Nov 10, 2017 in Economics

Supply and Demand

Hilton Hotels and Resorts are performing well globally because of the relations of fundamental demand and supply factors. Firstly, it is the demand for hotel and accommodation services from its customers. Barrows & Powers (2008) established that the second factor is the supply of those requirements necessary to offer services such as presence of space for property, foodstuffs and workforce. Demand is the most elementary feature that drives to transactions at Hilton Hotels and Resorts, while supply of the aspects of fabrication utilized by the hotel influences its output. Dopson & Hayes (2008) say that since information about supply of labor, food and land is readily known at Hilton Hotels and Resorts, the forecast data helps to estimate the demand. Managers can accurately gauge the relationship between the income, food, and supply and demand. 

Factors that Change the Demand for Products

Demand ultimately means customers. Hilton Hotels and Resorts look at customers from three different perspectives. The factors of demand include demographics and household income.

The first factor is the changing age composition of the population. Generational change has positively increased the demand at Hilton Hotels and Resorts. The firm expanded with the baby boomers. As baby boomers aged they travelled more as families, which fueled the demand and rise of Hilton Hotels and Resorts and the rise of all suites properties as customers wanted more spacious accommodations (Barrows & Powers, 2008).

The demand for more accommodations at Hilton Hotels and Resorts will continue to rise as age composition of the population continues to change (Dopson & Hayes, 2008). However, research indicates that in the near future, the number of teenagers between 10 and 14 will decrease, while those between 15 and 19 will increase; the number of 30-49 year olds will decrease, while the number of 50-59 year olds will increase. The shifting demographics will have major implications in the demand for Hilton Hotels and Resorts products.

The second factor that affects the demand for Hilton Hotels and Resorts products is household income. Barrows & Powers (2008) say that the higher a household’s income, the more frequently its members dine out. It is therefore fundamental to realize that both spouses are working in the  upper-income families. These families experience great time pressure, hence they need a haven offering a quick moment of fun and relaxation (Barrows & Powers, 2008). The demand for reservation at Hilton Hotels and Resorts increases as the household income increases.           

Factors that Affect Changes in Supply

The key factors of supply that concern Hilton Hotels and Resorts are land and its produce, food, and labor. Barrows & Powers (2008) point out that the firm needs land for its locations, and certain kinds of land are critical for Hilton Hotels and Resorts. Good locations such as high-traffic areas, locations near major destinations, locations associated with scenic beauty are important for the firm. As land resources become scarcer, the firms such as Hilton Hotels and Resorts are making greater use of the space available. Enough supply of land in good locations implies that Hilton Hotels and Resorts will attract more customers. Environmental pressures add to the difficulty of finding the new locations. Research shows that even though foodstuff production and delivery is anticipated to be sufficient, climatic and weather changes can cause food shortage hence lead to increase in food costs.

The second factor that affects supply in Hilton Hotels and Resorts is labor. Barrows & Powers (2008) point out that Hilton Hotels and Resorts are full service operations and have a commitment to food service. Hilton continues to experience increased workforce turnover and rising rivalry from other competitors. The firm’s growth and high turnover continue to require a greater share of slow growing workforce. High supply of qualified workers means that Hilton Hotels and Resorts will have smooth operations. Barrows & Powers (2008) say that sources of labor supply are being targeted as restless retirees.  

Changing of Quantity Demanded

Hayes & Miller (2011) mention that demand in the hospitality industry unlike supply can and does change quickly. For example, in 2009, the recession caused demand for some hospitality products such as hotel rooms to drop as much as 30% from the previous year 2008 (Hayes & Miller, 2011). Quantity demanded for a product occurs when the price drops. For example, when the price for reserving rooms and suites at Hilton drops, it is expected that more people will demand accommodation and make more reservations. The quantity demanded changes with increase in households’ income, which implies that there will be more reservations for families.

 

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