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GBMP 508



DATE - 03/20/2012


1. What is Hiltons 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 ones too. Thats 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 couldnt give continuity to guests who stayed in multiple brands and also if the customers had a bad experience in their previous stay they couldnt 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 customers preferences and always made sure that it exceeded their expectations. Upon departure they can exceed the customers 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 Hiltons 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 couldnt 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 dont 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 customers 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.