Marketing Case

Topics: Microeconomics, Hotel chains, Brand Pages: 4 (1242 words) Published: June 26, 2011
Executive summary
Hilton is running a loyalty program to create and retain loyal customers as its competitors do. Given the severe competition in the lodging industry, all major players are competing by introducing more generous loyalty programs. Hilton should not compete on what its competitors are doing. Instead, it should customize and differentiate its current loyalty program and establish a compelling brand strategy to create brand passion and brand loyalty and to reposition the Hilton brand so that customers are truly loyal to the brand. In doing so, Hilton chain can attract and retain more business loyal customers and create long term customer loyalty. 1. Loyalty program and better customer management

Loyalty programs can help property operators and brand owners manage better their customers by the following points: • Retain and reward profitable customers
• Tracking customer behavior patterns (spending, characteristics, preferences etc) • Customize unique rewards to profitable customers
• Strengthen brand and improve brand loyalty
• Encourage customer spending
• Attract new customers
• Create and retain loyal customers
• Segment customers and formulate customized services to each segment 2. Loyalty program assessment
Value of the program
Now Hilton runs above breakeven point at 68% occupancy (p.4). It means that Hilton already passes the zero-profit point and makes profits. Therefore, revenue at higher occupancy levels will generate profits for Hilton. HHW program helps Hilton to run at higher occupancy level and hence revenues generated by the program will contribute to make profits for Hilton. From page 4, the breakeven point is 68% x 154,000room x 365nights = 3,8222,800 nights or 3,8222,800 nights x $158 = $6,039.2 millions. From page 8 and table B, number of nights actually paid by members is 7,015,000nights + 712,000 stays x 2.4nights – 180,000 claimed nights = 8,543,800 nights. Total revenues from members is $1,108million + $327million =...
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