hilton power point presentation-1
TRANSCRIPT
C A S E S T U DY
HILTON HHONORS WORLDWIDE
WELCOME
YOUR HILTON HHONORS EXECUTIVE TEAM:
Rasheed GbajabiamilaNatalia KolodenkoKimone Burnett-MelbourneDiwaker VasisthaAnkita Singh
OPENING QUESTIONS
What is your 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?
Industry OverviewHilton Hotel
OverviewCompetitive
LandscapePurpose of Loyalty
ProgramsHilton HhonorsCase Synopsis
Key IssuesSWOT AnalysisPorter’s 5 Forces
ModelAlternative
ScenariosRecommendations RisksContingency PlanHhonors Today
WELCOME PACKAGE
Hotel Industry
HOTEL INDUSTRY OVERVIEW
The global hotel industry constituted of 13.6 million rooms dominated by 4 chain brands.
Marriott Starwood Hyatt Hilton
OVERVIEW CONTINUED
Hotel Chains offered services such as:
reservations
loyalty programs
on-site sales and services
management of hotel real estate
OVERVIEW CONTINUED
Less standardization of operations
Unrestricted circulation of information regarding competitor operation procedures
74% of Americans travelled overnight per year
41% used a hotel, motel or resort
https://www.youtube.com/watch?v=4Z-ocRmfBnI
Hilton Hotel Overview
HILTON HOTEL OVERVIEW
Founded in 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
RO
OM
1
HILTON MARKET
Hilton market was divided into three categories
Business Convention Leisure
There are 12 hotels within the Hilton brand
HILTON DISTRIBUTION
THIRD PARTY BY 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%
COMPETITIVE LANDSCAPE
COMPETITIVE LANDSCAPE
Marriott International Starwood Hyatt Hilton0
50000
100000
150000
200000
250000
300000
350000
400000
339200
212900
93700
154000
Number of Rooms
POSITIONING
LUXURY
POSITIONING
UPSCALE
POSITIONING
MID-MARKET
POSITIONING
ECONOMY
PURPOSE OF LOYALTY PROGRAMS
Building guest relationships
Yield management models
Collaboration with partners Working with franchisees
Assisting travel managers gain compliance
RELATIONSHIP WITH GUESTS
Direct contact Customized experience•
YIELD MANAGEMENT MODELS
The art 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
YIELD MANAGEMENT MODELS
Who will get the last room in high season? Who will be turned away?
COLLABORATING WITH PARTNERS
Partners database
Easier to earn points
Easier to spend points
WORKING WITH FRANCHISEES
ASSISTING CORPORATE TRAVEL MANAGERS
HILTON HHONORS
Designed to build loyalty to the Hilton brand
Hilton HHonors Worldwide (HHW) operates the program.
HOW TO EARN AND SPEND POINTS
HHonors points
DOUBLE DIPPING ®
HHonors points
LEVELS OF MEMBERSHIP
Everyone who joined 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
???
GUESTS SEGMENTATION
Rational benefits
Game players
Emotional benefits
Service/ relationship
seekers
CASE SYNOPSIS
The Starwood Announcement
STARWOOD PREFERRED GUEST PROGRAM
No Blackout Dates
No Capacity Control
Paperless Rewards
Hotel Reimbursement
KEY ISSUES
To determine if Hilton should compete point for point with Starwood's Loyalty program
OR
Take a different approach
Diskin’s Dilemma
CHALLENGES
Increased cost
Reduction of cost-effectiveness of loyalty programs
Starwood could become market leader
SWOT ANALYSIS
Strengths• Highly recognized 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
SWOT ANALYSIS
Weaknesses
• Challenges managing customer expectations due to varying offerings
• Relatively limited network size and distribution
SWOT ANALYSIS
Opportunities• Target other customer 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
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
PORTER’S FIVE FORCES MODEL
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.
PORTER’S FIVE FORCES MODEL
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
PORTER’S FIVE FORCES MODEL
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
PORTER’S FIVE FORCES MODEL
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
PORTER’S FIVE FORCES MODEL
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
ALTERNATIVE STRATEGIES
#1 Loyalty War: Match the Loyalty Program of Starwood
HotelNo “blackout” dates
No capacity control
Paperless Rewards
Hotel Reinmbursement
ALTERNATIVE STRATEGIES
#2 Differentiate Hilton 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”
ALTERNATIVE STRATEGIES
#3 Paid Membership
Coupons and discounts
Flat rates across seasons
Personalized Gifts
RECOMMENDATION
RECOMMENDATION
Alternative #2Differentiate Hilton Hhonors from Starwood & Competitors
RISKS
RISKS
Other competitors may follow suit with Starwood resulting in Hilton being left lagging in the industry
Insufficient return on investment resulting in significant financial losses
CONTINGENCY PLAN
Imitate the Loyalty 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
RECOMMENDED AREAS OF RESEARCH
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.
HHONORS TODAY
https://www.youtube.com/watch?v=0-ssLCIvkYk
HOPE YOU ENJOYED YOUR STAY WITH US