Hilton Hotel : Brand Differentiation through Customer Relationship

Management

1. Background
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.
 The company went public under the name Hilton Hotels Corporation in 1946, with a portfolio of
15 properties in 11 states.
 In 1964, Hilton focused on domestic growth in the lodging segment as well as through
diversification into casinos and vacation ownership.
 in 2000 with the acquisition of Promus Hotel Corporation, a transaction that pushed Hilton close
to the 1,700 properties mark.
 In 2005 Hilton Hotels bought back Hilton International, bringing about 400 Hilton properties into
the fold. Organic growth also continued.
 in September 2006 Hilton announce the opening of the 1,000th hotel in North America since
the acquisition of Promus

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.

2. Hilton OnQ
The nervous system of the Hilton Hotels Corporation was a comprehensive, integrated
infrastructure known as OnQ. 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. The roots of OnQ
arch all the way back to Promus, and Holiday Inn

3. IMPORTANCE OF CRM FOR HILTON HOTELS HOSPITALITY INDUSTRY CSFs

Maintaining Brand Loyalty

The competition in the hospitality industry has been immense with customers preferring
the hotels which provided high value for money, comfort level and convenience. So as
to provide the best staying experience, the implementation of CRM was imminent. Also,
CRM helped in tracking the customer’s travelling pattern, duration of stay and spending
patterns which in turn aids in personalization of offers and promotions for the
customer.
Capital Intensive
Hospitality industry especially the premium, super-premium and luxury hotels is a
capital intensive industry. Managing the chain of more than 28,011 estates demands
integration of all the services at different hotels which was enabled by CRM. Expansion
of the service portfolio by providing the valet service (pick-up and drop-in) and other
complementary services has been the mark of various members in the industry. These
services were enabled by the increased effectiveness by the CRM in tracking the
customers.
Call centers, which received around 24-27 million calls per years, complemented the
CRM and where responsible to generation of more than millions of revenue (as shown
in exhibit 7) every year.
Capacity Utilization
Pre-booking assignments make the utilization of capacity or available rooms more
optimal. However, analyzing the pattern of the customer choices and his demands
through the data stored in the databases is necessary.
Customer Satisfaction
Making customer feel special and at home is what hospitality industry aims at. Comfort,
convenience and connectivity (3Cs) are key parameters on which the customer rates the
hotels. The concept of Sample Arrivals report is evident of the fact that the level of data
collection done for each customer. CRM provided an upper hand to the hotels not only
in knowing the customer preferences and tastes but also catering to make the life of the
travel agent simpler.
Technology cost management
Implementation of the technology platforms is very capital intensive as depicted below:

 OnQ stage 1: $ 93 million

 OnQ stage 2: $ 102 million
 Information systems (IS) funding: $ 240 million
 CRM installation: $ 0.65 million
 CRM maintenance cost: $ 1 million per year
Since, the investment in the technology is quite large, hence judicious decision
regarding the applicability of the CRM and effective data mining of the customer profile
are expected. Maximizing the marginal utility of the technology cost by implementing
the economy of scope is evident in the case. Devising measures like technology cost/
 room, technology cost/ customer/ year and revenue. Technology cost helped Hilton in
effective measurement of the success of the brand.
4. IMPACT OF THE CRM ON HILTON HOTELS
DIRECT IMPACT
1. Competitive advantage
Over rivals As discussed in the case, the dominant position of Hilton Hotels over
others has primarily been because of integration of all the brands using same
technology platform.
2. Better personalized service
Tracking the customer, understanding the needs and preferences to provide
customized services is the primary aim of the CRM. This includes maintaining
databases with all the relevant information.
3. Technology cost
Cost in installing and procuring the hardware for new technologies are huge. It is
feasible for organization with deep pockets.
4. Transparent Feedback
With the current feedback mechanism (SALT) directly linked to the CRM which
eliminates the presence of intermediaries who can possibly manipulate the feedback
by the customers for the own good.
5. Increased Revenue
Needless to say, CRM, OnQ, call centers all add up to increased revenue as shown in
the case.
6. Comparison of services
Services can be compared online at various travel agents for different locations and
amongst different brands at the same location. E.g. comparison of Hilton
International and Conrad in New York though they belong to same parent brand.
INDIRECT IMPACT
1. Word-of-mouth
Increased satisfaction infuses the word-of-mouth which in turn leads to increased
market penetration and wider customer base.
2. Improved relationship at both the ends (suppliers as well as customers)
Streamlining of activities is easier through CRM and other tools by introducing
concepts like pre-assignment, JIT which takes care of impediments like leaner staff,
inventory and effective room management.
3. Success of various loyalty programs (HHonors member and MyWay program)
Loyalty programs are made more meaningful through the implementation of the
CRM platform.
 4. Integration of cultures of different countries
CRM at various countries integrates the cultures of countries and makes the
customer feel at home by producing the same homely environment.

5. Solution

 Hilton must develop their CRM in the new way, using social media to get
awareness from customer, building connection with customer and can deliver
their service and all information about Hilton directly to the customer via social
media activity.
 Making a promotion strategy for all customer that already using our service.
Giving them a benefit like special rate for all Hilton Group member that
customer can use in the future.