Hilton Hotels: Brand Differentiation

through Customer Relationship

Management

Submitted By:
Section- C
Group 7

Summary
The Hilton hotel is one of the most internationally recognizable name in the hospitality industry,
who began its operations in the year 1919 with Mobley hotel in cisco, Texas by the Hilton
family.
The company went public in the year 1946, under Hilton hotels corporation with 15 properties in
11 states. It grew to 2935 hotels in 78 countries by September 2007 (exhibit 1)
There was different brand segmentation of hotels under Hilton hotels. These different segments
were bought under one
umbrella by an IT system
initiative OnQ. The OnQ
NKUR SHRIVASTAVA-19A2HP453 provide.
IYUSH KATRE-19A1HP060
HIVKANT TIWARI-19A3HP658
MAN KUMAR JHA-19A3HP660
AM DHAR-19A3HP666
OHIT JONATHAN YELLAMELLI-19A2HP452
Hilton hotels used OnQ platform to provide a unique guest experience as a cycle of Guest
profile, online profile, pre-arrival, arrival, in-stay, departure, post-stay as shown in exhibit 3.
They also used arrival report key to gather customer information for their database and provide
hotel honors loyalty level -whether the guest is diamond, gold, silver, blue,4+.
OnQ recognizes and remembers customer preference, customer loyalty, reputation.
They have a goal of opening 1000 hotels in north America in 5 years and 1000 hotels in whole
world in 10 years.
Their main competitors are intercontinental hospitality group (IHG), Accor, Starwood hotels and
resorts, global Hyatt, and Marriott
In the early 2008, the company was acquired by Blackstone group for a reported $26million and
Hilton leadership was contemplating whether to reinvest in CRM or maintain status quo.

Q1. Hilton was into hospitality business, it had different segment of hotels integrated under one
brand name Hilton Hotel Corporation. They defined themselves as brand management business
company aiming towards providing excellent care to their guests.
According to Exhibit 1, the company had total of 11 brands of both properties and rooms which
where either owned, managed or franchised. In franchised segment Hampton Inn (premium
brand of Hilton Hotel, form Exhibit 5) had 46% of shares in properties and 32% shares in
rooms. Further from exhibit we can infer that in worldwide presence ranking Hilton Hotel Corp.
was ranked second with presence in 78 countries just behind Intercontinental Hotels Group.
Hilton came up with information technology (IT) system name OnQ, which was comprehensive
integrated infrastructure, custom built enterprise system designed to support various operations at
each hotel. Thus, aiming for better customer service with initiative Customer Really Matters
(CRM) enabled by OnQ. CRM segmented guests into four categories:
 The 8 million active members
 4+, guests having 4 or more days of stay
 Fast Rez, people who signed up for local reservation account
 Local VIPs
According to Exhibit 6, OnQ provided unique guest experience by creating online profile of
guests which would take record of their likes and dislikes from their every stay with Hilton
Hotels and improve their overall experience.
Q2. Evaluation of Customer Really Matters (CRM) initiative
Strength Weakness
 OnQ reservation system  More adoption time required by front
 Satisfaction and Loyalty Tracking desk office staff
(SALT)  Pre-assignment of rooms may not be
 Big brand name and large customer always suitable for guests
base  High cost of OnQ
 Diversified
Opportunity Threat
 Better exploitation of OnQ system for  Competitor Marriott International had
future purpose similar market share
 Reduce management cost by smooth  Other player also started adopting
information flow similar CRM strategy
 Proper balance between automation
and manual work for better working of
OnQ

Hilton hotels introduced OnQ and CRM model in 2002 which was basically a database of
customers, it helped to recognize guests and personalize guest preference. They also helped to
record customer complain through SALT and ensure issues re-occur. Hilton hotel had a huge
brand name and had 2935 hotels across 78 countries (Exhibit 1).
Huge maintenance cost amounting to $60 million a year and initial infrastructure setup cost was
also high amounting to $93 million (as mentioned in Pg.-3). Customer preference may change
over time which the OnQ model was unable to recognize.
Reducing of maintenance cost and better training of front desk staff may act as opportunity.
Other key players were also adopting similar initiative like CRM. Eg.: Marriott International
selected Siebel system for consolidating customer data. (as mentioned in Pg.-6)

Q3. Recommendations to Hilton leadership after acquisition by Blackstone

Reinvestment in CRM
 In any business customer service plays an important role which will decide the future of
the company. The leadership at Hilton should realize that CRM would help the company
by retaining customers and improving customer satisfaction. The OnQ CRM initiative
will help Hilton to prioritize customers, so it is best for the company to invest in the
technology.
  The investment is not an alternative but a necessary development for the company to
grow to its required goal of 1000 hotels in north America in 5 years and 1000 hotels in
whole world in 10 years (from pg.1)
 The OnQ CRM strategy was developed with long term benefits in mind and will ensure
profit in the long term by reducing costs and increase customer loyalty and brand
awareness.
 Although it is difficult to allocate revenue and measure ROI of CRM, but it will reduce
talk time on the phone and allow agents to quickly access data of customers
 From exhibit 2 we can also see that there is an increase in revenue in all its segments
during the period where CRM and OnQ was introduced i.e. from 2002 to 2006
Counterpoint
If the leadership is chasing short term goals then it must maintain status quo and not increase
investment as further investment will not ensure any increase in revenue. As the cost of OnQ
technology and CRM is very high compared to revenue generated and the growth of customers
conversion rate is stagnated from exhibit 7