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Hilton Honors

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1-The strengths of Hilton HHonors program from the standpoint of Hilton Hotels Corp and Hilton Internationals are that it builds brand loyalty and this is seen as the industry’s most important marketing tool. It builds partnerships and collaboration, accesses new markets, and also creates a greater recognition of the Hilton brand. Weaknesses would include Hilton not being the industry leader, competitive information is shared freely in the industry and there is less standardization of operations.

Strengths for Members Properties (franchised hotels) are that their reputation could increase because they are with a renowned brand. There is support for the franchise from the franchisors. With expansions that means more visibility and possibly new customers for the franchises. Weaknesses would be that there are more restrictions in operations because the franchisors are now dominant, new agreement would increase the ongoing payment of fees from the franchise to the franchisor. You will also not be guaranteed success for the franchise.

Strengths from the standpoints of guests would be easy to use loyalty rewards program, the more you stay the more service value you will obtain, the loyalty program extends worldwide. Weaknesses would include a variation in room price, there is a limited access for redemption during peak periods and the one-time customers are not given preference.

Strengths from the corporate travel departments are personal incentives for individuals and help travel managers to gain compliance. Weaknesses would be that there are no benefits from HHonors loyalty program specific to business class and a problem with capacity because small distribution of hotels. 2-When Hilton started the program they ran it as a none profit center but as a service to its two parents, HHC and HIC. It was required to break even each year and to measure its effectiveness. Membership was open to anyone who applied, free of charge. Hiltons research found that HHonor members spent about $4.6 billion on accommodations per year. Studies show that when booking was guided by a good-yield management model, a company’s revenue increased by 20 percent. This may cost the company some money because of training, but the 20 percent increase will take care of it. You have to factor in the “walking cost,” this is the cost of turning a customer away. This cost depends on the customer’s future lifetime value with the chain, a function of their willingness to pay and past loyalty to the Hilton chain. You got to look at who should get the room, a person paying $20 dollars more and may not ever see again or the person spending thousands of dollars towards the Hilton. Hilton offered double dipping. They looked at airlines with frequent-flyer programs who have 20-40 million members who aren’t HHonors members and do a lot of traveling. With double dipping Hilton does not compete with their programs, but complements them. With the HHonors program, it’s a strong factor in persuading hotel owners to become franchisees. They see that the program attracts business and its costs are comparable either or even lower than competitors. The programs ability to bring in business was its biggest selling point. At the start many people were concerned about the cost of the program but after discussing the importance of building long-term customers loyalty they all agreed they needed to spend even more money on the program. They focus more on the higher-revenue guests, but its also important to reach out and try to target other customer segments. A significant proportion of Hiltons business came from contracts with larger corporate clients. Hilton offers discounted rates if the corporation delivers enough stays. They will negotiate a rate by getting a promise for a volume of stays. With some travel managers telling their employees that they have to follow the company policy if they want to get reimbursed, they will have a real hard time getting that guy to stay at a certain hotel if they cant mandate it. Hilton responds with a roster of offerings to give that traveler a personal incentive to use them, the preferred vendor.

3-Starwood is attempting to expand their distribution network and to target one third of Hiltons market. They were pledging to invest $50 million in advertising to publicize the program. Starwood targeted a new segment with the W brand hotels. They were challenging the industry with 4 features, No blackout dates, No capacity control, Paperless rewards, and Hotel reimbursement Diskin should just stay out of it, Starwoods preferred guest announcement was a solution to a problem that they had and that Hilton did not have. It could start price wars and could damage the industry like it had done to United Airlines. Diskin does not want to start a price war because it could ruin what he had built.

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