation that encourages bilateral tourism with China. According to this legislation, Chinese tourists are allowed to travel to Australia by small guided groups (Australian Government: Australian Trade and Investment Commission, 2014). This point does not affect Hilton Hotel Sydney directly but means that the hotels management could undertake actions that would popularize Hilton Hotel among Chinese tourists.

In the situation of the ongoing COVID-19 pandemics, the Australian government prohibited foreign tourists to enter the country until 2021. It also limited the ability of domestic tourists to travel across the country (Australian Government: Department of Home Affairs, 2020). This way, currently, Hilton Hotel Sydney should focus on serving not tourists but businessmen who are more likely to enter the country to solve business affairs. Besides, Hilton Hotel Sydney as well as all other hotels in Australia should be concerned with domestic tourists since they are the only source of income in the present situation.

Economic Factors

Before the pandemic, the average unemployment rate in Australia was around 5 percent (Trading Economics, 2020). In the last two months, it sharply increased to 7 percent (Trading Economics, 2020). In comparison with other countries, this rate is rather low. Still, the businesses connected with tourism were forced to dismiss most of the staff to reach the dropped consumer demand. At the present moment, hotels gradually recover the dismissed employees; however, the ones with a complicated operating model do this much more slowly (Ross, 2020). Since Hilton Hotel Sydney is categorized as an upper-upscale hotel, its rate of recovery is meager since such places depend more on business meetings than on tourists (Ross, 2020). Hence, the hotel has to sharply reduce the number of employees to minimize the costs of the pandemic.

Another side of the previous low rate of unemployment is that citizens mainly have income and, thus, could spend it on journeys. Besides, the average rate of disposable income of Australian households is gradually growing during the last five years which means that the number of people who could afford to travel is also increasing (Trading Economics, 2020). At this point, it should be noticed that the Australian dollar is currently the lowest of the past eleven years and indicates that the Australian economy is in decline (Janda & Lannin, 2020). Therefore, the weak national currency, even though the inflation rate is low and under 2 percent annually, makes it costly to travel abroad and, in turn, leads to domestic tourism growth. Hence, it could be concluded that the after-pandemic recovery of Hilton Hotel Sydney should be driven by the increased targeting of local recreational guests.

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Social and Cultural Factors

According to the data provided by the Australian Bureau of Statistics (2019), the growth of life expectancy combined with low fertility rates lead to population aging. This tendency could not be ignored since the traveling patterns of older adults differ from those of youth and middle-aged people. First of all, retired people assist hotels in escaping cyclical downturns since they are more willing to travel in the low season as it is less costly. Besides, the growing number of aged tourists leads to the necessity to modernize hotels to provide such guests with the medical help of high quality whenever needed (Nikitina & Vorontsova, 2015). Since the segment of elderly tourists is gradually expanding, hoteliers should address this target audience more actively. The services provided by Hilton Hotel Sydney reveal that it is more oriented toward middle-aged travelers. For instance, the hotel’s territory has fitness and spa centers, beauty salons, bars, and restaurants. Such places are more frequently attended by youth and adults than by aged people. Therefore, the administration of the hotel should reshape the suggested services to the needs of older people.

Another issue that should be addressed in the given subsection deals with the increasing popularity of private accommodations. The analysis conducted by Pratap (2017) indicates that such platforms as Airbnb undermine the demand for hotel services because, in some cases, a tourist might be better off by renting a private accommodation than by booking a room in a hotel. Nevertheless, as it has already been mentioned earlier, Hilton Hotel Sydney targets not only recreational tourists but also people in business who use the hotel for an appointment and special events. Simultaneously, it could be noticed that online platforms for renting private accommodation are more commonly used by youth than by adults or senior citizens who are used to traditional recreational activities in hotels. This way, the described problem is closely connected with the Australian population’s aging and proves that the chain should target this audience more actively.

Technological Factors

The coronavirus pandemic accelerated the process of integration of digital technologies in everyday use in hotels. The problem of social distancing was resolved by the application of mobile apps where a guest could, for example, order a dish in the hotels restaurant (Fox, 2020). One of the hotels that successfully implemented this technology was Hilton Hotel Sydney. By the way, business in Australia is marked by one of the highest degrees of digitalization and robotization in the world (Thacker, 2019). Sydney, in its turn, is one of the most technologically developed Australian cities (NSW Government, n.d.). In NSW there is a trend towards the application of smart city technologies and the substitution of human personnel with artificial intelligence and robots (NSW Government, n.d.).

On the official Hilton Hotel Sydney website, any interested person could book a stay, view the services and photos of the hotel, and join the reward program. The chain of Hilton hotels uses BI and AI to analyze guests’ feedback from social media and websites and trace their preferences. As a result, this strategy facilities Hilton to satisfy the requirements of key stakeholders. More precisely, Hilton Hotel Sydney’s specialized software enables guests to check-in and -out online, lock the rooms door through the smartphone, and customize the stay in the hotel

Environmental Factors

The willingness to return to a vacation place is directly affected by satisfaction with the environmental conditions. In Australia, climate change threatens the industry of tourism and hospitality. The rising temperature leads to large-scale fires, and the increasing sea level causes devastating floods that reduce the willingness of tourists to arrive in Australia. Hilton Hotel Sydney is located in New South Wales, where annually happen around six natural disasters, including storms, floods, and bushfires (Singhal & Gladstone, 2020). The study of Gonzalez-Rodriguez et al. (2020) shows that tourists are more likely to choose environmentally friendly hotels, even if it more expensive. This way, it could be recommended to the chain of Hilton hotels, and, particularly, to the Hilton Hotel Sydney to more actively present itself as environmentally friendly to attract more customers and increase competitiveness.

Competitive Analysis

Hotel Brand
Marriott Hyatt Four Seasons Hilton
Hotel class 5 stars 5 stars 5 stars 5 stars
Location 30 Pitt Street
Sydney, NSW
161 Sussex Street, Sydney, NSW 199 George Street, The Rocks, NSW 488 George Street, Sydney, NSW
Number of guest rooms 543 rooms 892 rooms 531 rooms 577 rooms
Number of meeting rooms 14 rooms 21 rooms 12 rooms 26 rooms
Leisure facilities – Restaurant
-Fitness center
– Swimming pool
-Barbershop
– Car Rental
– Restaurant
-Fitness center
– Regency Club lounge
-Restaurant
-Fitness center
– Swimming pool
– Car Rental
– Spa
– Salon
– Lounge
– Restaurant
-Fitness center
– Spa
Price Range From A$260 From A$197 From A$245 From A$181
Online Review (06/08/2020)
(Booking.com Review)
8.7/10 8.4/10 9.1/10 8.5/10

The analysis depicts that the competitors of Hilton Hotel Sydney are strong players in the hospitality industry. In comparison with other hotels, Hilton offers fewer leisure facilities. Nevertheless, this drawback is mediated by the lowest starting prices that make the hotel available for a broader range of guests. All the described hotels are located nearby popular tourist destinations, that is a strong point. The guests also highly assess the quality of the hotels services. The biggest number of meeting rooms proves the previously expressed statement that Hilton Hotel Sydneys focus, to a greater extent, is directed at businesspeople.

Commercial Partners

At present, Hilton Hotel Sydney cooperates with the restaurant Luke Mangan & Company, the athletic club Pitt St Platinum, the manufacturer of fitness equipment TechnoGym, and the spa center Alysium Day Spa. These partners provide the hotel with leisure facilities of high quality.

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The list of possible commercial partners is comprised of the following companies:

  • Sydney Private Day Tours – a top-rated and award-winning company that organizes trips across destinations in Sydney. The partnership with this firm could enliven the options of tourists leisure activities.
  • State Theatre. It is located a two-minute walk from Hilton Hotel Sydney. Since the hotel is focused on wealthy tourists that prefer to rest with luxury, the possibility to attend a theatre might be appealing to them. Once again, this would eradicate such weak aspects of the hotel as the absence of leisure facilities.
  • Tastes of The Hunter Wine Tours. Tourists might be satisfied with the opportunity to investigate Sydney from a gastronomical point of view. This company provides tours of high quality and would not harm the reputation of Hilton Hotel Sydney.
  • Beaches such as Bondi, Bronte, Gordons Bay. These are the most well-known beaches in Sydney. The problem is that they are located not within walking distance and for foreigners it might be confusing to get there. Since in the high season tourists are particularly fond of attending beaches, for Hilton Hotel Sydney it might be useful to organize transfers to prominent beaches and book places for its residents in advance. This way, the hotel will create an image of one that takes care of the guests.

Market and Consumer Research

The statistics retrieved from BudgetDirect.com depict that yearly more than 4 million international tourists arrive in Sydney. However, only 28 percent of foreigners come to spend vacations there. More commonly, the goal of tourists is either education or attendance of friends and relatives. 4.4 percent of tourists come to Sydney for business purposes. Most of the tourists arrive from China, the US, and New Zealand. In addition, most of the visitors are from 15 to 40 years. The second-largest age category includes people of 50 – 59 years old. As it has already been mentioned, most of the tourists enter Sydney with non-touristic goals. Still, those who do, dedicate most of their time and budget to dining at restaurants and sightseeing. Hence, most of the guests that attend Hilton Hotel Sydney are expected to be relatively young wealthy people who came to Sydney to attend popular historical places, eat out, and shopping.

Conclusion

In conclusion, it should be noted that Hilton Hotel Sydney is a strong player in the market with a wide range of competitive advantages, including a large number of rooms for meetings, location, partnerships, and reputation. The weak point, that is expressed in the small variety of leisure activities, could be mitigated through the establishment of partnerships with companies that organize tours, beaches, and theatres. The present crisis caused by the pandemic of COVID-19 turns into the fall of income for the entire chain of hotels and resorts. Therefore, Hilton Hotel Sydney should direct attention to targeting domestic tourists. Besides, Australia’s economic performance makes it less comfortable for local tourists to travel abroad. Hilton Hotel Sydney takes drastic measures towards digitalization of its services that significantly improves its quality and strengthens its position in the market.

References

Australian Bureau of Statistics (2019). 3101.0 – Australian Demographic Statistics. Web.

Australian Government: Australian Trade and Investment Commission (2014). Working with China. Web.

Australian Government: Department of Foreign Affairs and Trade (2018). Pacific Labour Scheme – Employer Self-Assessment Eligibility checklist. Web.

Australian Government: Department of Home Affairs (2020). Travel restrictions. Web.

Bavas, J. (2020). Sydney CBD protest ends peacefully after last-minute change of location. ABC News. Web.

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BudgetDirect.com (2020). Sydney tourism statistics 2019. Web.

Fox, J. T. (2020). Pandemic drives mobile development, adoption for hotels. Hotel Management. Web.

Gonzalez-Rodriguez, M. R., Diaz-Fernandez, M. C., & Font, X. (2020). Factors influencing willingness of customers of environmentally friendly hotels to pay a price premium. International Journal of Contemporary Hospitality Management, 32(1), 60-80.

Janda, M., & Lannin, S. (2020). Australian dollar slumps to 11-year low on weak jobs data; ASX slips. ABC News. Web.

Nikitina, O., & Vorontsova, G. (2015). Aging population and tourism: socially determined model of consumer behavior in the “senior tourism” segment. Procedia-Social and Behavioral Sciences, 214, 845-851.

NSW Government (n.d.). Advanced technologies. Web.

OTA Insight (2020). Forecasts from the field: Hotel management’s views on the future of distribution and technology. OTA Insight. Web.

Patterson, J. (2016). The value of strategic partnerships in the hospitality business. Insights. Web.

Pratap, A. (2017). Hospitality industry Pestel analysis. Notesmatic. Web.

Ross, D. (2020). Hotel workforce recovering fastest in economy segment. Hotel News Now. Web.

Singhal, P., & Gladstone, N. (2020). Some NSW regions face up to six natural disasters a year. The Sydney Morning Herald. Web.

Thacker, R. (2019). Australian businesses embracing technological revolution. Dynamic Business. Web.

The Global Economy (2018). Political stability – Country rankings. Web.

Tourism Australia (2020). Federal government support for tourism businesses. Web.

Trading Economics (2020). Australia Disposable Personal Income. Web.

Trading Economics (2020). Australia Unemployment Rate. Web.

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