Term Paper on "How the Hilton Might Expand Into Chile"

Term Paper 6 pages (1697 words) Sources: 1+

[EXCERPT] . . . .

Hilton/Chile

Chile -- The world's longest country offers a long list of potential investment opportunities for the Hilton Hotels Corporation

Because of the general global instability gripping the world, embarking upon a new venture by any company dependant upon tourism, even a company as large and as durable as the Hilton Hotels Corporation, must be viewed with caution. The Latin American region where Chile, the world's longest country, is located might be viewed with a raised eyebrow as a whole. This is not simply routed in general fears and trepidation regarding the health of the hospitality industry. There are always financial concerns regarding the Latin and Central American region's legendary economic instability, its tendency towards hyperinflation, its many nations plagued with high rates of debt, and other factors that might deter investors and tourists alike. However, the nation of Chile has many features that will make it an attractive potential destination in the future for business and leisure travelers, features which makes it unique, despite the legitimacy of some of the woes regarding its regional neighbors.

Furthermore, is always best for a company to be a first-mover in any new, expanding market. For the Hilton Corporation, to become a first-mover into the expanding Chilean leisure and adventure travel industry, as well as to offer the best accommodations to the growing influx of business travelers to Chile would be an unparalleled opportunity. Chile offers, for the Hilton Corporation's future prospects, a likely source of potential growth in a number of expanding tourist and business markets.

Chile: a country overview

Current business environment of Chile

Chile has shown remarkable economic health over the past decade, compared with its neighbors. According to the World Economic Forum: www.weforum.org http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/ORGANIZATION/EXWhere is the Wealth of Nations? (2005) - Total wealth per capita, Chile ranked 32 out of 118 countries, fourth in Latin America after Argentina, Uruguay and Brazil, in terms of the overall wealth of the population. (All statistics found in "Chile" entry 2006, Wikipedia)

Chile's official website quoted the objective authority of the National Statistics Institute, INE, which reported that Chile's Consumer Price Index (IPC) rose only 0.5% in July 2006, meaning the country accumulated only 2.6% inflationary growth in the first seven months of 2006 and 3.9% in 2005. (The Chilean Government, 2006) This demonstrates not only that Chile is not currently affected by the hyperinflation that was so much of a concern and a deterrent for Latin American investors, but also that because of Chile's relatively stable economy, business travel within the region is likely to increase within the next ten years. The Hilton Corporation, by offering attractive hotels for the likely influx of business travelers could establish its name within the borders of the country, before similar names such as Marriott attempt to gain a foothold.

Political stability

One of the greatest concerns about investing in Chile is has undoubtedly been its political stability. Until recently, Chile was governed by one of the region's most notorious right-wing dictators, Augusto Pinochet. Readers may be familiar with Pinocet's name, as he was responsible for leading a military government that murdered and tortured opponents to his regime, resulting in a generation of "disappeared persons," and a nation decimated of many of its best and brightest because of his government's strong-armed tactics. However, Pinochet mercifully fell from power in 1988, and the Chilean government has slowly grown more democratic in its structure since his deposition. ("Chile," 2006, Wikipedia)

In September 2005, Chile's President Ricardo Lagos furthered this trend towards democratization by eliminating the positions of appointed senators and permanent senators, severing the ties between the executive branch and the armed forces, and reducing the presidential term's duration. Chile's judiciary is now independent of government control, and currently a center-left coalition dominates the governing branches. ("Chile," 2006, Wikipedia) Although the government and constitution has not been long in power, the overall trend since the deposition of Pinochet has been a positive one.

Moreover, although Pinochet was a brutal dictator, even during his reign he was not hostile to foreign investment and business. This means that there is an long-standing established willingness within the nation to welcome foreign investment, and that the nation has been open to outside economic cultures and ways of doing business for many years. Again, this means that business travelers, as are increasngly likely to seek Chile as a destination for travel and accomodation into the future, because it offers a stable economy and now, a relatively stable government. It also bodes well for Hilton's own business dealings with Chilean contacts.

Economic infrastructure

Chile is one of Latin America's most economically developed countries and one of most highly industrialized countries in Latin America. ("Chile," 1994," Library of Congress Country Studies; "Chile," 2006, Wikipedia) In terms of quality of life, it was ranked first by The Economist of all countries in Latin America. One particularly significant recent development regarding foreign investment, according to a press release of the Chilean Embassy, occurred on July 7th, 2006, when Moody's Corporation upgraded Chile to a low-risk country for foreign investment. This matched the Standard & Poor's rating, one of the world's foremost providers of credit ratings and risk evaluation, which also ranked Chile quite high in this regard. (The Chilean Embassy, 2006)

Cultural aspects

Chile's historic social stratification, or wealth gap between the rich and poor has been mitigated, to some extent, by the government's new educational and housing investments in programs for very poor and in upgrading the water and sanitation systems that serve the nation's poor. These investments have helped lower infant mortality rates and raise life expectancy, giving country a relatively high human development index (HDI) world ranking. ("Chile," 1994," Library of Congress Country Studies) They have also, more to the point from the Hilton's point-of-view, made the country more attractive for tourists.

Chile's beautiful and varied landscape additionally means that the nation offers many opportunities for scenic and adventure travel. Adventure travel for Baby Boomer tourists with time on their hands, or younger people who wish to challenge themselves in ways they do not experience in their everyday lives is growing increasingly popular. Such opportunities abound in Chile, many famous parks and natural wonders, such as Torres del Paine, as well as the Andes Mountains. ("Welcome to Chile," 2006, Geographia)

Plan for the Hilton

The investment plan in Chile for the Hilton Corporation would ideally be dual-pronged. First of all, there should be a plan to target the burgeoning business travel that is likely to rise in the coming years in Chile. The Hilton could offer its traditional luxurious hotels, designed to provide comfort for the accidental tourist or business traveler. The population's familiarity and Westernization, given the nation's long-standing business relationships with North America and Europe would allow hotels to offer amenities attractive to international tourists, such as hotel staff that were fluent in a number of languages, for example, as well as the opportunity to take advantage of Hilton's traditional rewards programs for business travelers, as described on its corporate website. (Official Website, 2006) younger or more adventuresome clientele, however, could provide a new venture for the Hilton in Chile. As persons, who might have spurned Chile before, such as idealistic young people, might return to travel to the nation now that the government is undergoing such substantial reformations, adventure travel is another growing industry that the Hilton Corporation should explore in the future. The Hilton could create a series of reasonably priced hotels, targeted at younger tourists or Baby Boomers desiring to explore less trafficked regions of the world, along such popular destination routes as the Andes, the many scenic parks of Chile, and other areas where persons could explore during the day, and then return to the relative, moderately priced comfort of the hotel at night. These hotels could offer… READ MORE

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