hilton hotel (w)
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HILTON HHONORS WORLDWIDE: LOYALTY WARS
GROUP 7
• About Hilton Hotels
The most recognized name in the industry, Hilton Hotels
stands as the stylish, forward thinking global leader of
hospitality. Today Hilton welcomes guests in more
countries than any other full-service hotel brand, with
more than 530 hotels and resorts in 76 countries across
six continent.
HILTON HOTEL BRANDS
Loyalty program
Luxury
Full service
Focused service
Time share
LOYALTY MARKETING PROGRAMS
HOTEL INDUSTRY
• Chain brands supplied reservation services, field
sales operations and loyalty program administration.
• Less standardization of operations.
• Chains managed one another's brands.
CONSUMERS
• Only 41% of consumers use hotels over night.
Three segments of customers:
• Business segments
• Convention segments
• Leisure segments
COMPETITION
Four global brands dominated business class Hotel
markets.
Starwood
Hyatt
Hilton
Marriot
MARKETING THE HILTON BRAND
• Hilton hotels were controlled by unrelated
corporations.
Hilton Hotels Corporation(HHC)
Hilton International Corporation(HIC)
• Reunified in 1997
• Bollenbach appointed as president and CEO of Hilton.
• Focus on Brand development.
• Varying product has been a limiting factor.
• Challenge to maintain customer expectation.
• The revenues reached $158 per night per guest.
• Occupancy exceeded break even.
• Fixed costs at about 68% occupancy and 80% at
higher occupancy level.
HILTON HHONORS PROGRAM
• Hilton HHonors worldwide - not as a profit center but
as a service.
• Required to measure the effectiveness through set of
metrics.
• Membership was provided free of cost.
• Members earned points during their stay at HHC or
HIC hotels.
• When earned enough points stay at the hotel is
redeemed.
Four tiers of membership Blue
Silver
Gold
Diamond
BLUE
• In 1998 4.5 cents per dollar was collected from the
members for every stay.
• HSW credited 10 points per eligible dollar of folio.
• Guests earned mileage in partner airline frequent
flyer programs.
• Members earned points by renting a car, using the
Hilton credit card from American express.
• Buying products from FTD florist and Mrs. field's
cookies.
• Besides free stays they had priority of reservations
telephone numbers.
SILVER
• Members awarded silver VIP status if stayed for more
than four times in a year
• Benefits are:
• Earned 15% bonus on base points
• Received a 5000 points bonus after 7 stays in a quarter.
• 10000 point discount when they claimed a reward
costing 100000 points.
GOLD
• Members awarded Gold VIP status if stayed for more than
16 times in a year,
• Benefits are 25% bonus on base points
• Received a 5000 points bonus after 7 stays in a quarter.
• 20000 point discount when they claimed a reward costing
100000 points.
• Certificated for the best room in the hotel after every 5th
stay.
DIAMOND
• No benefits were promised.
• Acquired more bang, more affinity, more vesting
from customers if you do something un expected.
RATIONALES FOR THE PROGRAM
1) Revenue and yield management
• Appoint a revenue manager to oversee day to day
decisions.
• Yield management models were probabilistic
algorithms that helped managers set reservation
policy.
• Variable pricing – rate charged on size and fittings as
well as day of booking, length of stay and customer
characteristics.
• Walking cost depends on
1. Customers future life time value
2. Function of their willingness to pay past loyalty.
Collaborating with partners
• HHW partnered with
• 25 airlines
• 3 car rental firms
• Other firms
WORKING WITH FRANCHISEE
• HSW a strong factor to persuade hotel owners to
become Hilton franchisees.
• Franchisee – smaller hotels.
• Depended on “Road warrior’ business.
RELATION WITH THE GUESTS
• This program let the most valuable guests to be
recognized on-property.
• After visit calling.
• Feedback groups in addition with focus groups
• Maintenance of guest profile
HELPING TRAVEL MANAGERS GAIN COMPLIANCE
• Proportion of Hilton business came from contract with
large corporate clients.
• Responsibilities of travel manager.
• Negotiate a rate by promising volume of stays.
• Objective is to use the program as a tool that can help
travel manager with compliance to their overall travel
policy.
MEMBERS ATTITUDE
• HHW made use of conjoint analysis to measure what
members wanted from HHP.
• Important features of the hotel programs were
Room upgrades and airline miles.
Free hotel stays and variety of on property profit
benefits and services.
Diskin recognized from the study that
o To attract game players
o To improve the stay experience for members
STARWOODS ANNOUNCEMENT
• The wall street journal of feb2,1999 announced the birth of
Starwood preferred guest program
• It included more than 550 participating properties worldwide
• Four features were
No blackout dates
No capacity control
Paperless reward
Hotel reimbursements
DISKINS DILEMMA
• Do we have to compete point from point?
• Do we have to take different positioning?
• Do we have to hold on to loyal members and
differentiate honors from starwood and other
competitors?
STUDY QUESTIONS
• What are the strengths and weaknesses of
Hilton HHonors from the standpoints of
a) Hilton Hotels Corp and Hilton International
b) Member properties(franchise hotels)
c) Guests
d) Corporate travel departments
What is Starwood attempting to do and how
should Jeff Diskin respond
How does the value generated to Hilton by the
program compare to its cost