Given the severe competition in the lodging industry, all major players are competing by introducing more generous loyalty programs. About one-third of business travelers did not have access to negotiated corporate rates and had full discretion to choose their hotel. For instance, consider the guest that always wants a room that is for nonsmokers and has a double bed. It was required to break even each year and to measure its effectiveness through a complex set of program metrics. No amount of miles or points is ever going to replace a warm welcome and being recognized by the hotel as a loyal customer. Revenue and yield management In the hotel industry, effectively managing yield meant utilizing a model to predict that a room was highly likely to come available due to cancellation or no-show, as well as driving business to higher-paying or longer-staying guests.
And, of course, many people are a combination of both. Four major hotel chains are competing on frequent-stay programs at the same points: Moreover, offering a very generous loyalty program has some risks: No Diskin was concerned that some travelers spread their hotel patronage among several chains and did not receive the service to which their total expenditure entitled them. While the brands stood for quality, there was less standardization of operations in hotel chains than in many other services. Do No tC op yo This document is authorized for use only by jintao wu until March The previous year had been successful.
Loyalty Wars Diskin did not hide his concern: They changed it every few years; they used to have members pay for it.
First, Hilton should spend the additional revenue to customize and differentiate current loyalty program to attract more hiltoh, create and retain loyal customers. Motel 6, Super 8, and Econo Lodge are the best-known chains in this segment. And, of course, many people are a combination of both.
The previous year had been successful.
Business Case Studies : HILTON HHONORS WORLDWIDE LOYALTY WARS CASE STUDY
No tC op yo No blackout dates All frequent guest and airline programs until now had ruled that members could not claim free travel during the very height of seasonal demand and when local events guaranteed a hotel full occupancy. When customers are passionate about the brand, what they want is experience and they will be willing to pay higher price to have such experience. You negotiated a rate by promising hhhonors volume of stays. No not include other Starwood-owned hotels, flagged under other brands 93 properties for 29, rooms.
He or she used past history and other statistical data to make continuously hilotn recommendations regarding hotel booking patterns and what price to offer a particular hillton. Company records certain competitively sensitive information has been masked.
The results help us determine the appropriate priorities for modifying the program. Because it is a privately held corporation, it will not divulge the breakdown of rooms between ownership, franchise, and management contract.
But honors frequent-guest programs were a good idea, perhaps bigger programs were an even better idea. The industry estimated that members of Do 6 This document is authorized for use only by jintao wu until March The rationale reason why customers use loyalty program is that they want to make profits out of loyalty programs. Loyalty Wars more about our incoming guests.
Hilton Hotels Michael J. Marquis MKTG518 Case Study I.
Do 12 This document is authorized for use only by jintao wu until March These findings led to refinements in the terms of membership forbut Diskin was exploring more innovative approaches to the rewards program.
World Trade Organization and company information. Hilton has made numerous changes since that time, including Hilton Hotels Corporation’s acquisition of Promus Hotel Corporation. HBS cases are developed solely as the basis for class discussion. It means that Hilton already passes the zero-profit point and makes profits.
Yield management models were probabilistic algorithms that helped this manager set reservations policy. Frequent travelers patronized hotels of various kinds and price segments, depending, for example, on whether a stay was a reimbursable business expense, a vacation, or a personal expense.
In fact, we complement them by allowing our joint customers to earn both currencies. About one-third of business travelers did hiltoon have access to negotiated corporate rates and had full discretion to atudy their hotel. For example, we worked with a nontravel partner to overlay data from their customer files onto our total membership base and identified segments that might like vacation ownership, others who would be great for the casinos, and some that might like the business and teleconferencing services we offer.
To order copies or request permission to reproduce materials, callwrite Harvard Business School Publishing, Boston, MAor go to http: That attracts investors, franchise ownership, new builders. Do The executives at Hilton HHonors worked for these hotels and theirrooms.
Exhibit 2 shows the price points in the industry, and Exhibit 3 shows the distribution of brands across price points. He thought back to his early years at United Airlines and recalled the damage that price wars had done to that industry. Second, Hilton can spend more money on the marketing efforts to reposition the brand, create brand passion and brand loyalty.