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C A S E S T UD Y
HILTON HHONORS
WORLDWIDE
WELCOME
YOUR HILTON HHONORS EXECUTIVE TEAM:
Rasheed Gbajabiamila
Natalia Kolodenko
Kimone Burnett-Melbourne
Diwaker Va...
OPENING QUESTIONS
What is your favorite hotel chain and why?
How many of you have stayed at the Hilton?
How do you feel...
Industry Overview
Hilton Hotel
Overview
Competitive
Landscape
Purpose of Loyalty
Programs
Hilton Hhonors
Case Synops...
HOTEL INDUSTRY OVERVIEW
 The global hotel industry constituted of 13.6
million rooms dominated by 4 chain brands.
 Marri...
OVERVIEW CONTINUED
Hotel Chains offered services such as:
reservations
loyalty programs
on-site sales and services
man...
OVERVIEW CONTINUED
 Less standardization of operations
 Unrestricted circulation of information regarding
competitor ope...
https://www.youtube.com/watch?v=4Z-
ocRmfBnI
HILTON HOTEL OVERVIEW
Founded in 1919 by Conrad Hilton in Texas
 Hilton Hhonors introduced in 1987
In 1997 Hilton Hotel...
HILTON MARKET
 Hilton market was divided into three
categories
 Business
 Convention
 Leisure
 There are 12 hotels wi...
HILTON DISTRIBUTION
THIRD PARTY BY
HHC ( USA ), 207,
42%
HIC ( OUTSIDE USA ), 220,
45%
HHC OWNED ( USA ), 39,
8%
MANAGED B...
COMPETITIVE LANDSCAPE
339200
212900
93700
154000
0
50000
100000
150000
200000
250000
300000
350000
400000
Marriott Interna...
POSITIONING
LUXURY
POSITIONING
UPSCALE
POSITIONING
MID-MARKET
POSITIONING
ECONOMY
PURPOSE OF LOYALTY PROGRAMS
Building guest relationships
Yield management models
Collaboration with partners
Working w...
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
p...
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
b...
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
appro...
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 ...
SWOT ANALYSIS
Weaknesses
•Challenges managing customer expectations
due to varying offerings
•Relatively limited network s...
SWOT ANALYSIS
Opportunities
•Target other customer segments
•Increased market penetration (Hilton Hhonors
members spend 4....
SWOT ANALYSIS
Threats
• Competition (primarily with Marriott International,
Starwood Hotels & Resorts and Hyatt Hotels)
• ...
PORTER’S FIVE FORCES MODEL
Threat of New Entrants – Low
Significant capital Requirements- Expensive to establish
hotels as...
PORTER’S FIVE FORCES MODEL
Threat of Substitutes - High
Existence of motels, Inns and others that satisfy
the same needs
T...
PORTER’S FIVE FORCES MODEL
Bargaining Power of Customers- Medium
• Buyers can influence prices based on certain factors su...
PORTER’S FIVE FORCES MODEL
Bargaining Power of Suppliers- Low
Many suppliers from which to choose
Suppliers usually try to...
PORTER’S FIVE FORCES MODEL
Intensity of Competitive Rivalry- High
Highly competitive industry
Price and advertising wars c...
ALTERNATIVE STRATEGIES
#1 Loyalty War: Match the Loyalty
Program of Starwood Hotel
No “blackout” dates
No capacity control...
ALTERNATIVE STRATEGIES
#2 Differentiate Hilton Hhonors
from Starwood & Competitors
Expand partnerships with
other companie...
ALTERNATIVE STRATEGIES
#3 Paid Membership
Coupons and discounts
Flat rates across
seasons
Personalized Gifts
RECOMMENDATION
Differentiate Hilton Hhonors from Starwood & Competitors
RISKS
RISKS
Other competitors may follow suit with Starwood
resulting in Hilton being left lagging in the industry
Insufficien...
CONTINGENCY PLAN
Imitate the Loyalty program of Starwood Hotels to
remain current with industry offerings.
Carefully pla...
RECOMMENDED AREAS OF RESEARCH
In-depth market research to analyze cost/ benefit
analysis of chosen alternative.
Identify...
HHONORS TODAY
HOPE YOU ENJOYED YOUR STAY WITH
US
Hilton Power Point Presentation-1
Hilton Power Point Presentation-1
Hilton Power Point Presentation-1
Hilton Power Point Presentation-1
Hilton Power Point Presentation-1
Hilton Power Point Presentation-1
Hilton Power Point Presentation-1
Hilton Power Point Presentation-1
Hilton Power Point Presentation-1
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Hilton Power Point Presentation-1

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Hilton Power Point Presentation-1

  1. 1. C A S E S T UD Y HILTON HHONORS WORLDWIDE
  2. 2. WELCOME YOUR HILTON HHONORS EXECUTIVE TEAM: Rasheed Gbajabiamila Natalia Kolodenko Kimone Burnett-Melbourne Diwaker Vasistha Ankita Singh
  3. 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. 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
  5. 5. HOTEL INDUSTRY OVERVIEW  The global hotel industry constituted of 13.6 million rooms dominated by 4 chain brands.  Marriott  Starwood  Hyatt  Hilton
  6. 6. OVERVIEW CONTINUED Hotel Chains offered services such as: reservations loyalty programs on-site sales and services management of hotel real estate
  7. 7. 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
  8. 8. https://www.youtube.com/watch?v=4Z- ocRmfBnI
  9. 9. 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
  10. 10. HILTON MARKET  Hilton market was divided into three categories  Business  Convention  Leisure  There are 12 hotels within the Hilton brand
  11. 11. 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%
  12. 12. COMPETITIVE LANDSCAPE 339200 212900 93700 154000 0 50000 100000 150000 200000 250000 300000 350000 400000 Marriott International Starwood Hyatt Hilton Number of Rooms
  13. 13. POSITIONING LUXURY
  14. 14. POSITIONING UPSCALE
  15. 15. POSITIONING MID-MARKET
  16. 16. POSITIONING ECONOMY
  17. 17. PURPOSE OF LOYALTY PROGRAMS Building guest relationships Yield management models Collaboration with partners Working with franchisees Assisting travel managers gain compliance
  18. 18. RELATIONSHIP WITH GUESTS Direct contact Customized experience •
  19. 19. 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
  20. 20. YIELD MANAGEMENT MODELS Who will get the last room in high season? Who will be turned away?
  21. 21. COLLABORATING WITH PARTNERS Partners database Easier to earn points Easier to spend points
  22. 22. WORKING WITH FRANCHISEES
  23. 23. ASSISTING CORPORATE TRAVEL MANAGERS
  24. 24. HILTON HHONORS Designed to build loyalty to the Hilton brand Hilton HHonors Worldwide (HHW) operates the program.
  25. 25. HOW TO EARN AND SPEND POINTS HHonors points
  26. 26. DOUBLE DIPPING ® HHonors points
  27. 27. 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 ???
  28. 28. GUESTS SEGMENTATION Rational benefits Game players Emotional benefits Service/ relationship seekers
  29. 29. CASE SYNOPSIS The Starwood Announcement
  30. 30. STARWOOD PREFERRED GUEST PROGRAM No Blackout Dates No Capacity Control Paperless Rewards Hotel Reimbursement
  31. 31. KEY ISSUES To determine if Hilton should compete point for point with Starwood's Loyalty program OR Take a different approach Diskin’s Dilemma
  32. 32. CHALLENGES Increased cost Reduction of cost-effectiveness of loyalty programs Starwood could become market leader
  33. 33. 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
  34. 34. SWOT ANALYSIS Weaknesses •Challenges managing customer expectations due to varying offerings •Relatively limited network size and distribution
  35. 35. 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
  36. 36. 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
  37. 37. 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.
  38. 38. 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
  39. 39. 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
  40. 40. 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
  41. 41. 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
  42. 42. ALTERNATIVE STRATEGIES #1 Loyalty War: Match the Loyalty Program of Starwood Hotel No “blackout” dates No capacity control Paperless Rewards Hotel Reinmbursement
  43. 43. 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”
  44. 44. ALTERNATIVE STRATEGIES #3 Paid Membership Coupons and discounts Flat rates across seasons Personalized Gifts
  45. 45. RECOMMENDATION Differentiate Hilton Hhonors from Starwood & Competitors
  46. 46. RISKS
  47. 47. 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
  48. 48. 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
  49. 49. 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.
  50. 50. HHONORS TODAY
  51. 51. HOPE YOU ENJOYED YOUR STAY WITH US

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