1. C A S E S T UD Y
HILTON HHONORS
WORLDWIDE

2. WELCOME
YOUR HILTON HHONORS EXECUTIVE TEAM:
Rasheed Gbajabiamila
Natalia Kolodenko
Kimone Burnett-Melbourne
Diwaker Vasistha
Ankita Singh

3. 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?

4. Industry Overview
Hilton Hotel
Overview
Competitive
Landscape
Purpose of 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 Chains offered services such as:
reservations
loyalty programs
on-site sales and services
management of hotel real estate

8. 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

9. https://www.youtube.com/watch?v=4Z-
ocRmfBnI

10. 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
ROOM1

11. HILTON MARKET
 Hilton market was divided into three
categories
 Business
 Convention
 Leisure
 There are 12 hotels within the Hilton brand

12. 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%

14. COMPETITIVE LANDSCAPE
339200
212900
93700
154000
0
50000
100000
150000
200000
250000
300000
350000
400000
Marriott International Starwood Hyatt Hilton
Number of Rooms

15. POSITIONING
LUXURY

16. POSITIONING
UPSCALE

17. POSITIONING
MID-MARKET

18. POSITIONING
ECONOMY

20. PURPOSE OF LOYALTY PROGRAMS
Building guest relationships
Yield management models
Collaboration with partners
Working with franchisees
Assisting travel managers gain compliance

21. RELATIONSHIP WITH GUESTS
Direct contact
Customized experience
•

22. 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

23. YIELD MANAGEMENT MODELS
Who will get the last room in high season?
Who will be turned away?

24. COLLABORATING WITH PARTNERS
Partners
database
Easier to earn
points
Easier to spend
points

25. WORKING WITH FRANCHISEES

26. ASSISTING CORPORATE TRAVEL
MANAGERS

28. HILTON HHONORS
Designed to build loyalty to the Hilton
brand
Hilton HHonors Worldwide (HHW)
operates the program.

29. HOW TO EARN AND SPEND POINTS
HHonors
points

30. DOUBLE DIPPING ®
HHonors
points

31. 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
???

32. GUESTS SEGMENTATION
Rational
benefits
Game players
Emotional
benefits
Service/
relationship seekers

33. CASE SYNOPSIS
The Starwood Announcement

34. STARWOOD PREFERRED GUEST
PROGRAM
No Blackout Dates
No Capacity Control
Paperless Rewards
Hotel Reimbursement

35. KEY ISSUES
To determine if Hilton
should compete point
for point with
Starwood's Loyalty
program
OR
Take a different
approach
Diskin’s Dilemma

36. CHALLENGES
Increased cost
Reduction of cost-effectiveness of
loyalty programs
Starwood could become market
leader

38. 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

39. SWOT ANALYSIS
Weaknesses
•Challenges managing customer expectations
due to varying offerings
•Relatively limited network size and distribution

40. 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

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 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.

44. 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

45. 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

46. 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

47. 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

49. ALTERNATIVE STRATEGIES
#1 Loyalty War: Match the Loyalty
Program of Starwood Hotel
No “blackout” dates
No capacity control
Paperless Rewards
Hotel Reinmbursement

50. 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”

51. ALTERNATIVE STRATEGIES
#3 Paid Membership
Coupons and discounts
Flat rates across
seasons
Personalized Gifts

53. RECOMMENDATION
Differentiate Hilton Hhonors from Starwood & Competitors

54. RISKS

55. 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

57. 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

58. 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.

59. HHONORS TODAY

60. HOPE YOU ENJOYED YOUR STAY WITH
US