Hilton Hhonors Case Study

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Managing a Better Program - Introduction

Hilton Hotels sees its frequent guest programs “HHonors” as an incredibly important marketing tool. It serves to direct promotional and customer service efforts for a population of its most important clients, the frequent business traveler. Hilton is running the “HHonors” loyalty program to create and retain loyal customers in the same way as its major competitors. Organizations in the lodging industry all compete for the same subset of customers by introducing more generous loyalty programs. The case study “Hilton HHonors Worldwide: Loyalty Wars” by John Deighton and Stowe Shoemaker details the importance of this program to their strategy and marketing efforts. The competitive advantage that Hilton derived from the “HHonors” is apparent.

The use of Information Technology in loyalty programs provides access to information of consumers that can be analyzed for decision making purposes. Information collected from consumers can be stored in data warehouse and analytical tools applied to it can provide business intelligence that will give businesses a competitive advantage. There are benefits to be derived when Information Technology is incorporated into loyalty programs because businesses are now able to do much more with the data collected than would have been possible without IT.

The Hilton loyalty program can help property operators and brand owners manage better their customers in several ways. The loyalty program supports the identification and retention of customers who are the basis of most profits. It enables the management of Hilton to identify those clients and reward them on the spot with upgrades and recognition. These characteristics can be tracked and analyzed to produce a picture of the customer value to the brand of Hilton.

These unique offerings can be used to strengthen brand and improve brand loyalty in the mind of the client. They can also be designed to encourage client spending on things like food, drink and other services found in the accommodation industry. The loyalty program can be used to attract new customers to the brand through targeted marketing efforts and through partnership with other vendors like airlines and rental car companies.

Comparing Rewards Programs

When comparing the two hotel chains, the best point of differentiation is the rewards programs offered. Hilton and Starwood brand hotels are considered to provide comparable quality stays, good customer service, and similar amenities. Starwood is a brand dedicated to the young working professional. They have combined the management of several groups like the Westin, Sheraton, and Caesar’s Palace brand to create a large organization. They have long been considered Hilton’s primary competitor.

Hilton Hotels already has a fairly healthy size of franchise members. A franchisee would need to take the time and choose an organization where they can be best supported as they open a new hotel under that brand. According to Pizam (2010, p. 326), 32% of U.S. hotel guests feel that the loyalty reward program a hotel employs is the deciding factor on where to stay. In order to truly determine which brand is the best option to choose, the two rewards programs need to be evaluated.

The Starwood brands rewards program offers four key points that help it stand out from Hilton’s rewards program. The first option they offer is no black-out dates; so patrons can choose to use their rewards points at any time of the year with no restrictions. This also means no capacity controls, where hotels limited the number of rooms available for this promotion. By using paperless rewards, rewards members can book online using their reward points and do not have to wait to receive a certificate in the mail. Finally, as an incentive to franchisee’s considering this brand, the Starwood hotels will actually reimburse themselves at a higher rate (10-20%) than competitors. This allows the hotel owners to not...
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