Case Analysis Hilton Hhonors
The Hilton HHonors program is operated as a service to both Hilton Hotels Corporation and Hilton International. Hilton sees this program “HHonors” as an incredible marketing tool that directs promotional and customer service efforts for a population of its more important clients which are namely the frequent business traveler. Hilton has stabled the initiative to run the HHonors loyalty program in order to develop and retain their loyal customers using the same method that its competitors are using. Organizations like these in the hospitality and lodging industry all compete for the same type of customers by utilizing the methods of a loyalty program. The competitive advantage is apparent in which Hilton has derived from its HHonors Loyalty Program. It was discussed extensive ly in “Hilton HHonors Worldwide: Loyalty Wars” by John Deighton and Stowe Shoemake where they detailed the importance of the program as a marketing strategy.
Question-1 Do You think the modern form of FMP’s is more sustainable than the earlier forms like trading stamps and coupons.
Trading stamps and coupons were required to give in to newer forms of loyality program because 1. Competitive pressure has made it necessary for corporate to innovate
2. Trades and coupons are not differentiating factors because that can easlity emulated by competitors Modern day FMPS are more sustainable because they can withstand emulation due to the following reason 1. FMP’s can provide individual customized experiences for each consumer 2. Data ware housing capabilities of computers has made information required for such customization easily available 3. FMP’s can benefit alliances through mutually beneficial loyality programs 4. FMPs also help in segmenting customes and formulate customized services to each segment
Question-2 What are the benefits of Hhonors program to Hilton •
Hilton would benefit from the HHonors Program through the following methods; Efficient estimation of “Walking Cost”: The program would provide historical information about the customers and thus aid Hilton to gauge the customers‟ characteristics which in turn would lead to better revenue and yield management.
Benefits from Double Dipping: The program allowed transfer of benefits within Hilton and its partners which allowed both sides to earn currencies through joint customers.
Better scope of gaining franchises/management contracts: The program‟s ability to drive business made it more lucrative for the smaller hotels to strike deal with Hilton
Enhanced customer relationship: The program enabled Hilton to provide customised hotel experiences for each of its guests which would in turn help Hilton and its collaborators become the customer‟s favourite
Help gain corporate contracts: Hilton‟s major business came through corporate clients and this program would aid the corporate travel.
Some strengths that the Hiltion HHonors programs possesses is the “Double Dipping” program which allows a transference of benefits with Hilton and its airline pa rtners‟ frequent flier programs for their stay in the hotel. This is one of the biggest strengths of the HHonors program as Hilton is not competing against its own programs but rather sharing mutual benefit since all participating partners can profit from the various programs. It is just not limited to hotel visits but products and services that are purchased from partner of Hilton. This has caused more franchisees and hotel to sign management contracts with Hilton. The program also allowed a better scope of gaining franchise and management contracts as the HHonors program‟s ability to drove business made it more productive for smaller hotel causing them to strike a deal with Hilton. It also advanced customer service relationships by enabling Hilton to provide a customized hotel experience for each of its varying guest. This results in the aiding Hilton and its associates to become the customer‟s favorite in lodging and hospitality. The program had prompted Hilton to apply CRM in order to collect information on its customers which included past behavior, likes and dislikes while analyzing the information to provide the customer different opportunities. This lead to the reunification of Hilton Hotels Corporation and Hilton International to create a better customer loyalty program. The loyalty program provided Hilton the development of databases with complete customer information which allowed them to improve their services and products with insight taken from the databases. This strategy strengthened competitive advantage by
developing a closer communication medium with the customers and added value to the customers. However, Hilton‟s HHonors program raised the costs of the loyalty program to keep up with demand and competition. There was an immense gap placed in its rewards program for guests to stay in the hotel to achieve „Diamond‟ status. The program increased the number of Blue and Silver members. The program places too much time to be taken in order to gain points for customers to really see a benefit to the relationship with themselves and Hilton. New members usually do not benefit quickly from the established relationship in the loyalty program.
Question-3 What is the decision problem of Jeff Diskin?what alternatives are left with him for HHonors program with announcement of competitive rewards program by Starwood?
Starwood Hotels and resorts Worldwide began to raise their cost in 1999 with the announcement of a new aggressive frequent-guest or loyalty program. It was accompanied by a fifty million dollar investment in advertising campaign. For Jeff Diskin it was competition and he released that Hilton had to raise their costs as well. Starwood was already representing about 550 participating properties globally and added program features that were too expensive for Hilton to match. Starwood‟s programs included the addition of no blackout dates; by this way customers were able to redeem reward points without the restriction of date or season. They added a no capacity control leaving all
unreserved rooms available. Starwood also added paperless rewards enabling properties to accept points for a stay. The hotel also included hotel reimbursements due to the fact that more dates were now available with no blackouts thus allowing Starwood to charge any estimate of 20 percent to 100 percent more than compared to its competition.
Question-4 What should he do?Why?
Jeff Diskin should remove the notion of mimicking the implementations of Starwood into the Hilton operation. Hilton would more likely improve its customer retention by concentrating its time, hard work, and money on areas of amenities and customer service. Along with the successful “Double Dipping” program, Hilton enhance its loyalty program through service guarantees and vigorous complaint management programs.