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Hilton Power Point Presentation-1
The document provides an overview of Hilton's hotel industry and HHonors loyalty program. It discusses Hilton's brand positioning and market segments. It also analyzes the competitive landscape, purpose of loyalty programs, and details of the HHonors program. Key issues facing Hilton are identified as it considers how to respond to Starwood's new loyalty program changes. Alternative strategies, recommendations, and risks are presented. The recommendation is to differentiate HHonors from competitors like Starwood by expanding partnerships and focusing on improving the top tier member experience.
Hilton Power Point Presentation-1
- 1. C A SE S T UD Y HILTON HHONORS WORLDWIDE
- 2. WELCOME YOUR HILTON HHONORSEXECUTIVE TEAM: Rasheed Gbajabiamila Natalia Kolodenko Kimone Burnett-Melbourne Diwaker Vasistha Ankita Singh
- 3. OPENING QUESTIONS What isyour favorite hotel chain and why? How many of you have stayed at the Hilton? How do you feel about the Hilton brand? What are your perceptions of hotel loyalty programs?
- 4. Industry Overview Hilton Hotel Overview Competitive Landscape Purposeof Loyalty Programs Hilton Hhonors Case Synopsis Key Issues SWOT Analysis Porter’s 5 Forces Model Alternative Scenarios Recommendations Risks Contingency Plan Hhonors Today WELCOME PACKAGE
- 6. HOTEL INDUSTRY OVERVIEW The global hotel industry constituted of 13.6 million rooms dominated by 4 chain brands. Marriott Starwood Hyatt Hilton
- 7. OVERVIEW CONTINUED Hotel Chainsoffered services such as: reservations loyalty programs on-site sales and services management of hotel real estate
- 8. OVERVIEW CONTINUED Lessstandardization of operations Unrestricted circulation of information regarding competitor operation procedures 74% of Americans travelled overnight per year 41% used a hotel, motel or resort
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- 10. HILTON HOTEL OVERVIEW Foundedin 1919 by Conrad Hilton in Texas Hilton Hhonors introduced in 1987 In 1997 Hilton Hotels Corporation and Hilton International unified its brand worldwide In 1999 the Hilton brand comprised of 492 Hotels and 154,000 rooms ROOM1
- 11. HILTON MARKET Hiltonmarket was divided into three categories Business Convention Leisure There are 12 hotels within the Hilton brand
- 12. HILTON DISTRIBUTION THIRD PARTYBY HHC ( USA ), 207, 42% HIC ( OUTSIDE USA ), 220, 45% HHC OWNED ( USA ), 39, 8% MANAGED BY HHC ( USA), 16, 3% HHC RUN CONRAD ( OUTSIDE USA ), 10, 2%
- 14. COMPETITIVE LANDSCAPE 339200 212900 93700 154000 0 50000 100000 150000 200000 250000 300000 350000 400000 Marriott InternationalStarwood Hyatt Hilton Number of Rooms
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- 20. PURPOSE OF LOYALTYPROGRAMS Building guest relationships Yield management models Collaboration with partners Working with franchisees Assisting travel managers gain compliance
- 21. RELATIONSHIP WITH GUESTS Directcontact Customized experience •
- 22. YIELD MANAGEMENT MODELS Theart and science of making more money from the same number of hotel rooms. Data from loyalty program Behavior models Set right price + Drive business to high value clients
- 23. YIELD MANAGEMENT MODELS Whowill get the last room in high season? Who will be turned away?
- 24. COLLABORATING WITH PARTNERS Partners database Easierto earn points Easier to spend points
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- 28. HILTON HHONORS Designed tobuild loyalty to the Hilton brand Hilton HHonors Worldwide (HHW) operates the program.
- 29. HOW TO EARNAND SPEND POINTS HHonors points
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- 31. LEVELS OF MEMBERSHIP Everyone whojoined the program Stay in Hilton 4 times a year 15% bonus on base points 5,000 points bonus after 7 stays in quarter Stay 16 times or 36 nights in a year 25% bonus on base points 5,000 points bonus after 7 stays in quarter Top 1% of members ???
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- 33. CASE SYNOPSIS The StarwoodAnnouncement
- 34. STARWOOD PREFERRED GUEST PROGRAM NoBlackout Dates No Capacity Control Paperless Rewards Hotel Reimbursement
- 35. KEY ISSUES To determineif Hilton should compete point for point with Starwood's Loyalty program OR Take a different approach Diskin’s Dilemma
- 36. CHALLENGES Increased cost Reduction ofcost-effectiveness of loyalty programs Starwood could become market leader
- 38. SWOT ANALYSIS Strengths • Highlyrecognized brand worldwide • Experienced CEO and executives • Excellent customer service through provision of customized guest experiences • Formidable loyalty program with unique point of difference (Double Dipping) • Strong focus on branding • Widely varying product offerings through multiple brands • Occupancy rate that exceeds break even • Increased synergy and cost savings through unification of Hilton Hotels Corp. and Hilton International • Huge partnerships with 25 airlines, 3 car rental firms and other firms • Good supply chain management
- 39. SWOT ANALYSIS Weaknesses •Challenges managingcustomer expectations due to varying offerings •Relatively limited network size and distribution
- 40. SWOT ANALYSIS Opportunities •Target othercustomer segments •Increased market penetration (Hilton Hhonors members spend 4.6 billion on accommodations per year but not all with Hilton) •Boost brand loyalty •Increased expansion into emerging markets and Caribbean •Acquisition of other hotels
- 41. SWOT ANALYSIS Threats • Competition(primarily with Marriott International, Starwood Hotels & Resorts and Hyatt Hotels) • Availability of information about each hotel’s operations • Vulnerable to economic downturn, political instability, natural and man-made disasters • Small market defined by price points and trip purpose • Increase in operational costs and overheads • Expense of maintaining loyalty programs of this caliber
- 43. PORTER’S FIVE FORCESMODEL Threat of New Entrants – Low Significant capital Requirements- Expensive to establish hotels as they are significant initial outlay costs. Existence of brand loyalty among established brands Building brand equity and brand recognition takes time.
- 44. PORTER’S FIVE FORCESMODEL Threat of Substitutes - High Existence of motels, Inns and others that satisfy the same needs Threat of sharing economy (for instance staying in private residences) Easy for customers to switch between options
- 45. PORTER’S FIVE FORCESMODEL Bargaining Power of Customers- Medium • Buyers can influence prices based on certain factors such as: • frequency of stay at hotels • number of guests • status of guests • Buyers can shop around for best deals • Customers have a significant influence over service quality and delivery • Hotel prices are usually set and not easily changed especially for infrequent customers and depending on the season
- 46. PORTER’S FIVE FORCESMODEL Bargaining Power of Suppliers- Low Many suppliers from which to choose Suppliers usually try to please large hotels and tend to bend in their favor to avoid losing contracts
- 47. PORTER’S FIVE FORCESMODEL Intensity of Competitive Rivalry- High Highly competitive industry Price and advertising wars can ensue Low product differentiation among premium brands, their product/service offerings are usually the same
- 49. ALTERNATIVE STRATEGIES #1 LoyaltyWar: Match the Loyalty Program of Starwood Hotel No “blackout” dates No capacity control Paperless Rewards Hotel Reinmbursement
- 50. ALTERNATIVE STRATEGIES #2 DifferentiateHilton Hhonors from Starwood & Competitors Expand partnerships with other companies Focus on service-seekers – not game players Improve experience of upper tier members of program Emphasize communication of “Double Dipping”
- 51. ALTERNATIVE STRATEGIES #3 PaidMembership Coupons and discounts Flat rates across seasons Personalized Gifts
- 53. RECOMMENDATION Differentiate Hilton Hhonorsfrom Starwood & Competitors
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- 55. RISKS Other competitors mayfollow suit with Starwood resulting in Hilton being left lagging in the industry Insufficient return on investment resulting in significant financial losses
- 57. CONTINGENCY PLAN Imitate theLoyalty program of Starwood Hotels to remain current with industry offerings. Carefully plan and manage the amount of money being spent in order to avoid unnecessary expense and cost over runs
- 58. RECOMMENDED AREAS OFRESEARCH In-depth market research to analyze cost/ benefit analysis of chosen alternative. Identify future trends in loyalty programs and consumer behaviour. Estimate volume of each segment of members: find out how many members had negative experience.
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- 60. HOPE YOU ENJOYEDYOUR STAY WITH US
Editor's Notes
- #11 Hilton is ranked as the 38th largest private company in the United States by Forbes.
- #21 Let me walk you to a secret room where you can see in details what is this all for. Do you have any ideas why hotels are putting so much money into their loyalty programs? WRITE ANSWERS ON BOARD.
- #22 To most obvious reason is developing relationship with valuable guests. Loyalty program assumes that they will be more loyal to the hotel not only because of countable benefits such as points, but also because the hotel personnel knows all their preferences and needs: no smoking room, double bad, the highest floor – whatever. If you are frequent travelers you don’t what to repeat your needs each time you are booking room.
- #23 Not so obvious benefit for the hotel is receiving data for building valid yield management models. What do you know about yield management? Yield management in hotel industry is a pricing strategy that allows to maximize revenue from fixed recourses which are hotel rooms. In other words it’s selling service to the right customer, at the right time, at the right price. Yield management is based on predicting guests behavior which in turn is based on analysis of previous behavior.
- #24 The concept of yield management is not limited just to setting right price – right model will help the hotel management to make a right decision on who will get a last room in high season in the overbooked hotel and who will be turn away. Now check your knowledge – who will get a room a man who is willing to pay more but has zero guests history? Or guest who has a decent track of stays. Make your choice.
- #25 The loyalty program is a good base for building partnership, which is so desirable because of opportunity to get access to a partner’s database and develop new business. Also wide partnership is beneficial for increasing guests satisfaction because it is easier to earn and spend program points.
- #26 Hhonors program is an important factor in attracting independent hotel to become Hilton franchisees because they owners see clear potential benefits for driving new business and building customer loyalty through this program
- #27 And the last but not the least point is helping corporate travel managers. Why do you think this travel manager is upset? What kind of help did he need? His job is to place employees it hotels so that the company pays less. If all employees are staying in the same hotel chain all the time, the company is getting super rate. But some of employees are picky or loyal to other hotels so convincing them to stay in Hilton could be a difficult task. The loyalty program could be a good incentive to stay to Hilton.
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