Marketing Management

Hilton Hotels: Brand differentiation through customer

relationship management

Submitted by –

Section B (Group 6)

Name: –

Atul Singh [19A2HP424]

Abhirajsingh Rathod [19A2HP466]
Aman Sah [19A1HP044]
Parth Gupta [19A3HP656]
Siddharth Singh [19A1HP055]
Summary

Hilton Hotels case focuses on brand differentiation through customer relationship

management. It projects how Hilton brand came up with the initiatives and be first in the
industry. Hilton Hotels was the first name in the lodging industry. The corporation started in
1919 with a single hotel which was The Mobley Hotel in Cisco, Texas under the leadership
of Conrad Hilton. They differentiated themselves from their competitors by coming up with
the strategy called Customer Really Matters (CRM).

It had total It had 2935 hotels in 78 countries. In 1946, the company went public with the
name of Hilton Hotel Corporation having the portfolio consisting of 15 properties in 11
states. The corporation aimed at global growth with the goal of opening 1000 in North
America in five years and 1000 hotels in rest of the world in ten years. In year 2000, Hilton
acquired Promus Hotel Corporation which pushed it close to the 1700 properties. It also
brought back the Hilton international bringing of about 400 Hilton properties.

“OnQ” a software which would enable the employees to deliver great customer service, was
masterminded by Tim Harvey. It helped the brand grow quickly and Harvey also stated, “It’d
take years for others to replicate it”. In 2002, the initiative of CRM was launched with the
goal of solidification of relationships with the brand’s best and loyal customers. CRM’s goal
was to ‘be their’ for the guest, which makes guest’s stay more personalized, leads in
making close relationships with them. The brand built its name on ‘Customer Satisfaction’
and believed that this would keep the customers loyal to the Hilton brand.
Q1. What is Hilton Core business?

Ans. Hilton’s core business lies in franchising lodging industry.

Started in 1919, Hilton steadily became one of the most valuable name globally. During the
years Hilton showed an impressive growth and became one the biggest lodging company
worldwide.

Hiltons hotels corporation branded themselves as company whose priority was to take
excellent care of their guests. As per exhibit 5, Hilton hotel corporation had numerous brand
positioning segments, targeted to aim every kind of customer be it business travel or leisure
travel with locations in major city centers, vacation resorts, conventions centers, etc. which
included around 50 million trips and 100 million room nights. Multi branded positioning
helped Hilton in securing greater market share with a smaller number of competitors.

The firm also catered to the needs of Hotel owners and estimated that there were billions of
dollars of real estate invested in the Hilton brand. Hilton believed in providing outstanding
customer service and therefore initiated” customer really matter “. Exclusive benefits are
given to gold and diamond level members through my way program one of the most
important component of CRM is SALT (satisfaction and loyalty tracking).

As “Cowan said that’s the report card from our guests”. Management monitors the rating
that their customers give based on their personal experience, will to return etc.
Q2. Evaluate the performance of the Customers
Really Matter Initiative.

Ans. The Customers Really Matter (CRM) initiative was launched by the Hilton
management in the article “I’ve got the power”. The motive of the initiative was to fetch a
holistic view to guest experience at the Hilton properties. Its primary focuses the four guest
categories and to improve their stay.

As part of CRM a ten-point scale, Satisfaction and Loyalty Tracking (SALT), has been
introduced to rate the guest’s overall experience. It is the crown jewel of the CRM initiative,
which lets the management know the guest’s overall experience, ability to recommend and
willingness to return. Based on this report the management can also rectify their mistakes.

Also, the Hilton management has launched OnQ, a custom-built platform that integrates the
guest’s profile and their preferences based on their previous stays to provide better service.
It links the customer profiles across all the Hilton properties. OnQ enables an efficient
communication between the guest’s preferences and problem(s) faced during their previous
stay to the front office of the current hotel with an arrival report (shown in Exhibit 6). This
report helps the management at the property to make the guest’s stay comfortable based
on their likes and dislikes. Also, Gold and Diamond level members have access to exclusive
benefits through the MyWayTM program. OnQ’s functions can be clearly seen in Exhibit 3.

In addition to the estimated $93 million, which includes application development, hardware
and infra implementation. In 2007, the investment has increased by another $102 million. In
addition, the management has further estimated a cost of $60 million a year in
maintenance. Although the performance of CRM cannot be measured accurately, we can
evaluate based on the hotel’s performance, which can be seen in Exhibits 1 and 2.
Considering all the expenses, the technology is ground breaking and gave Hilton Corp an
edge in customer service. It also was the leading recipient of the prestigious JD Powers
customer satisfaction award. These achievements alone show us that the CRM initiate was
successful.
Q3. What do you think Hilton leadership should do
after the Blackstone acquisition? Should they further
invest in CRM or simply maintain status quo?

• The Blackstone Group has been known for leading global alternative asset manager
and provider of financial advisory services. The group is largest investor in hospitality
worldwide and before the Hilton Hotels acquisition, owned more than 100,000 hotel
rooms including mid - tier brand La Quinta and Luxury brand LXR.

• Estimated cost of OnQ was $93 million per year and grown to $102 million per year.
The CRM installation cost was $650,000 and its yearly maintenance cost was
$1million. Therefore, investing in CRM is profitable as Hilton had been The First
major Multiband Operator and it was tightly integrated with its frequent guest
program which was delivered chain-wide.

• From exhibit 7 net revenue rise from $77.64 to $102.55 in 2002 until 2007. The
improved efficiency of call-center operations and reduce in average call time, which
significantly increased revenue.

• Hilton also had a competitive advantage against its competitors as it was the only
company that used the same technology platform across its entire portfolio
consisting of various brands. So, they could take advantage of this unified system
whenever and wherever it was required.

The aspects of Hilton’s CRM that needs to strengthen are: -

 Information Transfer Accuracy-

Due to large franchise of Hilton, the customer information was not integrated and
easily available. Since the information system is not totally automatic, there will be a
challenge to obtain all needed information accurately.
Therefore, the solution to this should be to Optimize the information transfer
structure, improve the joint process between automation and manual work, execute it
consistently and flawlessly across the network and reduce the management costs as
well.
 Hard to measure-
CRM can be measured but it will be hard to be exact. Unlike quantitative figure, CRM
can be measured from both internal and external sides roughly through various
channels.
Therefore, the solution to it should be to Utilize data to improve cross-channel
application for customer service and experience, from social media, mobile, web, call
center and physical environment.