The PowerPoint for the final round of Ascend's the 4th annual case competition.

1. Ascend Case Competition
Andrew Chen, Rongbin Ye, Weiying Zhang, Yuyao Tang
Strategies for Hilton Worldwide (HLT) to expand growth

2. Agenda
Problem01
Short Term Recommendations02
Implementation04
03 Long Term Recommendations

3. Hilton Worldwide | CompanyOverview
Source: Hilton 2017 Annual Report; Hilton Explore Our History and Heritage; Hilton Vision, Mission and Values
As of June 2018
• Headquarters: McLean, Virginia
• Hilton History & Values: Conrad Hilton opened the first Hilton hotel in
1925 with the goal of being the best hotel in Texas. Hilton is founded upon
six values: Hospitality, Integrity, Leadership, Teamwork, Ownership and Now
• Rewards Program: Hilton Honors has four levels: Member, Silver, Gold, and
Diamond. More information can be found on their loyalty program website:
http://hiltonhonors3.hilton.com/en/explore/benefits/index.html
5,284
Properties
1: Does not include 5 properties classified as “Other” in the 2017 Annual Report; Total of
5,279
Hilton Worldwide Statistics
$9,140
Revenue ($M)
14
Brands
856,115
Rooms
• Industry Position: Hilton Worldwide ranks second only to Marriott by
market capitalization in the lodging market
Hilton Stock Underperformed the Industry Average
in 2017

4. Problem: Declining Growth
Shrinking Luxury Market Losing Younger Demographic
Competition against other similar hotels Online Disruption (Airbnb)
WHY? WHY?
● Cheaper than traditional hotels
● More options
● Local experience
● Smaller, personal boutique hotels
● Changing desires of target demographic
● Impersonal, big-brand approach is falling out
of fashion, in favor of localized design &
aesthetic

5. Hilton’s Market Share Shrinks in Upscale to Luxury Segments during 2015 - 2017
While there was a slight recovery over 2017, Hilton’s overall market share in these segments decreased
Change of Hilton’s Market Share in Various Segments
2015-2017
Source: Bloomberg Terminal
https://www.forbes.com/sites/pamdanziger/2018/12/18/whats-ahead-for-the-luxury-market-in-2019-expect-turmoil-and-slowing-sales/#5b7bc82c6578
• We believe this decrease is a result of fierce
competition in the lodging industry
• InterContinental Hotels Group (IHG) performed best
with the highest market shares in the upscale, upper
upscale and luxury segments
• As wealth is raising worldwide, analysts believe the
luxury market will keep growing with the trends of
“adapting the human side of digital disruption” and
“entering younger, digitally-powered customers with
new ideas about what luxury is”
• Hilton can improve performance in upscale to luxury
market to boost its revenue
9.76% 7.09% 7.51%
37.15%
28.85% 29.18%
27.30%
25.71% 28.06%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
1 2 3
Luxury Upper Upscale Upscale

6. Airbnb Grows Quickly in Recent Years
Airbnb is a digital disruption that shocks traditional hotels. Analysts predict it will grow to become the
second largest lodging provider surpassing Hilton Worldwide in the near future
Top Hotel and Short-Term Rentals Value Sales
2011-2020
Source: Tubular Insight / https://tubularinsights.com/airbnb-uber-brand-vs-brand/
https://www.google.com/search?rlz=1C5CHFA_enUS814US814&q=airbnb+revenue+growth&tbm=isch&source=univ&sa=X&ved=2ahUKEwiBgMmcurrgAhVNxVkKHeYvDSsQsAR6BAgEEAE&biw=1440&bih=821#imgdii=jWq10Wv
olunEuM:&imgrc=ZOAheo5bhStP6M:
• The clientele figure shows that the younger generation
(age: 13-30) comprises more than 80% of Airbnb’s total
users
• Statistics shows Airbnb’s total volume of users grew by
17% and its revenue grew by more than 80% in 2017
• Reports analyze Airbnb’s success as a result of offering
affordable price and interactive atmosphere
• Airbnb also has weaknesses like inconsistency in
quality control, safety assurance and hygiene

7. Recommendations
1. Deep Digitalization: Embrace A.I.
technology and Gamification to establish a
self-sustaining, engaged, loyal community
in the world.
2. Glamping (Glamorous Camping)
Locate the emerging market of glamping
in the US and in the global
market.
Short Term Long Term
1. Fashion Partnership: Establish
strategic partnerships with fashion brands
to produce co-named pajamas, slippers,
toiletries for introduction to hotel rooms:
a. Luxury brands
b. Youth brands
2. Hilton Youth: Create interactive
environments and host interesting
activities in Hilton midscale hotels like
Tru by Hilton to attract young people

8. Segment Brands Under Hilton Recommendations
Luxury 1. Collaborate with ultra luxury
Fashion Brands
Business/Family
No Changes Needed
Younger Generation 1. Collaborate with Street Fashion
Brands
2. Theme rooms pop up with
famous IPs or designers
Short-Term Strategy – Fashion Partnership
Establish strategic partnerships with fashion brands to produce co-named pajamas, slippers, toiletries, etc
for introduction in hotel rooms, and set up a section in the lobby to sell products
1

9. Historical Precedence: Pepsi – Marriot Partnership
● 25 year-long relationship
● Zack’s Consensus Estimate:
Pepsi Partnership yields 4.6% revenue growth
Increase in RevPAR by:
5~6%
Outside of
North
America
3~4%
Worldwide
2~3%
North
American

10. Impact of Fashion Partnership Recommendation
Revenue
1. RevPAR Increase by attracting
fashion-focused customers and
making Hilton stand out in a crowded
market 75%
2. Partnership Product sales (Branded
Pajamas, slippers, toiletries,
fragrances, etc.) 25%
Cost
1. Licensing Fee
2. Management Fee
2%~3% ↑
Total
Revenue
1.5% ↑
Total NI
20%~30%
Rev
Sharing

11. Digital&WorkSpaceDesign forYoungProfessionals
• Mobile Check-in& Digital Key
• Tech Forward(free fast Wi-Fi,easy-to-reachchargingoutlets, freewirelessprintinganywhere)
• Rollingdeskin guestroomsfor mobileproductivity
• Semi-privatealcovesin the large lobby
Amenities for Sociable Youth
• Game Room
• Large lobby with 24/7 Market
• Modern Fitness Center
• Free & hot breakfast
• 24/7 LavAzza Coffee,Tea, Hot Chocolate,etc.
• Tru-ly Local Recommendations
 Build Movie Projection Room
 Host events to create interactions among tenants
• Host traveler socials andnetworking events
• Localcultural introductions andexperiences
• Present exchange program
• Photographydisplays
Short-Term Strategy – Target Younger Generation
Attract an increased number of youth by offering more youth centered programs within Tru brand
Source: Hilton Website, Tru by Hilton Website
Increase the Net Present Value by
$9.5+ million (1% net profit)
over 5 years!!!
2

12. Cost & BenefitAnalysis for incorporating facilities and interactive events
Benefit Cost
From Hilton Worldwide’s standing, the benefit from incorporating events mainly comes from increases in
franchise revenue and the cost comes from brand marketing and Hilton Honors program.
Source: Bloomberg Terminal; Hilton 2017 Annual Report
https://www.hilton.com/en/corporate/wp-content/uploads/2018/02/US-tru-franchise-disclosure-document.pdf
Franchise Application Fee $75,000
Construction Extension Fee $10,000
Renovation Work Extension Fee $10,000
Computer System Fees AVG $15,000 / year
Training Program Fees AVG $10,000
Opening Procurement Services AVG 30%
Monthly Royalty Fee 5% of gross rooms revenue
Monthly Program Fee 4% of gross rooms revenue
Miscellaneous Services Approximately $10,000 / year
Marketing Expense 507/ guestroom
Hilton Honors Program 980 / guestroom
Interest Expense 477 / guestroom
Assumptions
ADR $90 / night Occupancy 76.3%
New Tru Built / year 10 WACC 7.7%
Guestrooms / Tru 100 Short-Terms 5 years
Conclusion
According to DCF model, our suggestions will bring
$9,699,150 NPV at the beginning of 2019.

13. Hilton Honors+ - Hilton Luxury
Expand partnerships
Optimize user plans for Hilton Honors
Glamping & Boutique 2.0 - Tru
Acquire boutique assets in resorts
Ex: Getaway
Deepening Digitalization – Hilton
(All)
Develop Algorithms for occupancy
Gamification
Info Safety & DIY room
HILTON
RESORTS
HILTON
Analytics
Source: https://ir.hilton.com/~/media/Files/H/Hilton-Worldwide-IR-V3/presentations/investor-presentation-
february-2018.pdf
Long-Term Strategy - Establish Strategic Advantages
Hilton should stratify Hilton Honors membership, develop Hilton glamping collections, and deepen digitalization.
$ 11M per year
7% - 11.6% value
added per year
10% Exposure in
the market

14. Hilton Honors App is well-rated by users but we can do more with cognitive
technologies
Google Play
Apple Store
Sources: https://hiltonhonors3.hilton.com/rs/hilton-honors-mobile-app/

15. Gamification will be a potential strategy that we suggest to develop the
market and exploit market values.
COST Estimated: $720K under the
contract

16. Cost of Glamping and Boutique 2.0 in the next five years
● Cost Breakdown:
○ Enfranchise the location and potential partners
○ Cooperate with the local government in emerging market
● Revenue Breakdown:
○ Luxury Boutique 2.0: Price could go over $1300 (Family in U.S.)
○ Youth Glamping: Price from $ 150 to $50 (Single/Hostel)
Sources: https://www.businessinsider.com/tentrr-uber-for-camping-2017-5
Domestic: Develop 5 Boutique
2.0 locations in the states (20), 15
youth Glamping (30) location in
the States.
International: Develop 10
Boutique 2.0 in the locations, 15
locations in the Europe,
international market
Occupancy: 0.25
Conservative projected profit: $11 Million/Year
Profit Rate: 30% for Luxury
25% for Youth

17. Implementation
3 mth 6 mth 1 yr 3 yr
Fashion Partnership:
1. Ask for collaborations with brands
2. Establish factory manufacturing to
produce products
Younger generation:
1. Construct movie projection rooms,
event centers
2. Advertise new initiatives
Glamping:
1. Scout the locations
2. Costumer Demand Research
Fashion Partnership:
1. Introduce products to hotel room
Younger generation:
1. Refine and develop event and youth
programs based on feedback
Digitalization:
1. Game Alpha version test
2. App update
Glamping:
1. Start construction on Glamping and
Boutique 2.0 sites
Fashion Partnership:
1. Digital marketing
Younger generation:
1. Attract conferences and events
2. Event planning
Glamping:
1. Signing contract with the
developers
Digitalization:
1. Game Alpha
Digitalization
1. A.I. Strategy Algorithm Whitebook
2. Glamping Partners Recognized
Glamping:
1. Evaluate and possibly expand
Glamping and Boutique 2.0 sites

18. Thank you
Questions ?

19. Appendix: Hilton Brands

20. Appendix: Hilton Honors Benefits

21. Appendix: Projection of Lodging Market
While growth is expected to slow down in the future, the industry is still predicted to grow faster than the
U.S. GDP. The growth rate is projected to stabilize at 4-5% in the next decade
133
144
151
159
168
179
188
2014 2015 2016 2017 2018 2019 2020
Totalhotel andlodgingmarket
Change(%)
8% 9%
5% 5% 6% 6%
5%
Total U.S. Hotel & Lodging Market,
2014-2020 (US$B)
Source: Phocuswright, includes private accommodation
Projected
• Following two years of 8-9% gains, the U.S. hotel and
lodging sector slowed to 5% growth in 2016, reaching
$151B
• The lodging market growth follows three major trends:
• Rise of the Millennials - 320 million trips per year
by 2020
• Multi-generational family trip increase
• Blurring of Business and Leisure Trips
• The whole market is characterized by cyclicality and
seasonality and it strongly relates to Macroeconomic
Conditions

22. Stock Price Raised after the Announcement
2016 Jan – June
Source: Hilton Website, Tru by Hilton Website
Appendix: Short-Term Strategy – Target Younger Generation
Learning from Airbnb’s success, we suggest Hilton Worldwide create interactive environment and host
interesting activities in its midscale hotels – Tru by Hilton to attract young people
• Tru by Hilton is Hilton's 13th brand and targets the
Millennials
• The brand was announced at 2016 Jan.
• The brand was constructed in 2017 and the first
hotel was launched in Oklahoma
• Tru by Hilton is operated as a franchise in
midscale segment with an ADR of $80-100 / night
• Tru by Hilton has captured approximately 2/3 of all
net pipeline growth associated with the midscale
segment since 2016
• As of December 31, 2017, Tru had nine properties
open and 284 properties in the pipeline
Back

23. Appendix: Vast A.I. potential in the A.I. strategy and digitalization process in the hospitality
Source: Mickinsey: Executive’s playbook.
https://www.mckinsey.com/business-functions/mckinsey-analytics/our-
insights/an-executives-guide-to-ai

24. Appendix: The major pool of income remains in the assets
● Franchise is
Hilton’s major
Management
model
● U.S.A! USA!
USA!
● Luxury is only
3% -
“Boutique”?

25. Appendix: Existing Market Strategies

26. Appendix: Digital Strategy of Hilton

27. Appendix: Performance of different brands

28. Appendix: Hilton rooms increase.

29. Appendix: Business Strategy in Next 5 Years

30. Appendix: The prices of glamping have a large spectrum, targeting different
market segmentations.
● Youth:
○ $150 – $50
● Luxury:
○ $1300
Sources: https://www.tentrr.com/s/sites/?lat=38.898891037586424&lon=-
77.0488925969258&number_of_people=2&seed=zduq2b&where=Current%20Location

31. Appendix: Hilton always locates hotels strategically and this should be continued
in the international market and U.S market.
Indonesia proposed 10 other locations to replicate success in Bali.
Sources: https://www.straitstimes.com/asia/jokowi-plans-to-replicate-
balis-success-in-10-other-indonesian-spots

32. Appendix: Going beyond the Internet of Things, A.I. Strategies
● https://www.hotelmanagement.net/operate/6-ways-artificial-intelligence-
already-impacting-hospitality
Booking Services
Operational Management
– Occupancy Rate
– KPI System
Services
- DIY
Existing Hilton Strategies
IOT is no longer the best way to involve
the users.