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Loyalty Wars

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Introduction

Hilton Worldwide is an international hospitality company formed in 1919 in Texas and belongs to the Blackstone Group. The company has been working on the new program that is meant to enhance its services, Hilton HHonors loyalty program. Apparently, Hilton HHonors is a program engaging in the provision of lodging services to its clients.  Its main aim is to retain its customers through rewarding them. Moreover, the program is tailored to reach more customers, as well as development engineering methods of retaining the existing customers. With the vast number of innovative competitors, product differentiation and customization, the company saw it os important to come up with a strategy to reach and retain their customers.

Notably, the Hilton HHonors loyalty program has both merits and demerits from various standpoints as follows:

Strengths and Weaknesses of the Hilton HHonors Program from Hilton Hotels Corp and Hilton International Standpoint

From the Hilton Hotels Corp and Hilton International, HHonors program has a number of strengths and weaknesses. The program has the following strengths; firstly, the program will be able to attract new customers, as well as retain the existing markets.  Therefore, this will act as a marketing strategy to offer free things or gifts to act as bait for customers. New customers are wooed by the loyalty services, thus, subscribing to the services of Hilton Hotels Corp and Hilton International (Lattman & Lingling, 2010). This translates to more profits for the hotels.

The loyalty program has also strengthened the brand of services offered by Hilton Hotels Corp and Hilton International and improved the customer brand loyalty. This has made the services offered   by Hilton Hotels Corp and Hilton International to be recognized and be respected all over the world (Sheela, 2002). Thus, Hilton Hotels Corp and Hilton International enjoy a good monopoly in hotels and lodging industry. The loyalty program has improved customer trust in Hilton Hotels Corp and Hilton International, thus good relations between the service providers and consumers.

The loyalty program has brought efficiency and accuracy in the executions of activities in Hilton Hotels Corp and Hilton International (D'Annunzio-Green, 2003).  This has been facilitated by close relations between the staff and customers, customer research on their preferences and likes coupled with tailoring of services to favor their individual tastes. The efficiency and accuracy in execution of business activities has also been catalyzed by the application of Information Technology (Lattman & Lingling, 2010). With information Technology, software’s have been developed together with database systems to store guest information and assist in managing customer needs.

The program has negatively affected   Hilton Hotels Corp and Hilton International in that it has increased the operating cost. This is because many hotels are offering the same service. This has made Hilton Hotels Corp and Hilton International provide better terms, like more free services which cut the profit margins. Failure to do this may lead to the loss of customers, as most of them have divided loyalty.

Strengths and Weaknesses of the Hilton HHonors Program from the Guests Standpoints

The following are the strengths of the program from the quests standpoint; firstly, the program increased communication between the company and its guests. This is because uests could communicate with the administration through the customer care team, in case there arose any problems. Secondly, the program made it possible for the administration of Hilton holdings to undertake research on customer behaviors (Sheela, 2002). Such kinds of research were carried through quantitative research like surveys and by holding focus groups with the loyalists. Thirdly, the program has made it possible to customize the customer profiles. This refers to tracking the guest preferences and behaviors and embedding them to their user profiles (Lattman & Lingling, 2010). This will enable them to offer guest’s services which they like. Lastly, the program has made Hilton holdings able to provide timely and efficient services to their clients, since they can anticipate the guest’s needs.

The program also had shortcomings when dealing with guests. For instance, a number of travelers broadcast the Hotels to other people but did not get their rightful rewards (D'Annunzio-Green, 2003).  Secondly, the program has failed to maintain a customer loyalty monopoly to their brand. This is because much of the clients' loyalty belongs to many brands.

Strengths and Weaknesses of the Hilton HHonors Program from the Member Properties (Franchised Hotels) Standpoints

The Hilton HHonors program had strengths and weaknesses from the standpoints of member properties (franchised Hotels). Starting with strengths, the program has made the member properties increase the loyal customer’s base. This is because of things like international trade, especially in tourism and international investors.  Rewarding loyal customers encourages them to come back time and time again.  Secondly, the program reduces the operating costs of the franchise hotels (Lattman & Lingling, 2010).  The reason is that the program costs are lower as contrasted to those of competing chains.  The program also generates the high value, business opportunities and business liaisons for the franchised hotels. Such features improve the business image and credit of business enterprises.

Such programs also pose one or more weaknesses. For instance, Hilton HHonors program may lay down a set of regulations or guidelines which have to be implemented by the member properties (D'Annunzio-Green, 2003).  Such regulations may negatively affect the profitability of such hotels.  The regulations, for example, may ask for high rates for improved quality service provision. The previous loyal guests of these hotels may be unable to afford the new rates, thus; the franchise hotels will get losses.

Strengths and Weaknesses of the Hilton HHonors Program from the Corporate Travel Departments Standpoints

The Hilton HHonors possessed strengths and weaknesses from the standpoint of corporate travel departments. Firstly, the merit the Hilton HHonors program had on corporate travel department was that it ensured a relatively constant supply of travelling customers. This is because the loyalists will always come back to Hilton.  Sometimes the loyal customers may not come, which cuts of the revenue for corporate travel departments, a weakness of the program.

How Does the Value Generated to Hilton by the Program Compare to its Cost?

For the economic undertaking to be successful, the costs incurred in its realization should be less than the values gained. If the contrary happens, loss is realized and such a venture should be abandoned. In comparison with the value generated to Hilton by the loyalty program in relation to thee cost incurred in its realization, it can be seen that the values gained outweigh the cost of the program. For instance, the value of the program is $1328.5 million, while the cost is $69.44 million (Lattman & Lingling, 2010).  This signifies that the program is profitably or worth. With such significance, it calls for more support of the loyalty program, as it will help realize more profit gains, increase in customers, and better the customer service provision.

What is Starwood Attempting to do and how should Jeff Diskin Respond?

In 1999, Starwood Hotels and Resorts worldwide ran an ad, where it was planning to launch an aggressive customer adhesive program. This program was to compete with loyalty programs from other large corporate hotels like Hilton. This would help attract more customers, thus, steer its profit margins upwards (D'Annunzio-Green, 2003). At the time, Jeff Diskin was the head of Hilton HHonors at the time.  To Diskin, Starwood was trying to do a number of things.  Firstly, Starwood was trying to skyrocket their costs which made Diskin suspect that they were trying to force Hilton raise its costs (Sheela, 2002). He also feared that Starwood would try to spoil Hilton's loyalty  way of getting more customers and earnings (Lattman & Lingling, 2010). This clearly shows that Starwood was trying to go head-on in competition for customers with Hilton Hotels, especially through the loyalty systems.

In so doing, Starwood is trying to lower the cost of the loyalty points.  The impact of this would probably the loss of number of clients, since a number of them revolve cost of services. As the head of Hilton, Jeff Diskin should do a number of things to avoid losing customers to Starwood. Hilton should improve its service provision, especially in quality, efficiency and in maintaining better relations with the customer (Lattman & Lingling, 2010). Such better customer relations can be maintained through calling to keep contact or even inviting them for special dinners to instill in them a sense of belonging to Hilton.

Jeff Diskin should try to offer unique, diversified and quality services which differ from the ones offered by their competitors. The kernel thought of using such an idea is to trap or woo customers who want a different treat or experience that is not homogeneous to that of other Hotels (Lattman & Lingling, 2010).  Creating the brand passion could, for instance, differentiate the genuine brand loyalty from the other normal brands, as passion will make them stick to Hilton Hotel services.

Jeff Disk could also engage in further research and get into the hearts of a given segment of customers, to better know their tastes. A good number of clients go for what they like, not looking at the cost or rewards.  If Hilton continues giving further discounts and rewards, it will make the customers anticipate for cheaper costs, which are not friendly in terms of the profit generation to the firm.

Conclusion

It is evident from the above analysis that Hilton HHonors loyalty program has both strengths and weakness from different points of view. The program’s main focus is to engineer methods that can be sued to retain their customers in all its branches. Despite the fact that the program is costly to develop, the hotel is anticipated an increased performance, once it becomes effective. This is a good to counter the increased competition in the world market. However, the hotel should not overlook some of the weakness of the program, as it could lead to inefficiency, as they are not addressed the way they deserve.

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