In 1999, The Starwood Hotels and Resorts Worldwide raised their cost by announcing their new aggressive frequent-guest program that was accompanied by a fifty million dollar advertising campaign. The head of Hilton HHonors program, Jeff Diskin, recognized their competition and realized Hilton would have to raise their costs to keep up with demand. Two entirely unrelated corporations controlled Hilton brand: Hilton Hotels Corporation (HHC) and Hilton International (HIC). At this point in time, Hilton was very well recognized, but was limited because of a varying product from property. In return, this challenged customer expectations due to such a variety of product offerings. Hilton’s customers needed a standard of what to expect no matter which division of Hilton properties they visited. Starwood represented more than 550 participating properties worldwide, and they were adding program features that might be too expensive for Hilton to match. Such as no blackout dates (no matter what day or season, reward points were always able to be redeemed), no capacity control (all unreserved rooms were available), paperless rewards (properties able to accept points for a stay) , and hotel reimbursement (since more dates were available with no blackouts, Starwood charged hotels 20%-100% more than competition.
Customer LoyaltyOld ideas, strategies
ExperienceConcentration mostly on top clients
Unexpected rewards to the loyalFranchisee control.
Decision: Whether to followThe New ideas of competitors
competitor or follow the current strategy.that are raising the bar. Offering something that HH doesn’t. Come up with new ideas and marketing
Identification of Problem
Franchisees and Partners:
In Franchisee case, since franchisees tend to be “smaller hotels” (p.541), it is difficult to control the quality of actual...