Hilton Hotels: Brand differentiation through customer relationship management

1. ICT FOR ORGANIZATIONAL EFFECTIVENESS
HILTON HOTELS: BRAND
DIFFERENTIATION THROUGH CUSTOMER
RELATIONSHIP MANAGEMENT
CASE ANALYSIS
AKSHAY BORHADE, 4007/20

2. ICT FOR ORGANIZATIONAL EFFECTIVENESS
EXECUTIVE SUMMARY
In the efforts to become one of the world’s premier hospitality firms, Hilton Hotels identified some
key problems within the firm that needs to be solved. One problem the firm identified was that
Hilton Hotels lacked outstanding technological innovations. They also saw a problem with the lack
of IT infrastructure in the firm, and that the organization had no way of maintaining its relationship
with its valued customers. Another problem that the firm saw was that there was a need for man-power
in order to properly build and maintain these strong relationships with customers.
The causes of these problems were due to forces in the industry, both from competitors and
volatility of the choices of the consumers . Hilton Hotels designed some great solutions for the
different problems, and the solutions were all found in technology. Solutions for the problems
included, Hilton OnQ, CRM (Customer Really Matters), call centers to optimize the CRM concept,
best guest arrival reports and the Satisfaction and Loyalty Tracking (SALT).
The firm has identified recognition, personalization, service recovery and customer analytics as the
key success factors and integrating the technology platform across all the levels aimed at achieving
these KSFs has been the aim of the industry.
IMPORTANCE OF CRM FOR HILTON HOTELS
HOSPITALITY INDUSTRY CSFs (relevant to the case)
Maintaining Brand Loyalty (especially because market is small)
The competition in the hospitality industry has been immense with customers preferring the hotels
which provided high value for money, comfort level and convenience. So as to provide the best
staying experience, the implementation of CRM was imminent. Also, CRM helped in tracking the
customer’s travelling pattern, duration of stay and spending patterns which in turn aids in
personalization of offers and promotions for the customer.
Capital Intensive
Hospitality industry especially the premium, super-premium and luxury hotels is a capital intensive
industry. Managing the chain of more than 28,011 estates demands integration of all the services at
different hotels which was enabled by CRM. Expansion of the service portfolio by providing the
valet service (pick-up and drop-in) and other complementary services has been the mark of various
members in the industry. These services were enabled by the increased effectiveness by the CRM in
tracking the customers.
Call centers, which received around 24-27 million calls per years, complemented the CRM and
where responsible to generation of more than millions of revenue (as shown in exhibit 7) every year.
AKSHAY BORHADE, 4007/20 HILTON HOTELS: BRAND DIFFERENTIATION THROUGH CRM

3. ICT FOR ORGANIZATIONAL EFFECTIVENESS
Capacity Utilization
Pre-booking assignments make the utilization of capacity or available rooms more optimal.
However, analyzing the pattern of the customer choices and his demands through the data stored
in the databases is necessary.
Customer Satisfaction
Making customer feel special and at home is what hospitality industry aims at. Comfort,
convenience and connectivity (3Cs) are key parameters on which the customer rates the hotels.
The concept of Sample Arrivals report is evident of the fact that the level of data collection done for
each customer. CRM provided an upper hand to the hotels not only in knowing the customer
preferences and tastes but also catering to make the life of the travel agent simpler.
Technology cost management
Implementation of the technology platforms is very capital intensive as depicted below:
 OnQ stage 1: $ 93 million
 OnQ stage 2: $ 102 million
 Information systems (IS) funding: $ 240 million
 CRM installation: $ 0.65 million
 CRM maintenance cost: $ 1 million per year
Since, the investment in the technology is quite large, hence judicious decision regarding the
applicability of the CRM and effective data mining of the customer profile are expected. Maximizing
the marginal utility of the technology cost by implementing the economy of scope is evident in the
case. Devising measures like technology cost/ room, technology cost/ customer/ year and revenue.
Technology cost helped Hilton in effective measurement of the success of the brand.
IMPACT OF THE CRM ON HILTON HOTELS
DIRECT IMPACT
1. Competitive advantage over rivals
As discussed in the case, the dominant position of Hilton Hotels over others has primarily
been because of integration of all the brands using same technology platform.
2. Better personalized service
Tracking the customer, understanding the needs and preferences to provide customized services
is the primary aim of the CRM. This includes maintaining databases with all the relevant
information.
AKSHAY BORHADE, 4007/20 HILTON HOTELS: BRAND DIFFERENTIATION THROUGH CRM

4. ICT FOR ORGANIZATIONAL EFFECTIVENESS
3. Technology cost
Cost in installing and procuring the hardware for new technologies are huge. It is feasible for
organization with deep pockets.
4. Transparent Feedback
With the current feedback mechanism (SALT) directly linked to the CRM which
eliminates the presence of intermediaries who can possibly manipulate the feedback by the
customers for the own good.
5. Increased Revenue
Needless to say, CRM, OnQ, call centers all add up to increased revenue as shown in the case.
6. Comparison of services
Services can be compared online at various travel agents for different locations and
amongst different brands at the same location. E.g. comparison of Hilton International and
Conrad in New York though they belong to same parent brand.
INDIRECT IMPACT
1. Word-of-mouth
Increased satisfaction infuses the word-of-mouth which in turn leads to increased market
penetration and wider customer base.
2. Improved relationship at both the ends (suppliers as well as customers)
Streamlining of activities is easier through CRM and other tools by introducing concepts like
pre-assignment, JIT which takes care of impediments like leaner staff, inventory and effective
room management.
3. Success of various loyalty programs (HHonors member and MyWay program)
Loyalty programs are made more meaningful through the implementation of the CRM platform.
4. Integration of cultures of different countries
CRM at various countries integrates the cultures of countries and makes the customer feel at
home by producing the same homely environment.
ORGANIZATIONAL FACTORS AFFECTING CRM INITIATIVE
AIDING THE PURPOSE
1. JD Powers customer satisfaction award
AKSHAY BORHADE, 4007/20 HILTON HOTELS: BRAND DIFFERENTIATION THROUGH CRM

5. ICT FOR ORGANIZATIONAL EFFECTIVENESS
Recognition of the success of the technology in turn motivates in keeping the technology
updated and increasing the economy of scope.
2. Need for proper direction to marketing
CRM helps in proper routing of the marketing efforts for customer acquisition and promotion.
3. Growth of the estates
Hilton Hotels slated to grow at an aggressive pace of 1000 hotels in USA in next years and
another 1000 hotels in rest of the world in next 10 years is quite ambitious. This has been made
CRM, a quintessential course of action for the sustenance of the firm.
HINDERING THE PURPOSE
1. Challenge of charting the evolution of CRM
The exact impact of the CRM on the revenue cannot be measured and hence, the uncertainty
regarding the inefficient system performance cannot be eliminated completely.
2. Rapid expansion of the Hilton Hotels
The aggressive growth strategy has put the Hilton Hotels puts an expansion constraint on the
acceptability of the CRM technology platform.
3. Cost associated in implementation and training
Cost incurred is very high in implementation as depicted above and hence act as a deterrent for
the purpose.
AKSHAY BORHADE, 4007/20 HILTON HOTELS: BRAND DIFFERENTIATION THROUGH CRM