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hilton honors program

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Hilton hhonors worldwide: loyalty wars :

Hilton hhonors worldwide: loyalty wars GROUP 7

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About Hilton Hotels The most recognized name in the industry, Hilton Hotels stands as the stylish, forward thinking global leader of hospitality. Today Hilton welcomes guests in more countries than any other full-service hotel brand, with more than 530 hotels and resorts in 76 countries across six continent.

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HILTON HOTEL BRANDS

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Loyalty program Luxury Full service Focused service Time share

LOYALTY MARKETING PROGRAMS:

LOYALTY MARKETING PROGRAMS

HOTEL INDUSTRY :

HOTEL INDUSTRY Chain brands supplied reservation services, field sales operations and loyalty program administration. Less standardization of operations. Chains managed one another's brands.

CONSUMERS:

CONSUMERS Only 41% of c onsumers use hotels over night. Three segments of customers: Business segments Convention segments Leisure segments

COMPETITION:

COMPETITION Four global brands dominated business class Hotel markets. Starwood Hyatt Hilton Marriot

MARKETING THE HILTON BRAND:

MARKETING THE HILTON BRAND Hilton hotels were controlled by unrelated corporations. Hilton H otels Corporation(HHC) Hilton I nternational C orporation(HIC) Reunified in 1997

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Bollenbach appointed as president and CEO of Hilton. Focus on Brand development. Varying product has been a limiting factor. Challenge to maintain customer expectation.

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The revenues reached $158 per night per guest. Occupancy exceeded break even. Fixed costs at about 68% occupancy and 80% at higher occupancy level.

HILTON HHONORS PROGRAM:

HILTON HHONORS PROGRAM Hilton HHonors worldwide - not as a profit center but as a service. Required to measure the effectiveness through set of metrics.

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Membership was provided free of cost. Members earned points during their stay at HHC or HIC hotels. When earned enough points stay at the hotel is redeemed.

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Four tiers of membership Blue Silver Gold D iamond

BLUE:

BLUE In 1998 4.5 cents per dollar was collected from the members for every stay. HSW credited 10 points per eligible dollar of folio. Guests earned mileage in partner airline frequent flyer programs. Members earned points by renting a car, using the Hilton credit card from A merican express.

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Buying products from FTD florist and Mrs. field's cookies. Besides free stays they had priority of reservations telephone numbers.

SILVER:

SILVER Members awarded silver VIP status if stayed for more than four times in a year Benefits are: Earned 15% bonus on base points Received a 5000 points bonus after 7 stays in a quarter. 10000 point discount when they claimed a reward costing 100000 points.

GOLD:

GOLD Members awarded Gold VIP status if stayed for more than 16 times in a year, Benefits are 25% bonus on base points Received a 5000 points bonus after 7 stays in a quarter. 20000 point discount when they claimed a reward costing 100000 points. Certificated for the best room in the hotel after every 5 th stay.

DIAMOND:

DIAMOND No benefits were promised. Acquired more bang, more affinity, more vesting from customers if you do something un expected.

RATIONALES FOR THE PROGRAM:

RATIONALES FOR THE PROGRAM Revenue and yield management Appoint a revenue manager to oversee day to day decisions. Yield management models were probabilistic algorithms that helped managers set reservation policy.

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Variable pricing – rate charged on size and fittings as well as day of booking, length of stay and customer characteristics. Walking cost depends on Customers future life time value Function of their willingness to pay past loyalty.

Collaborating with partners:

Collaborating with partners HHW partnered with 25 airlines 3 car rental firms Other firms

WORKING WITH FRANCHISEE :

WORKING WITH FRANCHISEE HSW a strong factor to persuade hotel owners to become Hilton franchisees. Franchisee – smaller hotels. Depended on “Road warrior’ business.

RELATION WITH THE GUESTS:

RELATION WITH THE GUESTS This program let the most valuable guests to be recognized on-property. After visit calling. Feedback groups in addition with focus groups Maintenance of guest profile

HELPING TRAVEL MANAGERS GAIN COMPLIANCE:

HELPING TRAVEL MANAGERS GAIN COMPLIANCE Proportion of Hilton business came from contract with large corporate clients. Responsibilities of travel manager. Negotiate a rate by promising volume of stays. Objective is to use the program as a tool that can help travel manager with compliance to their overall travel policy.

MEMBERS ATTITUDE:

MEMBERS ATTITUDE HHW made use of conjoint analysis to measure what members wanted from HHP. Important features of the hotel programs were Room upgrades and airline miles. Free hotel stays and variety of on property profit benefits and services.

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Diskin recognized from the study that To attract game players To improve the stay experience for members

STARWOODS ANNOUNCEMENT:

STARWOODS ANNOUNCEMENT The wall street journal of feb2,1999 announced the birth of Starwood preferred guest program It included more than 550 participating properties worldwide Four features were No blackout dates No capacity control Paperless reward Hotel reimbursements

DISKINS DILEMMA:

DISKINS DILEMMA Do we have to compete point from point? Do we have to take different positioning? Do we have to hold on to loyal members and differentiate honors from starwood and other competitors?

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STUDY QUESTIONS

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What are the strengths and weaknesses of Hilton HHonors from the standpoints of Hilton Hotels Corp and Hilton International Member properties(franchise hotels) Guests Corporate travel departments

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What is Starwood attempting to do and how should Jeff Diskin respond

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How does the value generated to Hilton by the program compare to its cost

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