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JULY 23, 2008

LYNDA M. APPLEGATE
GABRIELE PICCOLI
CHEKITAN DEV

op yo Hilton Hotels: Brand Differentiation through
Customer Relationship Management

In early 2008, Hilton Hotels Corporation was poised for tremendous global growth—with an aggressive goal of opening 1,000 hotels in North America in five years and 1,000 hotels in the rest of the world in ten years. The company had just been taken private by the Blackstone Group1 for a reported $26 billion, a 32% premium over the $32.05 share price the day prior to the announcement.
The takeover announcement by Blackstone clearly framed the road ahead: “Blackstone intends to invest in the Hilton properties and brands globally to enhance and grow the business for the benefit of owners, franchisees, and customers... This transaction is about building the premier global hospitality business.”

tC

But growth would not be easy in the highly competitive global lodging business. Challenges in this market historically included access to capital, high levels of employee turnover, and difficulty achieving standardization typical of service delivery operations. Improving service delivery and consistency across the family of Hilton brands had been the major focus of the Customers Really
Matter (CRM) strategy that the firm launched in 2002. With five years invested in CRM, the
Blackstone acquisition provided the opportunity to evaluate the results to date and to devise an action plan going forward.

Hilton Hotels’ Background

Do

No

Hilton was perhaps the most internationally recognizable name in the lodging industry, in large part due to the role that the Hilton family had played throughout its history. The firm began its operations in 1919 with the Mobley Hotel in Cisco, Texas under the guiding leadership of Conrad
Hilton. The company went public under the name Hilton Hotels Corporation in 1946, with a portfolio of 15 properties in 11 states. After spinning off the international unit in 1964, Hilton focused on domestic growth in the lodging segment as well as through diversification into casinos and vacation ownership. A strong commitment to economies of scale was made in 2000 with the acquisition of
Promus Hotel Corporation, a transaction that pushed Hilton close to the 1,700 properties mark.
Promus Corporation, originally incorporated as Holiday Inns of America in 1954, focused on franchising and managing brands such as Embassy Suites and Hampton Inns after selling its Holiday
Inn division in 1990. Tom Keltner, EVP and CEO of The Americas, a Holiday Inn and Promus veteran, explained: “It was with the acquisition of Promus that Hilton began the portfolio
________________________________________________________________________________________________________________
Professors Lynda M. Applegate of HBS, Gabriele Piccoli of the University of Sassari, and Chekitan Dev of Cornell University prepared this case.
HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
Copyright © 2008 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

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Hilton Hotels: Brand Differentiation through Customer Relationship Management

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diversification process that today gives us a presence in each one of the sizable and growing segments of the industry.”
In 2005 Hilton Hotels bought back Hilton International, bringing about 400 Hilton properties into the fold. Organic growth also continued, and in September 2006 Hilton announce the opening of the
1,000th hotel in North America since the acquisition of Promus—a rate of one Hotel every two days.
Poised to break the 3,000 properties mark, with a presence in 78 countries, and with a global workforce of over 100,000, Hilton was one of the largest lodging companies in the world (Exhibit 1).
Keltner explained the role of scale: “We need scale and breadth to be the first choice of the world’s traveler. We want enough distinct products at different price points in order to be considered by guests across the full spectrum of segments and reasons for traveling.”

op yo Hilton Hotels Corporation defined itself as a brand management company devoted to taking excellent care of its guests, who collectively took over 50 million trips accounting for over 100 million room nights in the United States each year (Exhibit 2). But the firm also catered to the needs of hotel owners and estimated that there were several billion dollars of real estate invested in the Hilton brands. As Bala Subramanian, SVP of Global Distribution Services, put it: “No one entity has this type of capital to invest. The way in which Hilton becomes more profitable is through other people’s money.” Keltner further explained: “One key measure of our success is willingness of owners to invest with us. We have great brands that take care of the customer, who consolidate more of their spend with us, we provide higher returns for our owners and they will build more with us. It’s shareof-wallet through brands, and share-of-shelf-space through owners.”

Hilton OnQ

tC

Franchising and alignment with real estate owners was the only feasible vehicle for fast growth in the capital-intensive lodging industry. Yet, the tool was not without risks and drawbacks. While the brands offered significant recognition and customer traffic with their programs, advertisement, and electronic distribution systems, the operators were responsible for delivering the guest experience on property and abiding by the brand standards. As with any business partnership of this depth and scale, smooth operations required significant trust and constant monitoring through qualityassurance efforts.

No

Tim Harvey, EVP of Shared Services and CIO captured the role of information technology at
Hilton: “At Hilton we have a belief that information technology is so intertwined with our brands and their culture that you need a consistent infrastructure to enable the brand promise.”

Do

The nervous system of the Hilton Hotels Corporation was a comprehensive, integrated infrastructure known as OnQ. The brainchild of Harvey and his team, OnQ embodied both the onestop shopping nature of an integrated solution and a readiness to serve customers “on cue.” Built on the premise that technology was an enabler for employees to deliver great customer service, OnQ was an ambitious custom-built enterprise system designed to support the property-level operations of each hotel in the Hilton family, regardless of size and segment, and to enable the firm’s Customers
Really Matter initiative at each customer touch point (Exhibit 3). Harvey recounted the genesis of
OnQ:
Technology providers in the hospitality industry have traditionally delivered siloed solutions. Since none of these integrate well together, the burden of that integration ends up falling on the brand. The roots of OnQ arch all the way back to Promus, and Holiday Inn before that, with a confidence in proprietary custom building and a passion for creating owners’ value.

2
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Hilton Hotels: Brand Differentiation through Customer Relationship Management

Hilton estimated the cost of OnQ to be about $93 million, with approximately $40 million for application development and $53 million for hardware and infrastructure implementation. By 2007, the investment in OnQ had grown by another $102 million, including $22 million for the development of OnQ Sales and Events, $40 million for globalizing OnQ for the international properties, and $40 million for the purchase and deployment of new hardware and infrastructure.
Hilton further estimated maintenance of the OnQ infrastructure amounted to about $60 million a year. As a matter of policy, Hilton did not levy separate technology charges. With a staff of 700 professionals, 300 contractors, and a yearly total information systems (IS) budget of about $240 million, funding of the IS function was apportioned to the brand program fees—themselves a function of the hotel’s revenue. Harvey explained:

op yo We don’t bill owners for technology based on transactional reimbursement. Rather, our model is based on the notion that technology is there to reduce their cost and improve their revenues, because we share in the goal of driving profitability. As a result, our billing reflects risk sharing based on owner profitability. In the old days you built a Holiday Inn because it was connected to Holidex.2 Today you build a Hilton family hotel because of the strength of our brands and the capability of OnQ in enabling them.

Hilton took responsibility for purchasing, maintaining, and refreshing property level hardware— thus providing a complete turnkey solution funded by a single percentage-of-revenue franchise fee.3
Harvey added: “Our owners like the simplicity of a single program fee and the fact that we align our goals—if they do well, we do well.”

tC

OnQ was a critical component of Hilton’s aggressive expansion strategy, enabling the firm to open more hotels, at a quicker pace, and with more consistency of delivery than otherwise possible. Given the critical role played by OnQ in enacting the brand promise, Hilton felt that outsourcing was not a viable option. Harvey explained: “For you to know 100% of your customers so that you can provide the most outstanding service, all technology components need to work flawlessly together.” Keltner added: “Our IT infrastructure is a competitive advantage; it’d take years for others to replicate it. Our branded sites look different, but they operate the same way. We generated $750 million cross-selling4 last year, and I can sit in my office and see how everyone did last night.”

No

Providing outstanding service was an objective formalized in 2002 under the guise of a new initiative: Customers Really Matter (CRM).

The Customers Really Matter initiative

Do

Upon becoming a diversified brand management company (Exhibits 4 and 5), Hilton focused on enhancing the value of its portfolio and ensuring consistency of delivery of each brand’s promise. In an article titled “I’ve got the power,” Hilton announced the introduction of the Customers Really
Matter initiative and captured its essence: “CRM is a way to use technology to give you the power to solidify relationships with our best customers.”5 The technology enabler was OnQ CRM, an application built on the OnQ infrastructure that consolidated far-flung customer data and produced comprehensive arrival reports (Exhibit 6). Deployed in early 2002, OnQ CRM had cost $650,000 to build, with yearly maintenance estimated at $1 million. Keltner articulated the original vision:
At every one of our customer touch points there were barriers to good service because information was not integrated and easily available. If there is no holistic view, talk times [time taken per call] are longer at the call centers, we can’t provide continuity to guests that stay with
3

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multiple brands, we can’t recognize them properly, if they had a bad experience in their last stay we don’t know. With CRM we set out to fix all that.

The initiative, showcased at the 2002 brand conferences and in the February, March, and June 2002
Heard@Hilton newsletter, was primarily focused on Hilton’s four categories of Best Guests: The 8 million active6 members of the Hilton Honors program; 4+, those individuals with four or more stays in a year; Fast Rez members, those individuals who signed up for an online reservation account7; and local VIPs. Laurel Bailey, VP of OnQ Marketing & Communications, explained: “We have customers who visit the Hilton Hawaiian Village once a year with their family and contribute as much as
$20,000 in revenue. These guests may not stay often, but they are invaluable.”

op yo Fostering a closer relationship with best guests throughout their lifecycle of interaction with the
Hilton family of brands was indeed a critical objective of the CRM initiative. As Subramanian put it:
“We want to ensure that our best guests don’t sleep around with the competition.” The firm identified recognition, personalization, service recovery, and customer analytics as the means to achieve such tight relationships with guests.

Dar Yasseri, director of CRM Strategy and Implementation, explained: “Recognition is about balancing the central view and the local knowledge so that we can call you by name, we can congratulate you on your recent attainment of diamond level. It is about acknowledging you and making you feel welcome. Personalization is about changing the experience to tailor it to your needs—whether through communications or at the hotel.”

tC

While recognition and personalization were most visible to customers, service recovery was a discipline of regaining customer trust after a mistake or problem occurred. Customer analytics was the less visible component of the CRM strategy, but a critical one, as it ensured that Hilton could measure results and quickly act when needed. The OnQ technology infrastructure represented a cornerstone of the initiative, but consistency of delivery depended heavily on adoption and use by the front desk staff, a critical challenge particularly given Hilton’s scale. Subramanian explained:
Scale engenders some execution challenges. Yes, we have the technology platform to deploy CRM throughout the brand, but you still have to get the message out to the very last hotel and make sure the delivery is consistent. We have a good hand we are playing with, but it all depends on how you play the hand—excellent delivery is not automatic.

No

Given the pace of innovation and the proliferation of brand programs, the Hilton leadership felt that another risk was being lulled into a false sense of security with early success. Keltner summarized the challenge: “We always intended CRM to become part of our DNA and define our brands. But we have so many different programs, how do you ensure that CRM is not perceived as the flavor of the month? More importantly, how do you avoid complacency after early success?”

Delivering the Customers Really Matter promise

Do

Producing the Hilton experience according to the expectations set by the CRM initiative began much earlier than check-in. Hilton sought to recognize guests at the reservations center in an effort to both speed up the reservation process as well as increase service quality. Hilton received approximately 78,000 calls per day in its four North American call centers (Exhibit 7). Subramanian explained: “OnQ Reservations allows the agents to access callers’ personal dossier and update their preferences. This information shortens the time on the phone and it enables better cross-selling.”

4
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Hilton Hotels: Brand Differentiation through Customer Relationship Management

op yo Every morning, as the property prepared to receive guests, OnQ enabled the front office staff to print the Best Guests arrival report (Exhibit 8). The report listed and ranked all expected guests that had a profile in OnQ and formatted relevant information from their dossier in an easily scanned format. Armed with this information, the front office pre-assigned guests to rooms and ensured that the rooms were appropriately prepared according to guest preferences. Gold and Diamond level
HHonors members also had access to exclusive benefits through the MyWayTM program. Benefits ranged from upgrades based on availability, concierge floor access, complementary Internet access, and the like. Beyond personalization, pre-assignment enabled superior service recovery. Steve
Cowan, general manager of the Doubletree and Embassy Suites in Crystal City, explained: “The arrival report alerts us to service recovery issues at hotels the guest stayed at previously. If a guest had an issue with the heating system, we see that. Then we can assign a room and dispatch an engineer to ensure everything works properly.”
Beyond customer service, Hilton found that having guest information prior to their arrival could generate important efficiencies, particularly later in the evening when hotels ran leaner staff. Cowan explained: “In this business you often find out guest needs when they arrive, so you have to dispatch staff. With OnQ we can prepare ahead of time and avert the need to react.” But preparing for guests was not without inherent challenges. Yasseri discussed the tradeoffs associated with the preassignment process: “There is a tradeoff with pre-assignments. If you pre-assign a guest, you can guarantee that you will have time to prepare the room according to their preferences. But we often have 50% of our guests on the Best Guest arrival report; you loose a lot of flexibility with so many pre-assignments.” tC

A tiered guest valuation system allowed the property to prioritize pre-assignment and service delivery by identifying most valuable guests. But pre-assignment entailed tradeoffs since, beyond general guest preferences, location and the characteristics of the hotel played an important role. For example, a guest who typically sought to be located on lower floors may prefer a high floor to avoid street noise in New York City.

No

Upon guest departure, a random sample of guests were asked to fill a survey. The Satisfaction and
Loyalty Tracking (SALT) survey was the key component of the CRM initiative and it was an important component of Hilton’s measurement system. Management carefully monitored the ratings a property received on overall experience, ability to recommend, and willingness to return. The driving objective was improvements in the percentage of surveyed guests who rated the property nine or ten on a ten-point scale. Cowan explained: “If you ask me what is the first thing I look at when I arrive in the morning, the metric I really track, that is the SALT surveys. That’s the report card from our guests. If you want to excel in this business, you have to do that better than anyone else.”

The Competitive Brandscape

Do

Because of tradition, size, and segment diversification, Marriott International was the only comprehensive competitor of Hilton. The two firms dominated the U.S. lodging market with about
9% of total rooms each. Yet, it was difficult to definitely identify Hilton’s competitive set, with some companies, such as InterContinental Hospitality Group (IHG) and Accor, being larger in total size but less diversified and some others, such as Starwood Hotels and Resorts Worldwide and Global Hyatt
Corporation, managing very successful brands but lacking a strong presence in all segments. Hilton felt that its competitive advantage did not reside with any one resource. Subramanian explained:
The key to our competitive advantage is that we have a lot of pieces that work well together. Since we are the only company that has the same technology platform and

5
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distribution footprint throughout all the brands, we can leverage our strengths consistently across the entire systems. Fundamentally, we believe that unless we do something consistently across a lot of our hotels and there is sufficient repetition and reinforcement, it does not matter that you have superstar hotels—that’s the brand promise.

op yo With the proliferation of brand programs, avoiding complacency was particularly important in the modern global hospitality industry where the major players kept a watchful eye on one another in order to ensure that their brands did not fall behind in the eyes of the customer and, as a consequence, of owners. Hilton had not been the first to make its foray into deep personalization of guest experiences, an area that the Ritz Carlton had pioneered in the luxury segment and Wyndham
International had introduced to the upper upscale segment. But Hilton had been the first major multibrand operator to roll out a strong, integrated customer relationship management effort that was tightly integrated with its frequent guest program and was delivered chain-wide. As a testament to the importance of CRM in the industry in 2004 Marriott selected Siebel Systems off-the-shelf software to consolidate customer data for easy access by call center and property-level employees. The other major multi-brand companies did not wait long to respond. Starwood, Hyatt, and InterContinental were using their frequent guest programs to build relationships with their high-value customers.

The Future of CRM at the Hilton Corporation

While Hilton had been the leading recipient of JD Powers customer satisfaction awards, measuring the success of the Customers Really Matter initiative was no small feat, and even more difficult was the challenge of charting the evolution of CRM. Harvey explained the measurement challenge: tC

The CRM area is the absolute hardest ROI, it is almost impossible to measure a-priori. We wanted to reduce talk time on the phone, and we achieved that because OnQ allows agents to quickly have all the needed information. We wanted more direct relationships with guests, so we measured it in terms number of captured email addresses. From an electronic standpoint,
CRM has been successful. The one that is hard is how effective are you at the front desk to create a personalized interaction.

No

A relentless focus on measurement, executive championship, employee training, and empowerment was Hilton’s approach to ensure that the principles of CRM became, as Keltner put it, “Hilton’s
DNA.” Subramanian concluded:
Our success is going to come down to execution. That’s the reality. We know what the opportunity is, we have the infrastructure and the data, what it comes down to is how effectively to harness the promise of CRM, the potential of OnQ, and execute it consistently and flawlessly across the network.

Do

The Blackstone acquisition offered the opportunity to decide whether the Customers Really Matter initiative was worth reinvesting in or whether it had been a good program that had run its course.
Had there been significant savings through improved efficiency of call center operations as claimed by executives? Had the initiative really enabled Hilton to differentiate its brand from the competitors’? Perhaps most importantly, with a varied portfolio of brands about to experience significant growth, the evolutionary path of the CRM initiative was not clear. Was a standardized approach likely to deliver the needed return going forward or was a more targeted approach called for? 6
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Exhibit 1

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Hilton Hotels: Brand Differentiation through Customer Relationship Management

Hilton Hotels’ Brand Portfolio (September 2007)

tC

Source: Hilton Hotels Corporation.

Owned
2
18
27
2
3
1
1
54

Company

Wyndham Hotel Group
Choice Hotels International
Accor
InterContinental Hotels Group (IHG)
Hilton Hotels Corp.
Marriott International
Carlson Hospitality Worldwide
Starwood Hotels & Resorts Worldwide
Global Hyatt Corp.

No

Properties
Managed Franchised
4
14
4
75
198
181
19
72
112
26
106
11
21
4
9
11
323
41
168
16
1,110
7
320
462
2,390
2,906

Owned
1,413
17,044
6,602
443
1,349
162
133
27,146

op yo Brand
Waldorf=Astoria Collection
Conrad International
Hilton Hotels
Hilton International
Embassy Suites
Doubletree Hotels
Doubletree Guest Suites
Club Hotels
Hilton Garden Inns
Homewood Suites
Hampton Inn
Hampton Inns & Suites
Totals
Grand Total

Hotels
6,441
5,376
4,121
3,741
8
2,935
2,832
945
871
749

Rooms
Managed
2,353
5,024
37,307
56,595
19,217
8,654
2,748
743
1,519
4,689
2,128
799
141,776

Franchised
1,026
57,748
5,164
25,912
27,706
4,045
1,416
44,382
18,274
107,324
33,298
326,295
495,217

Countries
55
40
90
100
78
68
70
95
44

Do

Source: Adapted from HOTELS’ Giants Survey 2007.

7
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Exhibit 2

Hilton Hotels: Brand Differentiation through Customer Relationship Management

Revenue and Competitive Measures by Brand by Year

Brand
Waldorf=Astoria Collection
Room Revenue

2001

2002

2003

2004

$258,566,213

$262,579,537

$261,159,914

ADR

$266

$258

$254

RevPAR

$191

$193

$192

RevPAR Index

111.3

115.2

115.2

Conrad International
Room Revenue

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2005

2006

$289,401,766

$327,954,076

$351,124,552

$280

$330

$321

$212

$241

$258

110.9

111.8

111.4

$16,488,158

$24,366,171

$34,027,356

$171

$183

$224

$110

$128

$129

$12,825,487

$13,922,405

n/a

n/a

n/a

RevPAR

$89

$113

$123

RevPAR Index

75.6

109.3

106.9

94.0

90.5

87.6

$2,524,306,671

$2,471,302,966

$2,735,158,951

$3,030,171,471

$3,334,146,538

$126

$125

$128

$138

$149

$84

$82

$88

$97

$105

107.1

105.4

104.8

104.7

104.8

$1,157,211,744

$1,179,835,300

$1,257,964,968

$1,394,893,681

$1,581,927,594

$121

$120

$122

$129

$140

Hilton Hotels
Room Revenue

$2,565,871,863

ADR

$149

RevPAR

$87

RevPAR Index
Embassy Suites
Room Revenue

105.0
$1,144,363,987

ADR

$128

RevPAR

$86

Doubletree
Room Revenue
ADR

125.7
$1,023,606,672
$107

RevPAR

$84

$83

$87

$94

$104

127.4

127.4

124.6

122.9

124.5

$979,070,676

$945,420,658

$1,004,739,271

$1,121,483,568

$1,256,007,772

$102

$100

$101

$112

$120

tC

RevPAR Index

op yo $5,616,630

ADR

$69

Hilton Garden Inn
Room Revenue
ADR

$62

$70

$78

$84

99.6

98.2

96.9

98.2

100.2

$368,690,111

$452,214,782

$530,041,491

$670,149,975

$826,184,629

$1,045,893,961

$97

$96

$100

$106

$114

$63

$60

$61

$67

$72

$79

100.6

105.3

110.9

110.1

109.5

111.6

$284,551,565

$309,372,646

$337,024,482

$390,840,322

$469,776,634

$566,941,625

$99

$95

$95

$97

$103

$110

$69

$67

$66

$71

$76

$81

117.7

120.1

121.7

118.9

114.1

114.4

$1,787,503,581

$1,956,857,911

$2,089,455,624

$2,379,156,479

$2,770,369,803

$3,208,908,869

ADR

$78

$79

$80

$83

$89

$96

RevPAR

$52

$52

$52

$57

$63

$69

113.6

116.6

117.1

117.7

120.0

121.6

No

RevPAR

$64

100.3

$102

RevPAR Index

RevPAR Index

Homewood Suites
Room Revenue
ADR
RevPAR

RevPAR Index

Do

Hampton Brand
Room Revenue

RevPAR Index

Source: Hilton Hotels Corporation.

8
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Exhibit 2 (continued)

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Hilton Hotels: Brand Differentiation through Customer Relationship Management

Revenue and Competitive Measures by Brand by Year

Explanation of Key Terms:

Average Daily Rate (ADR) measures the mean room rate paid by guests for a given product over the period of time (e.g., the average rate for a room at any Doubletree property during the year).

op yo Revenue per Available Room (RevPAR) measures the room revenue produced by the property divided by the number of rooms it had available for sale during a given period of time. It combines both ADR and occupancy. For example, a property may improve its occupancy by discounting its rates (i.e., dropping its ADR). Another property may choose to hold prices and accept selling less of its inventory of available rooms (i.e., accept a lower occupancy). RevPAR is a measure that enables comparison across different pricing strategies.
RevPAR Index is computed by comparing an individual brand’s RevPAR against that of the competitive set. RevPAR Index is the standard measure of brand competitiveness in the lodging industry. Do

No

tC

Source: Authors.

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The OnQ Platform and the Guest Cycle

tC

op yo Exhibit 3

Hilton Hotels: Brand Differentiation through Customer Relationship Management

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Do

No

Source: Hilton Hotels Corporation.

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Hilton Hotels Corporation Organization Structure

Do

No

tC

op yo Exhibit 4

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Hilton Hotels: Brand Differentiation through Customer Relationship Management

Source: Hilton Hotels Corporation.

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Exhibit 5

Hilton Hotels: Brand Differentiation through Customer Relationship Management

Brand Positioning Statements

Waldorf=Astoria Collection

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Conrad International

op yo The Waldorf=Astoria Collection offers all the amenities and services that guests should expect at some of the most extraordinary properties in the world. Located in desirable travel destinations, each hotel has its own individual character, timeless architecture and special history. Guests staying at
Waldorf=Astoria Collection hotels can choose to indulge themselves at rejuvenating spas, sample culinary excellence or play a round of championship golf. Our desire for each guest is to provide and encourage new discoveries which will help make every experience with us uniquely their own.

Conrad International is a global contemporary luxury brand, combining a proud and prestigious heritage with a contemporary attitude.

Hilton Hotels & Resorts

No

Embassy Suites

tC

Hilton Hotels & Resorts stands as an innovative leader in the full-service hospitality segment, with the most recognized global name in the industry and more than 500 hotels and resorts on six continents. Hilton’s belief that Travel Should Take You Places celebrates a commitment to the guest experience and the idea that travel can transform people. With more choice and control over their stays, our guests can be at their best 24/7, whether they travel for business or leisure… starting the day with a personalized Hilton Breakfast, staying productive with our state-of-the-art business centers and Hilton Meetings conferences, enjoying a great workout with Hilton Fitness by Precor, sharing the day’s accomplishments over drinks and dinner at our contemporary restaurants and relaxing at the end of the day in the comforts of the Hilton Serenity Bed.

Embassy Suites offers an upscale experience that is not defined by fluff but rather by thoughtfulness – a hotel that puts the guests in control, by thinking first about what they need and want, not just what is the status quo.

Do

At Embassy Suites, we put genuine thought behind each and every offering and amenity and all our business practices—right down to the design of the hotel itself, and a complimentary, cooked-toorder breakfast. Embassy Suites is a hotel designed with guests in mind.

Doubletree Hotels

Doubletree Hotels, Guest Suites and Resorts are first-class, full-service hotels in the Upscale and
Upper-Upscale segments located in primary and secondary markets throughout the U.S., Mexico,
Latin America, and Canada. Doubletree properties offer full-service restaurants, lounges, room service, complete meeting/banquet facilities and other amenities expected at a first-class hotel.

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617.783.7860.

Exhibit 5 (continued)

Brand Positioning Statements

Homewood Suites

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Hilton Hotels: Brand Differentiation through Customer Relationship Management

Hilton Garden Inn

op yo Homewood Suites by Hilton is an upscale, yet casual, all-suite residential-style hotel brand catering to travelers seeking a homelike hotel experience for a few days or more when on the road. The extra space and privacy of the suites, the casual atmosphere, and the many homelike amenities and services ensure guests satisfy their individual need for comfort, flexibility and convenience. All at the price of a high-quality, traditional hotel. Best of all—if guests are not completely satisfied, we make it right or their night’s stay is free.

The Hilton Garden Inn aims to be the hotel of choice for the smart, productive and practical traveler.
Our engaging, warm, and focused staff create an emotional connection with each guest. We promise to provide our guests with everything, when and where they need it and with highly functional, innovative amenities.

Hampton Inn

tC

Hampton Inn represents the beacon of hospitality, illuminating the journey to excellence, sparking connections around the world. We offer a commitment to guest satisfaction utilizing an unconditional spirit of cooperation. Our reputation, for both product and service, is defined by our ability to execute our “must haves” for every property. The setting and service are casual, comfortable, personalized and we aim to build genuine connections with our guests.

Do

No

Source: Hilton Hotels Corporation.

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617.783.7860.

Arrival Report

Do

No

tC

op yo Exhibit 6

Hilton Hotels: Brand Differentiation through Customer Relationship Management

rP os t

809-029

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617.783.7860.

Exhibit 6 (continued)

E
F
G
H
I
J
K
L
M
N
O
P
Q

No

tC

R

The header at the top of the report. Double-check this header each day to make sure that the information you downloaded is YOUR hotel and the correct date.
A checkbox where you can manually put a check mark by the guest’s name after the guest has checked in.
A space where you will manually fill in the guest’s room number after the guest checks in.
The guest’s name and hometown information.
The guest’s current HHonors loyalty level – whether the guest is a Diamond, Gold, Silver, Blue, 4+
The confirmation number for their stay.
The guest’s company’s name.
The guest’s HHonors number and frequency program number.
How many times the guest has stayed on our property (Pr), with our brand (Br) and within the
Hilton family of Hotels (Ent) including Hilton International within the last 12 months.
How many times in the last 12 months the guest has stayed at a Hilton International Hotel.
The number of guests in the party.
Where, in the future, any comments will be for special requests and preferences as well as the proper actions to be taken.
The booking information.
For example, S=smoking room, N=nonsmoking, K=Kin,
D/D=Double/Double, A=Accessible.
The different areas under Requests and Preferences that we will be using in the future. F.O.=Front
Office requests, Hskp.=Housekeeping requests, and F&B=Food & Beverage requests.
The Service Recovery Action area. These comments are driven by the Hilton family of Hotels, NOT just your hotel or brand. This section represents a problem during the guest’s last stay within the
Hilton Family of Hotels. Examples include:
− PreBlock – MOD Inspect = Pre-assign guest room and have management perform an inspection. − PreBlock – Quiet Room = Guest has requested that we pre-assign the guest’s room in the most quiet area of property.
− Wake-up Call = Extend wake-up call service to the guest based on our brand standards.
− Extra Service = Provide extra attention to service and detail to this guest during his/her stay.
− F&B/BQTs = Provide extra attention to service and product in the food & Beverage and
Banquets areas.
− HHonors = Provide extra detail to provide proper service and amenities to customer based on his/her HHonors level.
Reimbursement information, according to the guest’s last stay within the Hilton Family of Hotels.
Y= customer did receive refund, N=customer did not receive refund.
Personalized welcome messages to the guest. The GSR should communicate these messages to the guest, according to your brand’s standards.

op yo A-D

Arrival Report Key

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Hilton Hotels: Brand Differentiation through Customer Relationship Management

S

T

Do

Source: Hilton Hotels Corporation.

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617.783.7860.

Aggregate US Hilton Reservation Contact Centers Volume

Call Center Data
2001
2002
2003
2004
2005
2006
2007

Net Revenue per Call9
$73.09
$77.64
$84.39
$85.57
$90.30
$99.29
$102.55

Conversion Ratio10
38%
39.1%
40.9%
41%
40.9%
41.5%
41.4%

Do

No

tC

Source: Hilton Hotels Corporation.

Total Calls
24,824,937
24,864,291
24,282,151
25,803,572
27,475,261
27,421,289
28,626,204

op yo Exhibit 7

Hilton Hotels: Brand Differentiation through Customer Relationship Management

rP os t

809-029

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617.783.7860.

Data Flow Diagram

No

tC

op yo Exhibit 8

809-029

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Hilton Hotels: Brand Differentiation through Customer Relationship Management

Do

Source: Authors’ research.

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617.783.7860.

Hilton Hotels: Brand Differentiation through Customer Relationship Management

rP os t

809-029

Endnotes
1

The Blackstone Group defined itself as: “a leading global alternative asset manager and provider of financial advisory services.” It claimed the position of “largest private investor in hospitality worldwide” and, prior to the Hilton Hotels acquisition, owned more than 100,000 hotel rooms including mid-tier brand La Quinta and luxury brand LXR.
2
Holidex was the pioneering Central Reservation System that Holiday Inn introduced to centralize and simplify the booking process for affiliated properties. To Holidex and its ability to deliver traffic to properties was ascribed much of the success of the Holiday Inn franchise in the 1960s and 1970s.
3

op yo Hilton typically charged franchisees a royalty and a single program fee of about 5% of gross revenue each.
The program fee included charges for distribution systems, marketing, brand quality assurance, and information technology 4

Cross selling is the process of taking potentially lost business and keeping it within the brand/chain. For example, when a potential guest finds the hotel they were seeking to be sold out, the call center personnel can immediately offer a nearby Hilton family affiliated hotel. Cross selling can be particularly powerful when applied to group business.
5

“I’ve Got the Power,” USA Today, January 22, 2002.

6
Active members, those who had at least one interaction over the past 12 months, is a superior measure of reward program size than total membership. Hilton had enrolled about 23 million total members in the Honors program since its inception.
7

4+ and Fast Rez guests accounted for about 1.6 million accounts.

8

9

tC

The number of properties in the firm’s portfolio varies over time due to new openings and re-branding.
Slight discrepancies between sources may occur.
Net revenue per call is derived as total revenue booked by the call/reservation centers divided by total number of calls that were received. It is a measure of efficiency designed to assess how much revenue is generated by each call made to the reservation center.
10

Do

No

Conversion ratio is computed as the total number of calls that result in a booking divided by the total number of calls. It measures how many calls were "closed" turning callers into bookers.

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617.783.7860.