Strategic Management
CORE11-130
Semester 091
Welcome to the family:
Analysis of the Hilton Brisbane
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Tutorial: Wed 2-4pm
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Executive Summary:
The Hilton Brisbane, established as a franchise of the Hilton Hotel Group in
1986, is one of Brisbane’s premier luxury hotels, catering primarily to the needs of
corporate customers (Professional Travel Guide, 2009). Being part of the Hilton Hotel
Group, one of the Hilton Brisbane’s outstanding attributes is its commitment to
make its customers feel as a member of the Hilton family. Furthermore, to maintain
& the famous Hilton brand image, the Brisbane franchise has undertaken regular
upgrades.
However, the Hilton Brisbane’s resources and attention have been focused
on business tourism, ultimately neglecting the profitable domestic tourism market.
This has been one of the predominant issues preventing the Hilton Brisbane from
capturing a greater market share. This, compounded with human resource concerns
over high staff turnover and quality of customer service, as well as insufficient
domestic marketing and advertising, has alienated loyal and potential customers.
Because of the severe impact of these factors on the Hilton’s operations, this report
proposes the following implementation strategies, aimed at rectifying these issues:
1. Attracting domestic tourists through modernization of non-corporate facilities,
focusing on accommodation and recreational areas, in addition to specialized
promotions.
2. Improving service quality and retention rates by offering more comprehensive
and continual training for employees and revising staff incentive programs.
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3. Increasing consumer awareness and widening the customer base via new
advertising and marketing campaigns, using diverse communication channels,
especially focusing on internet presence.
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Table of Contents
Executive Summary:..............................................................................................2
1.0 Issue...........................................................................................................4
2.0 Target Market.............................................................................................4
3.0 Macro-environment....................................................................................6
3.1 Societal Values & Lifestyle................................................................................6
3.2 Government Legislation & Regulation..............................................................6
3.3 Population Demographics.................................................................................7
3.4 Economic Environment.....................................................................................7
3.5 Technology........................................................................................................7
4.0 Driving forces and Porter’s Five Forces........................................................8
4.1 Key Success Factors...........................................................................................8
4.2 Driving Forces....................................................................................................8
4.3 Porter’s 5 Forces...............................................................................................9
5.0 Analysis of Competitors............................................................................10
6.0 SWOT........................................................................................................11
6.1 Strengths:........................................................................................................11
6.2 Weaknesses:....................................................................................................12
6.3 Opportunities:.................................................................................................12
6.4 Threats:...........................................................................................................13
7.0 Strategic Human Resource Management..................................................13
8.0 Implementation........................................................................................14
8.1 Narrow focused target market:......................................................................14
8.2 Human Resource Management:.....................................................................15
8.3 Marketing & Advertising:................................................................................16
9.0 Appendix:.................................................................................................17
9.1 Appendix 1......................................................................................................17
9.2 Appendix 2:.....................................................................................................18
9.3 Appendix 3:.....................................................................................................19
9.4 Appendix 4:.....................................................................................................19
9.5 Appendix 5:.....................................................................................................20
10.0 Reference List...........................................................................................21
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1.0 Issue
This report focuses on the Hilton Brisbane, a franchise of the successful
Hilton Hotel Group. Despite its heritage and 23 years of experience in the Brisbane
area, it is evident that the Hilton Brisbane still has many inadequacies, which have
limited their ability to increase their market share (Professional Travel Guide, 2009).
Identified within this report are three major issues that have affected the Hilton
Brisbane: a narrowly focused target market, which excludes a major segment of the
Australian tourism industry; a lack of local & regional promotion of the hotel, which
limits the customer base; and finally difficulties in the human resource segment,
suffering under high staff turnover and a lack of service quality. Throughout the
report these issues will be analysed and expanded upon and strategic solutions will
be provided to overcome the problems.
2.0 Target Market
The Hilton Hotels generally target both business & leisure travelers in the
upper scale market (Von Bodman, Carlos, Poprawski, Saab, & Wu, 2003). Being part
of this Hilton Corporation brand, the franchise Hilton Brisbane receives customers
from all areas of upper scale tourism. However, it has begun to direct its focus
towards domestic business travel within the last years.
In Australia, the domestic business tourism market contributes to 10.4% of
the $12 billion tourism industry (see Appendix 1) (Datamonitor, 2008 c).Being a high
profit margin niche market, this market has specifically been targeted through
several refurbishments. Both the multi-million dollar renovation in 2004 & 2009
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were aimed at improving business facilities and accommodation to meet the high
demands of these customers (Hilton Hotel Corporations, 2009;[Link],
2004)
Refurbishments, such as the ones undertaken by the Hilton Brisbane, are
important especially when targeting the business travel sector with its special needs.
When focusing on business customers, outstanding service, comfortable & luxurious
accommodation and fine food are expected. However, in addition to these demands
businesses also require high-tech meeting facilities and the newest technology,
making constant updating essential. With the Hilton’s commitment to improvement
of their facilities and technological amenities, such as modems, it shows an
engagement to meet the high demands of its clientele and facilitate their business
(Hilton Hotel Corporations, 2009).
However, despite these incentives and special loyalty programs such as
HHonours (Von Bodman, Carlos, Poprawski, Saab, Wu, & Harrison, 2003), it is
expected that this area of tourism will be declining within the next year, as 2009 is
expected to have the lowest global economic growth in 60 years at 0.5%
(International Monetary Fund, 2009). With this expected decrease of global market
activity, there will be less money for expensive travel, ultimately making business
customers increasingly price sensitive.
As a results of this market development as well as decreasing brand loyalty,
the need to increase advertising in areas such as business & in-flight magazines and
increased customer value is becoming more important (Von Bodman et al 2003).
However, advertiseing campaigns should be redesigned to utilize the internet, which
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has been found to have the greater impact on the purchase habits of business
travelers (Von Bodman et al 2003).
3.0 Macro-environment
3.1 Societal Values & Lifestyle
The international Hilton brand of hotels is positioned towards the high-end,
luxury, business markets and the Brisbane franchise is not exclusive to this. On a
global scale, the Hilton Hotels aim to set the standard within the hotel industry for
their target markets of wealthy travellers and business clients.
The general lifestyle values of the Australian market include high value for
leisure, relaxation time and work-life balance as well as luxury items and social
status. Australians also have a tendency to be more family oriented rather than work
oriented, although this is beginning to shift towards a greater commitment to work.
3.2 Government Legislation & Regulation
Australia is considered to be an attractive investment destination for
business. A country analysis report by Datamonitor observed that Australia has one
of the most open economies among members of the OECD and was rated first in
terms of the lowest overall level of regulation (Datamonitor 2008 a). It was found
that Australia also follows market friendly policies and has a very liberal legal regime
(Datamonitor, 2008 a). These factors encourage international chains such as Hilton
to bring their franchises to Australia.
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Government legislation and regulations on an international level are more
difficult to characterise due to their extreme variations and for the purposes of this
report, are considered irrelevant to the Hilton Hotel Brisbane.
3.3 Population Demographics
The population demographics relevant to the Hilton Hotel Brisbane will be
considered on a national scale as opposed to a global scale. The trends most
characteristic of Australia are the ageing population, reduced labour force, stricter
immigration policies and general decrease in population growth.
Over the next 40 years, the government predicts that the number of people
over the age of 65 will double to almost 25% of the overall Australian population
(Datamonitor, 2008 a). This means that more people are of retirement age and could
increase the market for luxury retirement-age travellers for Hilton. Because of this
shift, the labour force will also reduce significantly over the next few decades. Other
Australian demographic trends include an implementation of stricter immigration
policies, reducing the number of immigrants living and working in Australia and a
general decrease in population growth (Datamonitor, 2008 a).
3.4 Economic Environment
The global marketplace has taken a major setback in the last couple of years
due to the global financial crisis and subsequent recession. Australia has been no
exception to this economic downturn, but despite this, the hotel and tourism
industry in Australia continues to grow and overall the tourism industry contributes
around $78.7 billion to the Australian economy (Datamonitor, 2008 a). Other trends
that are apparent are the strong mining and infrastructure industries, rising inflation
rate and an increased dependency on imports with exports becoming weaker.
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3.5 Technology
The rapid advancements in technology worldwide have been taken
advantage of by the international Hotel industry. Current updates include online
booking systems, more efficient staff communication systems, internet advertising
opportunities and more sophisticated facilities for business customers (CBS
Interactive, 2009). Current technologies are now considered a bare minimum
requirement for the luxury hotel sector. If hotels such as the Hilton Brisbane do not
continually stay at the forefront of the industry with technology, they risk losing
competitive advantage to other hotels and a large portion of their business,
particularly business clients.
4.0 Driving forces and Porter’s Five Forces
4.1 Key Success Factors
The most successful hoteliers of today have a framework on which their
successes are based. It is not enough to be at the right place at the right time,
successful hotels are also expected to provide high quality service at competitive
prices, which are factors that the Hilton takes into account.
Nevertheless, expansion and growth in the hotel business without capable
and efficient human resources is unfeasible. Attracting, educating, and retaining
exceptional employees are required to sustain the operational side of the company.
The Hilton Brisbane addresses this through continual training of its service providers.
In addition, the use of technology and software’s for e.g. streamline hiring &
booking, is becoming increasingly important to successful hotel operations.
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4.2 Driving Forces
Rising overheads, shrinking profits and influxes of competitors are other
issues that Hilton Brisbane face. To counteract these problems, Hilton Brisbane
utilizes strategies such as the use of economies of scale and outsourcing with regards
to services and amenities, to minimise costs and keep standards consistent (Von
Bodman, Carlos, Poprawski, Saab, Wu, & Harrison, 2003). Furthermore, the Hilton
Group ensures its future by diversifying their portfolio and focusing on several target
markets. In addition, they continually build strategic connections and affiliations in
the industry to attract consumers. All these strategies create a security blanket to
protect the Hilton in times of economic difficulties, which can threaten the hotel
industry.
4.3 Porter’s 5 Forces
The hotel business is a moderately attractive business. Suppliers, new
entrants, threat of substitutes and the bargaining power of customers are of average
authority in Australia. When it comes to suppliers, the Hilton Brisbane depends on
secondary suppliers, which serve the operational needs of the company. Due to this
strong dependence on resources and staff, suppliers have a strong bargaining
position (Datamonitor, 2008 c). However, despite this reliance the bargaining power
of suppliers remains at best moderate, due to the superior market power of large
market players, such as Hilton (Datamonitor, 2008 c).
With regards to new entrants, it is quite difficult for a new competitor in the
hotel business to enter the market, due to legal complexities in purchasing, leasing,
and property management as well as the large amount of funding required
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(Datamonitor, 2008 c). However, the likelihood of new entrants is still moderate, as
the market is perceived as being “attractive” for affluent investors (Datamonitor,
2008 c).
Looking at the threat of substitutes, such as alternative forms of
accommodation (for example, camping or apartments), it can be stated that this
force is also moderate, but alternatives are continually increasing. However, most
consumers do not consider these accommodation alternatives further, as their main
purpose for choosing luxury hotels is either business or luxury travel (Datamonitor,
2008 c).
Finally, the buyer’s power is high. Although they are price sensitive, a strong
brand image could persuade them to patronize the Hilton brand. This is the area the
Hilton Hotels should emphasize more, as a positive and predominant brand image
results in a broader & more loyal customer base.
Overall, the use of Porters five forces tells us that the hospitality market is
fairly attractive to both existing players and future hoteliers.
5.0 Analysis of Competitors
The Hilton, Marriott, and Sofitel are reknown hotel brands competing
worldwide, with franchises in key locations such as in Brisbane, Australia, where
competition is particularly intense. In Brisbane’s CBD, franchises of all three hotel
groups can be found within a mile radius of each other, giving consumers a greater
variety to choose from and increasing competition (see Appendix 2). All of these
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hotel groups were listed internationally under the NYSE, until the recent privatization
of the Hilton brand by Blackstone Corp.
However, to gauge the extent of the competition, it is important to compare
their financial standing through their total international revenue and compare their
differentiating factors and target markets within Australia. Internationally, by the end
of the financial year of 2007, Marriott Inc. lead in total revenue, followed by the
Hilton Hotels and finally Starwood Hotels (see Appendix 3 & 4) (Datamonitor, 2008 b,
e & f). However, with regards to operational profits for 2007, Hilton Hotels suffered a
steep decrease from year 2006, whilst Starwood Hotels and Marriott Inc.
experienced increases (see Appendix 5) (Datamonitor, 2008 b, e & f).
Nationally, the three competing hoteliers share the same target market,
focusing on luxury and upscale business travelers. While the Marriott defines its
market as being “Achievement Guests”, Starwoods’ Sofitel prioritises comfort &
relaxation of their business travelers and the Hilton specializes on business launches
& conference, they essentially target similar consumer needs (Datamonitor, 2008 b,
e & f). However, while sharing the business travel market, these three hotels employ
noticeably distinct strategies. The CEO of the Sofitel unveiled its “Pillars of Strategy”
focusing on their brand growth, HR, and maximization of shareholders’ revenue
(Datamonitor, 2008 f). Marriott’s central focus is on their “Spirit to Serve®” program,
dedicated to consumer empowerment through use of excellent service and
amenities, while Hilton Hotels adopt a philosophy of treating guests and
stakeholders as part of the “Hilton family” and continually improving relations
(Datamonitor, 2008 b & e).
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Based on the competitive analysis it can be deduced, that the competition
of the Hilton Brisbane is only moderate, due to the fact that all competitors have
different strengths. However, further improvements in both product offerings and
promotions are still necessary for the Hilton Brisbane to maintain and increase their
market share.
6.0 SWOT
6.1 Strengths:
-location: Situated in Brisbane’s CBD, the Hilton enjoys a prime location, which
places it within easy walking distance to the train station, main shopping area,
entertainment and cultural centre.
-large customer base: Due to its establishment in 1986 (Professional Travel Guide,
2009), the Hilton has a large customer base, which does not only include prior
visitors of the Hilton Brisbane, but also those who choose to use the Hilton chain
globally
-business facilities: Resulting from continual renovations, the Hilton has state-of-the-
art business facilities, which include modern executive suites as well as the 24-hour
business centre, which offers services such as faxing and teleconferencing
([Link], 2004; Hilton Hotel Corporations, 2009)
6.2 Weaknesses:
-outdated general facilities: While the Hilton’s facilities underwent 2 refurbishments
in the last 5 years, these renovations only extended to business facilities, resulting in
complaints from leisure customers about outdated accommodation & recreational
facilities ([Link], 2004; Trip Advisor, 2009).
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-high staff turnover and low quality customer service: Due to fluctuating occupancy
between seasons, the Hilton Brisbane experiences high staff turnover, which affects
its training cost as well as service quality (Chapman & Lovell, 2006).
-lack of internet presence: The Hilton Brisbane is lacking in online presence, as it
does not have its own website. This lack may limit the Hilton’s ability for market
growth as previously mentioned studies have shown that the internet greatly affects
buying habits.
6.3 Opportunities:
-domestic tourism: As the Hilton Brisbane is not targeting the domestic market yet,
there is an opportunity for expansion into this market segment. Such an incentive
would help increase their market presence, as domestic tourism contributes to 65%
of Australian tourism and has grown by 7% between 2006 & 2007 (Australian
Government, 2008).
6.4 Threats:
-competition: The Hilton Brisbane faces a vide variety of competitors ranging from
established competitors, such as the Sofitel and the Marriot, as well as new
alternative accommodations, like Quest apartments.
-economic crisis: The current economic crisis has the potential to further deter
international and domestic travelers from coming to Brisbane and staying at luxury
hotels, such as the Hilton Brisbane, due to a lack funds.
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7.0 Strategic Human Resource Management
The Hilton Brisbane has been faced with several issues in the last couple of
years with regards to Human Resources. While Hilton has managed to recruit
sufficient staff to meet their demands, they’ve suffered under high staff turnover
(Chapman & Lovell, 2006). This high turnover is the result of great fluctuations in
seasonal occupancy and lack of retention strategies. During the peak season, Hilton
increases its hiring to meet the demands, however come off season, they find it
difficult to sustain these employee numbers due to lack of business.
In addition, the lack in quality of service poses a problem to the Hilton’s
reputation & occupancy rates. On travel websites such as [Link], several
customers have mentioned that the service, particularly front desk service, was less
than acceptable given the Hilton’s reputation (Trip Advisor, 2009). This can be
attributed to the high staff turnover, as most Hilton Brisbane staff do not have the
experience or additional training, needed to deliver extraordinary service.
Despite these issues, customers reviews indicated that Hilton management
is competent. To ensure their competitive advantage over strong competition,
management must now take responsibility and implement measures to improve
training and retention to ensure the satisfaction of their customers.
8.0 Implementation
During the investigation of the Hilton Brisbane, three main issues were
identified – a too narrowly focused target market, human resources and marketing.
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In order to improve these areas and provide greater value to the customer, it is
recommended the following be implemented.
8.1 Narrow focused target market:
As indentified in the analysis of the target market, the Hilton Brisbane’s
focus has been on corporate customers, while neglecting the more profitable market
segment of domestic tourism. As domestic tourism contributes to 65% of total
tourism industry in Australia, the Hilton should also target this market segment to
strengthen its market position (Datamonitor, 2008 c). It is recommended that the
Hilton refurbish their non-executive rooms, general facilities. In addition, certain
marketing campaigns should be implemented to address this market, which will be
further discussed in marketing recommendations.
Generally the Hilton Brisbane has all the necessary resources to implement
these recommendations, namely budget and supplier alliances. The availability of
refurbishment funds is evident the previous spending of $16 million on other
renovations, therefore the budget has to be merely reallocated (Hilton Hotel
Corporations, 2009;[Link], 2004). Furthermore, being a franchise of the
Hilton Hotel Group, the Hilton Brisbane would also have access to many companies,
who have contributed to the refurbishment of other Hilton Hotels through provision
of amenities and fittings. By addressing this weakness in outdated facilities, the
Hilton Brisbane will better uphold an image of quality and excellence to ensure
customer satisfaction.
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8.2 Human Resource Management:
In addition, the Hilton Brisbane is faced with the problem of high staff
turnover and customer complaints regarding the poor quality of service. To once
again uphold the Hilton’s reputation for quality and excellence, to attract new
customer while retaining the old customer base and ensure high customer value, it is
essential for the Hilton Brisbane to address these two issues. These HR problems
should be addressed by providing more comprehensive inductions and continual
training for employees, specific employee incentives, both monetary and non-
monetary, and by following the global trend of outsourcing for services such as
cleaning. Furthermore, the use hospitality and tourism student interns during the
main season and encouraging their return through incentives such as future job
prospects would also aid the retention rate as well as the quality of service, while
providing a service to the community.
Once again the resources required for these recommendations are available
to the Hilton Brisbane through the Hilton Hotel Group. Internationally the Hilton
Group has implemented a variety of courses for employee training from SkillSoft as
well as software such as Oracle’s PeopleSoft Enterprise Human Capital Management
Suite to streamline hiring processes (CBS Interactive, 2009). If the Hilton Brisbane
were to implement such programs available through the Hilton Group and also take
on certain incentives used by the Hilton internationally, it will be able to successfully
address their weakness of human resource management, while making the Hilton
experience more enjoyable & worry-free for customers.
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8.3 Marketing & Advertising:
Besides the two previous problems, the Hilton Brisbane has currently also
been neglecting its local advertising and marketing campaigns. This is an issue, as
about 75% of Australian tourism is domestic and without the right advertisement &
marketing the Hilton won’t be able to reach its full potential with regards to
occupancy and its market position (Datamonitor, 2008 c). Therefore, the
implementation of new advertisement and marketing for both business & leisure
travelers is essential to the Hilton’s future success and sustainability. Such
advertising should cover a variety of channels from magazines and billboards to
television and radio to the internet and the creation of an individual website to
ensure maximum exposure. Furthermore, the Hilton should also initiate a marketing
campaign targeting domestic leisure travelers with special offers and mini-breaks.
To implement these strategies, the Hilton would have to hire advertising
firms and web designers to ensure high quality and efficient advertising. However, at
the same time the Hilton Brisbane does have the opportunity to utilize some of the
Hilton Hotel groups successful international campaigns such as the award-winning
“Travel should take you places” campaign (Hospitality Net, 2006). By implementing
this strategy the Hilton would be able to address its weakness in advertisement,
while ensuring competitiveness with Hotels such as the Mariott or the Sofitel.
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9.0 Appendix:
9.1 Appendix 1
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9.2 Appendix 2:
Marriott
Sofitel
Hilton
Brisbane
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9.3 Appendix 3:
9.4 Appendix 4:
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9.5 Appendix 5:
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10.0 Reference List:
[Link]. (2004, July 21). Hilton Brisbane receives $10m facelift. Retrieved
February 15, 2009, from [Link]:
[Link]
Australian Bureau of Statistics. (2009, March 24). Population Distribution. Retrieved
March 18, 2009, from Australian Bureau of Statistics:
[Link]
Australian Government. (2008, March 14). Australians Spend $58.2 Billion on
Domestic Travel in 2007. Retrieved March 10, 2009, from Tourism Australia:
[Link]
lang=EN&sub=0315&al=2856
CBS Interactive. (2009). Retrieved February 28, 2009, from Tech republic:
[Link]
Chapman, J. A., & Lovell, G. (2006). The competency model of hospitality service: why
it doesn't deliver. International Journal of Contemporary Hospitality
Management , 18 (1), 78-88.
Cox, M., Jacobs, E., & Mayer, J. (2003, November 20). Starwood Hotels and Resorts -
A case study. NY: Cornell University. Retrieved March 10, 2009, from
[Link]
es/ [Link]
Datamonitor. (2008 a). Country Analysis Report Australia - In depth PESTLE analysis.
Datamonitor. Retrieved March 3, 2009, from MarketLine database
Datamonitor. (2008 b). Hilton Hotels Corporation. Datamonitor. Retrieved March 3,
2009, from MarketLine database
Datamonitor. (2008 c). Hotels & Motels in Australia. Datamonitor. Retrieved March
5, 2009, from MarketLine database.
Datamonitor. (2008 d). Hotels & Motels in Pacific and Asia. Datamonitor. Retrieved
March 5, 2009, from MarketLine database.
Datamonitor. (2008 e). Marriott International, Inc. Datamonitor. Retrieved March 5,
2009, from MarketLine database.
Datamonitor. (2008 f). Starwood Hotels & Resorts Worldwide, Inc. Datamonitor.
Retrieved March 3, 2009, from MarketLine database.
Hilton Hotel Corporation. (2009). Hilton Brisbane. Retrieved February 15, 2009, from
Hilton Hotel Corporation: [Link]
Hilton-Brisbane/[Link]?ctyhocn=BSBHITW
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Hospitality Net. (2006, February 15). ew Hilton Hotels Advertising Campaign Earns
Industry Praise; Travel Should Take You Places™ Campaign Takes Home Honors
for One of the World's Leading Hoteliers. Retrieved February 28, 2009, from
Hospitality Net: [Link]
query=hilton+hotel+advertising
International Monetary Fund. (2009, January 28). World growth grinds to virtual
hald, IMF urges decisive global policy response. Retrieved February 15, 2009,
from International Monetary Fund:
[Link]
Morning Star. (2007). Hilton Hotels Corporation. Retrieved February 17, 2009, from
Morning Star: [Link]
Country=USA&Symbol=HLT#hisoviewanchor
Professional Travel Guide. (2009). Brisbane Hotel Guide: Hilton Brisbane. Retrieved
March 28, 2009, from Professional Travel Guide:
[Link]
Australia/Hotels/Reviews/Hilton-Brisbane-p1077803
Trip Advisor. (2009). Hilton Brisbane: Traveler Reviews . Retrieved March 10, 2009,
from Trip Advisor: [Link]
d255652-r27071151-Hilton_Brisbane-Brisbane_Queensland.html
Von Bodman, P. C. (2003, November 20). Hilton Corporation - A Case study. NY:
Cornell University. Retrieved March 9, 2009, from
[Link]
es/[Link]
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