Hilton

Topics: Hilton Worldwide, Hilton Hotels, Hilton Hotels Corporation Pages: 7 (555 words) Published: February 12, 2015
Situation:
Starwood unveil an aggressive frequent guest program
Issue statement:
How can H maintain its customers loyalty in response to Starwood Case analysis
Customer
3 segments
average member belongs to 3.5 programs
want a streamlined reward-redemption process and points that do not expire most important feature: room upgrades, airline miles, free hotel stays, a variety of on-property benefits and services game players

corporation
Hilton: managed by Hilton hotels corporation and Hilton international 492 hotels, 154000 rooms
revenues of $158 per night per guest
occupancy exceeded break-even
well-recognized brand
HHoners program:
4 membership tiers-- blue, silver, gold, diamond
double dipping
competition
Hilton, Starwood, Hyatt & Marriott (chart)
Starwood preferred guest program
No blackout dates
No capacity control
Paperless rewards
Hotel reimbursement
HHonors Strength
More competitive than competitors, low cost
No charge
customized hotel experience
build loyalty and customer lifetime value
extensive partnerships
double dipping
well recognized brand image, developed loyalty program
weakness
average member is part 3.5 reward programs
only 1 in 5 member stays can be attributed to the program
most member never realize the full benefits of the reward program management not satisfied with customers service experience
opportunities
business segment
professional association, corporate partnerships
better communication of benefits
expansion of network distribution
threats
Starwood preferred guest program
response from other competitors
Implications
overall high brand recognition , but low bran loyalty
consistent valuable customer experience is key
competitive
reduced spread of patronage
Alternatives
status quo
pros
offering are more competitive already
cost of program has been decreasing
cons
customer experience does not meet management expectations
does not change customer loyalty toward programs
adopt Starwood’s program
pros
keep customers from joining Starwood
increased the offering of the loyalty program
cons
increase costs
no differentiation, realized benefits may not exceeds costs
modify
pros
attract customers away from competition by targeting weaknesses in program cons
risk that added costs will not cede the desired results
recommendation
state quo + modify program
short-term action plan
status quo
avoid overreaction
reminder advertising
training day to educate all properties on how to effect communicate the benefits of the programs medium & long-term action
re-evaluate effectiveness of short-term plan
paperless rewards
expand network size and distribution
additional corporate membership perks
annual communication and training conference

loyalty
pros
analytics
breakdown
region
individuals
brand awareness
prestige
referral
long-term relationship
cons
apathy
low motivation because of “unreachable”
reward not desirable
lack of choice availability
privacy

Hilton:
Retaining/ lower churn
Increase revenue / customer stay
Increase market share
Protecting vs. others
DD
Fewer stays
Franchise:
Pull to the property
Consistency in redemption
Consumers:

Motivation
Increase profile of franchise
Market share
increase cross-property stay
decrease turnover rate
increase the capacity for data
make prediction

loyalty
20% of all stays  members
20%  yield management revenue increase
20% of the 20%  4% of the revenue from members
breakeven 68% ???
fill rate of 66% without the loyalty program

how the program is funded?

 what costs franchisees?
“Incremental one stay in five” otherwise had gone to the competitors Page 6 chart
1/5 (20%) of 7,015,000 = 1.4 m stays would have lost
$158, 80% margin on every room
%158*0.8*1.4m=$177m, lost on margin if not doing the loyalty program  potentially lost cost of Franchisees to not to lose 177m:...
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