Hilton HHonor

Topics: Hotel, Customer, Consultative selling Pages: 19 (572 words) Published: October 30, 2013
Case
 Problem
 

 
The
 Sheraton
 and
 Westin
 hotel
 brands
 combined
 to
 form
 one
 company
 and
 instituted
 a
 $50
 
million
  ad
  campaign
  for
  a
  new
  “aggressive”
  loyalty
  program.
  The
  new
  merger
  solved
  many
 
problems
  that
  the
  individual
  companies
  had
  faced
  and
  allowed
  Starwood
  to
  become
  a
 
major
  competitor
  for
  Hilton
  Hotel
  Corporation
  and
  Hilton
  International.
  The
  increased
 
spending
 by
 Starwood
 on
 its
 loyalty
 program
 reduced
 the
 cost-­‐effectiveness
 of
 the
 Hilton
 
HHonors
  program,
  and
  in
  an
  industry
  that
  rewards
  economies
  of
  scale,
  Starwood
  is
  forcing
 
Hilton
 to
 decide
 how
 to
 contend
 with
 a
 new
 power
 in
 the
 industry
 and
 what
 competitive
 
advantage
 the
 Hilton
 HHonors
 loyalty
 program
 can
 derive
 over
 its
 competitors.
 

 
Problem
 Solution
 

 
Loyalty
 programs
 are
 crucial
 to
 the
 hotel
 industry
 because
 they
 allow
 a
 hotel
 brand
 to
 build
 
and
 maintain
 its
 customer
 base,
 which
 allows
 the
 hotel
 and
 the
 customer
 to
 benefit
 from
 
their
  continued
  business.
  The
  loyalty
  program
  increases
  the
  hotels
 ability
  to
  operate
  above
 
occupancy,
  increases
  cash
  flow,
  customizes
  the
  customer
  experience,
  and
  rewards
 
profitable
 customers.
 
 

 
At
  the
  blue
  membership
  level
  of
  the
  HHonors
  program
 
if
  a
  customer
  stayed
  eight
  nights
  at
  the
  Hilton
 
Albuquerque,
  the
  hotel
  would
  pay
  the
  HHonors
 
corporation
  approximately
  $46.08.
 
  At
  the
  same
  time
 
the
  customer
  would
  be
  awarded
  points
  worth
 
approximately
  $131.07
  at
  standard
  business
  rates.
 
While
  there
  is
  a
  perceived
  deficit
  by
  running
  the
 
HHonors
  program,
  the
  customer
  is
  not
  guaranteed
  to
 
use
  all
  of
  the
  awarded
  points,
  the
  future
  point
  value
  in
 
dollars
  will
  be
  less
  costly,
  there
  is
  a
  relationship
  formed
  between
  the
  customer
  and
  the
 
hotel
  with
  the
  increased
  opportunity
  for
  repeat
  business,
  the
  incremental
  reduction
  of
  cost
 
by
 increasing
 occupancy
 above
 “break-­‐even”
 is
 greater,
 and
 the
 hotel
 is
 still
 turning
 a
 profit
 
by
 filling
 the
 occupied
 room.
 The
 net
 benefits
 of
 the
 loyalty
 program
 outweigh
 the
 cost
 to
 
the
 Hotel
 corporations
 and
 hotel
 operators.
 

 
However,
 with
 ever
 increasingly
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