Outcome of HHonor Program - Make Revenue
As occupancy rate of Hilton Group is 69%,so the total revenue of Hilton Group in 1998 is: 154,000 * 365 * 0.69 * 158 = 6,128,014,200
际酒店集团
Why Hhonors for Hilton in China
Target for high end – High price, high profit
Target Customer – business group from large company, government officer
• Better than pay to travel agency
• Sensitive to “game players” – only 22.5% occupacy are by Hhonor members
• Differentiate HHonor from Starwood helps reducing cost, increase margin, attract more investors, franchisees
(6.7%) are foreign brand. Poor customer service as common.
Customer relation management (CRM) as a new idea.
Little care on loyalty management for customer
Reality So Far
Membership Program
More Insight
• Loyalty Management
Vicious Cycle
Successful Program
Honor &
Enjoyment
Branding Diversified Penetration Theme Park
The Starwood Announcement
➢ No blackout dates ➢ No capacity control ➢ Paperless rewards ➢ Hotel reimbursement
Revenue = (Charge on paid stay – Reimburs. to hotel) * Num. of paid stay
Outcome of HHonor Program - Cost Effective
As the expected marking cost is about USD750 per room per year in Hotel Industry, so the yearly marking expenditure of Hilton Group through traditional way will be 750*154,000=USD115,500,000
The revenue contributed by Hilton Members in 1998 is: (7,015,000 + 712,000*2.4) *158 = 1,378,360,400
The HHonors Program bring USD 1,378 million per year for Hilton Group, up to 23% of total revenue.
Major competitors in China
Hyatt Hotels and Resorts凯悦酒店
Cendant 圣达特
Marriott万豪国际
Starwood 喜达屋
Accor 雅高
Best Western
International 美国 最佳西方国际集团
Choice Hotels International精品国
Hilton HHonor Worldwide Case
Occupancy Rate of Hilton in 1998c
7,015,000 nights
2.4*712,000 =1,708,800 nights
77.5%
Rooms Occupied
Rooms Occupied 38,772,444 Hilton Group had 154,000 rooms in total. Occupancy Rate: 69%
Hotel(CRM) industry in China
Hotel industry: fast growing 1990s Foreigner invested hotel in a monopoly market, all of
them positioning in high end. Total 7035 Hotels targeting for foreign tourists, only 472
Application of IT technology in Hhonor saves cost as compared to other local hotels in reducing management cost.
Good service with perfect IT platform from the program – convenient for the customer
From Income Statement of Hilton HHonors Worldwide (Exhibit4),Hilton HHonors Program even make profit of USD399,000, but contributed 23% to total revenue of Hilton Group..
Membership is linked to identity, ally for business people and governor
As little other frequent guest programs, Hhonor would be very unique, attracting most customers
To meet cost
Compensation for busy hotel
Simulated by new program
Match
Pass
• Honor program proved to be cost-effiective, successful history
• Potential Members to activate / aquire (11.1 bn, 4.6 bn, 1.1bn)
• How to execute
• Data Collection , Analysis & Digging
• Customer & Business Segmentation
• Unique Service & Different Strategy
• Partner Interaction
• Periodic Creation and Track Record
Benefit of HHonor Program
✓Develop Pricing and Marketing Strategy based on Historical Data from Members ✓Build Relationship with Loyal Customer ✓Utilize Partner's Customer Resources
• A solution for Starwoods own problem – its frequent guest problem ineffective
• Concern of initiation of price wars
• Starwood is a real competitor – very similar segmentation (Luxury, Upscale, Mid-market); both have high percent of Franchised and mgt contracts