HILTON HHONORS WORLDWIDE

Hilton HHonors
Worldwide: Loyalty Wars
-by Group 3
 Flow of presentation
• Overview of the case
• Loyalty programs
• Hotel industry
• Hilton HHonors Worldwide

• Problem
• Our Standpoint
• Implementation
• Contingency Plan
 Loyalty Programs
• Origin in 1900s- coupons

• Revamped in 1950s- stamps

• S&H Green Stamp Company

• Modern loyalty programs in 1980s

• Started by American Airlines- AAdvantage
 Benefits of loyalty programs
• Retaining customers- 80/20 rule
• Increase Customer Lifetime Value
• Providing more value to the customers in terms of reduction in cost
• Personalised marketing- personalised services
• Provide additional benefits to loyal customers
• Attract new customers
• Major players in the market:
Hotel Industry
Marriott International 339,200 rooms
Starwood Hotels and Resorts 212,900
Hyatt Hotels 93,700
Hilton Hotels 91,100
Hilton International 62,900

• Ways of operations:
• Owned properties
• Franchised properties
• Management contracts
• Franchised and management contracts
 Types of customers
• Business segment
• Convention segment
• Leisure segment
 Price Points
• Luxury- Above $125
• Upscale-$100 to $125
• Mid-market with food and beverages(F & B)-$60 to $90
• Mid-market without F&B-$45 to $70
• Economy-$40 to $65
• Budget-$30 to $60
• Extended stay -$60 to $90
 Hilton
• Hilton Hotel Corporation (HHC)- United States of America

• Hilton International Corporation (HIC)- Overseas

Hilton HHonors (Frequent-guest program)
• Hilton HHonors- started in 1987
• Limited to HHC i.e. in USA
• Hilton HHonors Worldwide (HHW)
• Introduced in 1997
• Headed by Jeff Diskin
• Worked under HIC & HHC
• Aimed at providing service to its parent company and break even
 Principles

• Principles
• Customer oriented loyalty program
• Use ‘Double Dipping’ with AA’s miles program
• Earn loyalty through renting cars, credit cards, etc
Tiers of membership
• Blue
• A member earned 4.5 cents per dollar on their folio
• Partnership with frequent flyer program with double dipping
• Reimburse the hosting hotel even though the stay by the guest was
totally done by cash
• Members can earn points through renting cars, credit cards from
American express or promotion products like FTD florist and Mrs.
Fields Cookies
• Members have priority reservation telephone no. , check ins were
fast and prioritized and late checkouts were allowed
• Silver- 15% bonus,10000 point discount on every 100000 points

• Gold-25% bonus,20000 point discount on every 100000 points

• Diamond
• The top 1% of customers we given the diamond status
• There were no extra benefits over the gold members and the
company didn’t disclose any services
• Diskin’s strategy was “To under promise and over deliver”
• Customers will be given extra facilities which were not promised
thus over delivering
 Rationale for the program
• Revenue and Yield Management
• Collaborating with partners
• Working with franchises
• Relations with guests
• Helping travel managers gain compliance
Starwood’s Announcement (2nd Feb, 1999)
• No blackout dates
• No capacity controls
• Paperless rewards
• Hotel reimbursement
 Problems in the case?
• What should Hilton do in response to Starwood?

• Alternatives available
1. Should they respond with the same strategy as Starwood?
2. Should it wait and see how Starwood’s strategy plays out?
3. Should it retire from rewards programmes?
4. Should it come up with a different strategy to counter Starwood?
 Our Standpoint and Recommended Strategies

• Hilton should come up with a different strategy to counter Starwood’s strategy

• Create a brand passion

• Differentiate the brand
• Create competitive advantages
o Brand loyalty
o Brand passion
 Strategies (Cont’d)
• Hilton HHonors Worldwide
• Maintain current rewards levels
• Provide better services to loyal customers
• Further customize redemption choices
• Convenience of program use
 Implementation of strategies
• Hilton lost more than half of its loyal customers annually due to its relatively limited
network size and distribution.
• Expand the number of partners, such as airlines, rental car firms, restaurants, casinos, etc.

• Experience
• Employee training
• Mass-personalisation strategy

• Referral points
 Contingency Plan
• Imitate the strategy adopted by Starwood Hotels

• Carefully plan and manage the amount of money being spent

Thankyou