From the case, we know Hilton is currently using the marketing penetration by focusing on business travelers. And now the expensive loyalty-program features that are added by Starwood Hotels and Resorts Worldwide Inc. for attracting more business travelers is threatening Hilton by increasing Hilton’s cost or decreasing Hilton’s market shares. Solution:
In my opinion, in response to the Starwood’s strategy, the solution for Hilton’s dilemma should be market development which is developing new market from current products or services. Hilton can avoid increasing its cost by showing customers Hilton has more and better benefits. There are several reasons for this solution. Firstly, HHonors Program has been a good service program for Hilton. On the other hand, Starwood’s Preferred Guest announcement was a strategy to their less effective frequent-guest program. As it shown on the case, “they changed it every few years”.
Secondly, it is risky to compete with them by increasing the cost and adding the features Starwood added. It is because the lower cost-effectiveness will hurt the profit of the whole hotel industry eventually. Also, if Hilton can have the same or more amount of business with lower costs compared to other competitors, Hilton earns more profits. The last but not the least, it is important to market and consolidate the Hilton brand nowadays. We need to let customers know how superior Hilton is than other hotels to attract and retain consumers. Implementation:
For implementation, Hilton needs to realize its flashpoints and put more marketing efforts on them. Firstly, HHW’s program has a unique practice called Double Dipping which means customers can earn mileage in partner airline and also earn HHonors points. This flashpoint can not only attract customers but also better relationship with corporate clients. Double Dipping melts the conflict of competing with the airline’s program. Hilton can talk to partner airlines by sharing members and create a complemented program with them.
Then, Hilton can advertise this program to more airlines by calling them. So Hilton can attract more customers through airlines without increasing advisement costs. Also, Hilton can increase the number and range of partners such as car rental firms and Cookies firms. This action will help customers attain their rewards easily and eventually will help Hilton get more customers. Thirdly, Hilton can franchise to more small hotels with comparable with lower loyalty- program cost than its competitors in order to increase the market share of Midmarket without F&B segment which other big competitors don’t have.
After that, Hilton can send an email to their current customers in their computer system by presenting the appreciation for being Hilton customers and introducing Double Dipping and other partners for customers to attain rewards earlier. Also, tell them they can get desirable points by having someone experience Hilton. Guest managers who are responsible for making the best customers feel special and satisfy their needs as perfect as possible can call upper-rank customers by introducing themselves.