Case Study: Hilton Hotel

Case study: Hilton Hotel

Worcester Polytechnic Institute Yidan Xu

Table of content:

Introduction1

Background2

Problem Statement2

Data Analysis2

Key Decision Criteria3

Alternative Analysis3

Recommendations4

Action and Implementation Plan4

Conclusion 4

Reference4

Introduction

In 2008, the company had the huge global growth, and it had just been taken private by the Blackstone Group. Blackstone decided to invest in the Hilton properties and brands to get more profit. However, the growth for Hilton is not that easy in highly competitive global lodging business. There are several obvious and serious challenges in this market: access to capital, high levels of employee turnover, and difficult achieving standardization typical of service delivery operations. In 2002, the firm launched the Customer Really Matter (CRM) strategy to improve service delivery and consistency across the family of Hilton brands.

The Hilton uses a kernel component that is OnQ. OnQ is a comprehensive, integrated infrastructure to provide an integrated solution and a readiness to serve customers “on cue”. And the CRM is built on the OnQ, OnQ CRM, to solidify relationships with the best customers. And the customers are asked to fill a survey, Satisfaction and Loyalty Tracking (SALT) survey. It was the important component of the CRM initiative and it was an important component of Hilton’s measurement system.    

Background

Hilton Hotel has the most reputation in the lodging industry. In 1919, the firm was beginning by Conrad Hilton in Cisco, Texas. In 1949, Hilton Hotels Corporation went public with a portfolio of 15 properties in 11 states, and focus on domestic growth. From 2000 to 2006, Hilton acquired several hotel companies one by one and became the largest lodging companies in the world. What the most competitive characteristic for Hilton is the customer caring and it defined itself as a brand management company.

Problem Statement

Blackstone wanted to evaluate that whether it is worth to reinvest the CRM or it had been a good program that had run its course to improve service delivery and consistency across the Hilton brand, and be differentiate from the competitors. But it is hard to measure the performance of the CRM, not to mention like ROI. And it also hard to measure how effective are the stuffs at the front desk to create a personalized interaction.

Data Analysis

Hilton focused on improving the value of its portfolio and ensuring consistency of delivery of each brand’s promise when becoming a diversified brand management company. The CRM provides several unique advantages to help the Hilton realize the goal. But it also has disadvantages here.

The first advantages of the CRM in Hilton is that it is integrated on the OnQ system. The OnQ system is the nervous system in the Hilton to integrate the franchise. For Hilton, it won’t abandon the OnQ since it can be measured how much effectiveness the OnQ providing to the company. So because the CRM is worked on the OnQ, it will work better with OnQ. It will be more convenient to share the data and convey the information between OnQ and CRM. The second advantage of the CRM is that it provides service in four section: recognition, personalization, service recovery and customer analytics. The third advantage of CRM is that it focuses on Hilton’s four categories of Best Guests: 8 million active members, 4+ customers, Fast Rez members and local VIPs. The fourth advantage of CRM is that it enables the hotel to pre-assigned the source for the reservation customers and recognize the customers when they in the reservation center.

The disadvantage of the CRM is that it hard to measure the effectiveness unlike OnQ, so it is hard for the executives to make the decision. The other disadvantage is that it works on the OnQ, which means very low compatibility. Low compatibility means that in all the franchise, the hardware and software have to be the same, in order to easily share the data. The cost of IT infrastructure and maintenance is too high. Another

 disadvantage is that the CRM may collect too much customer information to cause uncomfortable and low customer experience in living in the hotel.

Key Decision Criteria

The problem facing the Hilton is that they have no idea how to evaluate the CRM. So the firm can’t make the decision about whether to reinvest the CRM or to pursue some other targeted system do the same course. So the most important decision criteria are cost, risk, resource, and people. Cost is not a very big problem for Hilton looking from the annual revenue situation. Risk evaluation is so important that the high risk may bring about the inestimably lose both on finance and on brand reputation. No can guarantee that there is lower risk for a new program other than CRM, or vice verse. Resource considers about the available sources in the hotel to implement other strategy. People is about training cost. And also there are some other criteria like time, culture, external environment, organizational structure.