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Hilton case study
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1. What is Hilton’s core business? What is the value of a brand in the lodging industry?
Hilton Hotels Corporation is a global hospitality company. Perhaps it is the most
recognizable name in the lodging industry. Hilton offered significant recognition
and customer traffic with their advertisements, programs and electronic
distribution systems. The company is responsible for delivering the guest
experience on property and abiding by the brand standards. Brand values have a
lot to do in lodging industry. For instance two companies selling similar product at
a same price. Yet people tend to buy one product more. If the question is why the
answer is brand value of the product. There are various aspects that determine a
brand value. This can be quality, premium price, higher market share or even a
positive image. In the case of lodging industry, once the customer have a bitter
experience with the service they are never going to come back to stay at the
same place anymore. The brand value in this industry is more over attained
through word of mouth. If a customer gets a quality service obviously he will
recommend the place for his known one’s too. That’s how a strong brand image
is built in lodging industry. The brand should create values in customers mind by
helping to assure them of a uniform level of quality. Then the customer becomes
loyal to the brand.
2. Evaluate the performance of the Customers Really Matter initiative to date.
The nervous system of Hilton Hotels Corporation was a comprehensive and
integrated infrastructure known as OnQ which is custom built enterprise system
designed to support the property-level operations if each hotel in Hilton
Corporation to enable Customers Really Matter initiative at each customer touch
point. The essence of the initiative was that CRM is a way to use technology to
give you the power to solidify the relationship with the best customers. It took
$650,000 to build OnQ and yearly maintenance was estimated to around $1M.
Before there were barriers to good service as information was not integrated and
easily available, time taken in call centres were longer, they couldn’t give
continuity to guests who stayed in multiple brands and also if the customers had
a bad experience in their previous stay they couldn’t figure out what the problem
was exactly. With the implementation of CRM all these was fixed.
By enabling the OnQ technology Hilton Hotel Corporation had
various advantages. A guest profile manager was on the software where guests
are classified into best guests or one-time visitor etc. Through this method they
can analyze who are their best customers and can add more revenue to
company. With the help of OnQ, regardless of where and how, customers could
reserve their stay online. So they know how the guest would like to be treated.
Pre arrival communication was another advantage of CRM. They were able to
communicate with their customers before their arrival which might help to know
what the customers expect from them. On arrival they were able to deliver quality
service to guests. On the period of stay Hilton ensured that the accommodation
included the customer’s preferences and always made sure that it exceeded their
expectations. Upon departure they can exceed the customer’s expectation. After
the stay they could record what they have missed and on the next visit they could
provide what they have missed.
When evaluating the RevPAR(Hilton Hotels), during the year 2001 and 2002 it
was $87 and $84 respectively. With the implementation of OnQ CRM technology
in 2002 tremendous changes have been recorded in the Hilton Hotel
Corporation. Even though the there was a decrease in the first year of installation
the success of CRM technology was proved within the next 2 years of time. By
the year 2006 Revenue Per Available Room increased from $87 of 2001 to $105.
Almost in all brands of Hilton Hotel Corporation there was a significant increase
in RevPAR. Another aspect should be considered is the Return on investment of
Call Center. The initial investment on implementing CRM was $650,000. From
the provided details there was a tremendous increase in Room Revenue
(Waldorf=Astoria Collection) from $2,565,871,863 to $3,334,146,538 which
directly shows that the implementation of CRM software was very much success.
And Return on Investment was very high.
3. What do you think Hilton leadership should do after the Blackstone acquisition?
Should they further invest in CRM or simply maintain the status quo? What
aspects of Hilton’s CRM should be strengthened if any, and how?
The Blackstone acquisition offered the opportunity to think further about the
success of CRM. Different questions came up. Whether there has been
significant savings through improved efficiency of call center operations as
claimed by executives or not? Does the implementation of OnQ help the brand to
differentiate from their rivals? Whether to continue with this or is it waste of
money?
I believe implementation of CRM technology was a very successful move by
Hilton. Especially in the hospitality industry customer service plays a very
important role. If we fail to analyze the customer needs and couldn’t deliver what
they expect we will end up with losing customers. OnQ provided Hilton to reach
various touch points of Customer. OnQ proves their initiative that Customer
Really Matters, but not all the customers. There are customers for instance
tourist from a different province or a country who maybe a one-time visitor. Yes
they have to be take care as well. But the CRM technology helps company to
analyze who has to be treated more. I would recommend the company to
maintain the technology without further investments. Keep updating the existing
technology. I don’t think any further investment on CRM can make additional
revenue for the company. CRM is not recommended for a company which needs
to achieve quick revenue. CRM should be implemented only with a long term
prospective. As far as I am concerned lodging industry is a long term investment.
In this Industry CRM is not an alternative but an imperative. A brand is
differentiated in the hospitality industry when the brand exceeds customer’s
expectation. Customers should feel free to ask if they needs more. And the
company should assure them that their needs which the company missed will be
satisfied on the next visit. CRM technologies have lot to do in building a direct
relation to customers. CRM returns are not only limited to increase in revenue.
Savings can be in the form of reduced use of time to manage customers and
customer transactions. Additional revenue can also be in the form of lead
generation. Revenue increases as the customer loyalty increases. With the help
of OnQ they can analyse different touch points of Customers like how long did
they stayed on company web page, how they reached the page etc. The details
of caller can be directly entered to data base so proper back up can be provided
by the company. There is opportunity of re-purchase or recommendations from
each customer in this industry. So I would strongly recommend that CRM should
be maintained without much further investments other than maintenance for the
time being.