Hilton hotels

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Information about Hilton hotels
Leadership & Management

Published on July 25, 2014

Author: akku909

Source: slideshare.net

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Hilton Hotels: Brand differentiation through CRM

HILTON HOTELS: BRAND DIFFERENTIATION THROUGH CUSTOMER RELATIONSHIP MANAGEMENT CASE ANALYSIS ICT FOR ORGANIZATIONAL EFFECTIVENESS AKSHAY BORHADE, 4007/20

AKSHAY BORHADE, 4007/20 HILTON HOTELS: BRAND DIFFERENTIATION THROUGH CRM ICT FOR ORGANIZATIONAL EFFECTIVENESS EXECUTIVE SUMMARY In the efforts to become one of the world’s premier hospitality firms, Hilton Hotels identified some key problems within the firm that needs to be solved. One problem the firm identified was that Hilton Hotels lacked outstanding technological innovations. They also saw a problem with the lack of IT infrastructure in the firm, and that the organization had no way of maintaining its relationship with its valued customers. Another problem that the firm saw was that there was a need for man- power in order to properly build and maintain these strong relationships with customers. The causes of these problems were due to forces in the industry, both from competitors and volatility of the choices of the consumers. Hilton Hotels designed some great solutions for the different problems, and the solutions were all found in technology. Solutions for the problems included, Hilton OnQ, CRM (Customer Really Matters), call centers to optimize the CRM concept, best guest arrival reports and the Satisfaction and Loyalty Tracking (SALT). The firm has identified recognition, personalization, service recovery and customer analytics as the key success factors and integrating the technology platform across all the levels aimed at achieving these KSFs has been the aim of the industry. IMPORTANCE OF CRM FOR HILTON HOTELS HOSPITALITY INDUSTRY CSFs (relevant to the case) Maintaining Brand Loyalty (especially because market is small) 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.

AKSHAY BORHADE, 4007/20 HILTON HOTELS: BRAND DIFFERENTIATION THROUGH CRM ICT FOR ORGANIZATIONAL EFFECTIVENESS 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. 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.

AKSHAY BORHADE, 4007/20 HILTON HOTELS: BRAND DIFFERENTIATION THROUGH CRM ICT FOR ORGANIZATIONAL EFFECTIVENESS 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. ORGANIZATIONAL FACTORS AFFECTING CRM INITIATIVE AIDING THE PURPOSE 1. JD Powers customer satisfaction award

AKSHAY BORHADE, 4007/20 HILTON HOTELS: BRAND DIFFERENTIATION THROUGH CRM ICT FOR ORGANIZATIONAL EFFECTIVENESS Recognition of the success of the technology in turn motivates in keeping the technology updated and increasing the economy of scope. 2. Need for proper direction to marketing CRM helps in proper routing of the marketing efforts for customer acquisition and promotion. 3. Growth of the estates Hilton Hotels slated to grow at an aggressive pace of 1000 hotels in USA in next years and another 1000 hotels in rest of the world in next 10 years is quite ambitious. This has been made CRM, a quintessential course of action for the sustenance of the firm. HINDERING THE PURPOSE 1. Challenge of charting the evolution of CRM The exact impact of the CRM on the revenue cannot be measured and hence, the uncertainty regarding the inefficient system performance cannot be eliminated completely. 2. Rapid expansion of the Hilton Hotels The aggressive growth strategy has put the Hilton Hotels puts an expansion constraint on the acceptability of the CRM technology platform. 3. Cost associated in implementation and training Cost incurred is very high in implementation as depicted above and hence act as a deterrent for the purpose.

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