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Introduction
Background information:
Hilton is the most recognized hotel
corporation company, the global leader in
the world of hospitality. Nowadays they have
3,897 hotels and resorts in 91 countries. It was
founded in 1919 by Conrad Hilton.

Vision: to fill the earth with the light

and warmth of hospitality
Mission: to be the preeminent global hospitality company- the first choice of
guests, team members, and owners alike.

To achieve this mission, one of the most important things is Customer Relationship
Management (CRM). CRM is defined as a process that entails the systematic and
proactive management of relationships as they move from beginning (initiation) to
end (termination) (Reinartz, 2004). Since 2002 a Customer Really Matter initiative
(CRM) was developed as an addition made to the Hilton OnQ. Hilton OnQ is an IT
infrastructure created by Hilton which allowed customers to have a one-stop
shopping of an integrated solution, and allowed employees to provide excellent
customer service on cue. CRM is a way to use technology to give you the power to
solidify relationships with our best customers according to Hilton. OnQ was the
technology enabler that consolidated customer data and produced comprehensive
arrival reports.

Purpose of this report:

In 2008, the Hilton Hotels Corporation has been taken private by the Blackstone
Group. In this report, we evaluate Hiltons CRM initiatives, results, and make
recommendations for the Blackstone Group what to do further with Hiltons CRM
after this acquisition.

1. Capabilities in the lodging industry, crucial factors for

a hospitality experience
First, it is important to know what the definitions are of the keywords used in the
question. Capabilities are defined as the processes that deploy the assets to create
a sustainable competitive advantage (Day, 1994). Examples of capabilities are:
- Advertising, promotion and selling
- Pricing and tendering
- Product and service management
- Distribution and logistics
As the definition of capabilities state, a capability is the foundation of a sustainable
competitive advantage, which should fulfil the following criteria, it should be:
- Controllable
- Different
 - Inimitable
Looking at the lodging industry, there are certain capabilities specific for the
industry. According to the book by Enz (2010) there are six capabilities necessary to
provide a foundation for a proper strategy.
Brand Strength: The Hilton Hotel Corporation was founded in 1919, which
means that the brand already exists for nearly a century. This signals that Hilton
Hotels is a trustworthy party and is able to survive even in economic downturns.
Also, the presence of a Hilton Hotel in almost every country in the world, makes
the brand strong and recognizable around the globe.
Frequent Guest Program: With the OnQ CRM software, Hilton Hotels is able to
recognize customers and also reward them for their loyalty. With the Hilton
Honors program, they recognize for example:
o 4+, individuals with four or more stays in a year
o Fast Rez, individuals who signed up for an online reservation
o Local VIPs,
Significant Presence in Top Markets: According to recent figures from Hilton
Hotels, the global stats are that they have 788,864 rooms, in 4,820 hotels
present in 104 countries and territories. So, they have hotels present in all ends
of the world, with a concentration in Europe and the US.
Premier and Distinctive Properties: With state-of-the art architecture and
locations, the Hilton Hotel Corporation has premier properties. Also, the fact that
they have different chains within the brand makes them able to distinguish
between different levels of exclusivity. They can serve the luxury seeker and the
just need a room type at the same time, under different names.
Scale: The fact that Hilton Hotels is one of the largest hospitality chains in the
world, comes with a certain complexity. On the one hand, this can be a
challenge, but on the other it enables Hilton Hotels for example to work with
large parties, like insurance companies, furniture companies, hotel supply
companies etc. This leads to enormous scale advantages, which comes with
discounts and in the end, more competitive prices for the customer. Another
benefit is again the recognize ability of Hilton Hotels, when they offer a certain
standard quality it adds to the trustworthiness of the brand. A downside of this
size is that since Hilton Hotels is working with franchisees, there is limited space
for own influences.
Diversification of Cash Flows and Assets: First of all, Hilton Hotels offers a
broad scale of different chains. Following this strategy enables Hilton Hotels to
serve a wide set of segments, which is certainly a competitive advantage.
Besides, they own casinos and vacation ownership. This diversification enables
Hilton Hotels to not just bet on one horse, but can rely on many different
industries. Also, the fact that they are present in almost all parts of the world
makes them less vulnerable to economic shocks in one place, they can
compensate.
Regarding the factors crucial for a hospitality experience, it is important to have a
look at the customer journey. The customer journey consists of 3 parts:
Pre-Stay
o Good visibility on the internet
o Proper information beforehand
o Accessibility of the property
Stay
o Complexity of check-in/check-out
o Proper housekeeping
o Ability to deal with issues on the spot
Post-Stay
o Handling complaints
o Solving experienced problems, to prevent from happening in the future
o Reward loyal customers
General factors:
o Consistency among different hotels
o Personal touch
o One-to-one similarity of the hotel with pre-stay information provided
(keeping promises)

Overall, in the hospitality business it is extremely important to let the customer feel
special, offer a so called great customer experience. Williams did a research on the
importance of understanding the consumer in the hospitality branch and concluded
that Innovative experience design will become an increasingly important
component of hospitality firms core capabilities. Those who go beyond service
excellence, and market experientially will lead the creation of value in the sector
(Williams, 2006). In terms of large hotel chains, a goal is to make a customer
loyal to your hotel, so their decision making is a lot easier and more limited with
only Hilton brands. However, there are many customers that weight the factors
differently, therefore it is important for Hilton Hotels to put similar customers in
segments and target them with different products, with different weights on the
factors. Hilton Hotels does this already with offering the different levels of luxury
chains.

2. Hiltons capabilities in the lodging industry and the

role of their OnQ CRM initiative
Hilton Hotels is doing an excellent job in addressing the factors just mentioned in
Q1. They launched the Customers Really Matter strategy in 2002 and tried to fulfil
the factors that make the customer experience unforgettable.

With the acquiring of the custom-built OnQ CRM system it becomes easier to spread
a uniform message across all properties, to meet the consistency principle. Also, it
makes it easier for franchisees to meet customers demands. This OnQ systems
offers numerous functions that are extremely helpful to create this competitive
advantage. This system for example allows to produce arrival reports of customers,
which is extremely useful for the front-desk staff. They know who is coming, they
know how many visits this person have had and when, it shows their wishes and
possible complaints they had. Staff can now personalize the welcome message
accordingly and makes sure everything is in order, to make the stay as pleasant as
possible. To really value the guest and treat everyone individually and customize the
approach guest will definitely feel more satisfied and retention rates will increase.
Also, the system enables to reward customer that are loyal more easily, the report
shows for example to what loyalty program a guest belongs, which gives him/her
certain privileges.

Features of OnQ CRM:

Customer built enterprise system
Customer information can be shared across brands
Pre-Arrival, Stay, Post-Stay
Integrated solution to serve customer needs based on records
Support the property-level of its hotel
Enabling firm to open more hotels and more consistence delivering value to
customers
Customer analytics, service recovery, recognition, personalization
Focused on the Hiltons Best Guests
Print the best guests arrival report every morning
Pre-assign tasks
Recognize guests

Besides that, Hilton is using call centers to optimize their CRM concept. Call centers
gather more information about customers during their reservation process. OnQ
reservations made it able to access guests personal dossiers and update their
preferences. This information shortens the call talk time and enables better cross-
selling.

Lastly, guests were asked to fill a survey upon departure; the Satisfaction and
Loyalty Tracking (SALT) - an important measuring tool because it assessed whether
the CRM initiative was truly working and how it could be tweaked.

3. Hilton and their degree of customer centricity

With Hiltons new CRM initiative, it is their ambition to solidify relationships with
their best customers. Here we will analyze to what extent Hilton is customer centric
based on their organizational aspects. Customer centricity is concerned with the
process of dual value creation. It lies not in how to sell products, but rather on
creating value for the customer and, in the process, creating value for the firm
(Shah, 2006). Hiltons CRM initiative main objective is to strengthen the relationship
with the customer through their whole lifecycle. This is the core value and is
expressed extensively.
 - The staff is expected to recognize the customers on an individual level and
personalize their interactions with them. Through these expectations, it is
made clear to the staff that the customer is the center of attention, rather
than for instance the rooms.

The backbone of Hiltons CRM initiative is the fact that they have an excellent
information-management process for data collection and data analysis functions.
Hilton has centered their CRM initiative around this technology, serving as a large
database, to share data rapidly within their property between staff members as well
as between their properties.

- Hilton uses its internally made information system ONQ which gives them the
opportunity to specifically fit the technology to Hilton its needs.
- The technology is used to share data of customers on the individual level.

Hilton also uses a clear formalized customer strategy on how staff should interact
with their guests. This strategy tries to map the customer so that the staff is able to
personalize their experience.

- The office staff is prepared through an arrival report with detailed information
about their customers, as well as a tool for the staff for further data collection.
A number of checkboxes have to be filled in, while also information is shared.
This information is very extensive ranging from, guest name to hometown
information.
- Through their ONQ technology, information is shared and integrated
encompassing all their customer touch points. The different touchpoints are
categorized through Hiltons guest cycle.

With regard to the performance-assessment process, Hilton focuses very heavily on

the product level. These performance measurements are not in line with customer
centricity. Although satisfaction levels of customers are checked, Hilton does not
take the individual customer or a specific group of customers into account when
collecting these data. Therefore, the satisfaction level isnt connected to the
customer, but rather to their products (rooms and property).

- A survey is filled out by a random sample of guests to measure satisfaction

levels of a property.
- Key terms with regard to revenue and competitive measures are based on
ratings on rooms (Average Daily Rate and Revenue per Available Room).
- There are no clear measurements on individual customers or groups of
customers.

Based on these organizational aspects Hilton is very customer-centered. Because of

the ONQ technology, Hilton serves customers on an individual level which greatly
helps personalize the experience. However, Hilton still lacks clear performance
assessments with regard to customers to actually show the effects of their CRM
initiative.
 4. Hilton and Customer Management
Hilton uses a proactive management of their customers from the beginning to the
end, ensuring that their customers needs and desires will be fulfilled and therefore
fostering a close and successful relationship with them throughout their life cycle in
the industry.

Customer Management implies that the decision making is based on the knowledge
about individual customers, and this has been acquired by Hilton Hotels with their
Customer Really Matters experience. Thus, guests were divided in four categories
of recognition (Hilton Honors Program, 4+, Fast Rez and Local Vips) being able this
way to show guests on their arrival that they are known by the company, and
therefore, being also able to provide with a unique and personalized experience.

This is not acquired effortless, but implies a full process before receiving guests in
the facilities. Hiltons ability to recognize their guests is due to the information kept
in their database (information that is integrated through all their different brands),
which is used since the moment the call is received in the call center, enabling this
way to know the customer preferences improving times and customer service. That
information allows for pre-assignment of guest prior arrival, which facilitates the
work of the staff in Hotels by knowing beforehand preferences and desires of the
upcoming customers.

However, pre-assignments are problematic for Hilton sometimes, as this decreases

flexibility. Therefore, the information about daily guests is also used to rank them in
order to provide a better and more exclusive experience for the most valuable
customers of the brand.

It is important to clarify that, even though CRM is constantly tracked and applied in
the Hilton Hotels, due to the characteristics of the industry and size of the company,
important tradeoffs need to be constantly made, and information should be
scrutinized carefully, as the data about a customer could be true depending on the
location or characteristics of a specific hotel or service.

For the measurement of the performance Hilton uses the Satisfaction and Loyalty
tracking survey monitoring ratings, willingness to return and recommend the hotel
of the Hilton guests. The survey is an important and effective tool for tracking as
Customer Oriented companies should increase CLV through customer loyalty, which
will be increasing if the customer satisfaction is high, in the Hilton case, through an
efficient and personalized hotel experience.

Main customer centricity characteristics (Interactive Customer Relationship,

Customer Integration, Internal Integration and External integration) are performing
as stated before by Hilton Hotels, providing this way not just value to the consumer,
but also value to the firm.
 5. Results of Hiltons CRM initiative
Before the OnQ CRM system there were problems with proper service because
information was not integrated and easily available, talk times at calls were longer
at the call centers because quests werent recognized properly. CRM should fix that.

Advantages of the OnQ technology Hilton Hotel Corporation implemented:

The software classified guests into best guests or one-time visitors etc. By
distinguishing the guests, you can pick out the best customers who gives
Hilton the highest revenue. You have to pay extra attention to those guests so
they become loyal.
OnQ allowed pre-arrival communication. Since at the start of an online
reservation, customer data is available. Hilton can contact the guest before
their stay to know their expectations, and are able to deliver the right service
on the day of arrival.

The OnQ CRM had cost $650,000 with a yearly maintenance estimated at $1 million.
When looking at the revenue and competitive measures (appendix 1) you can see
that the revenues decreased in more perspectives at the Hilton Hotels comparing
2001 and 2002. This means that with the implementation of the OnQ CRM
technology in 2002, changes have been recorded in the Hilton Corporation. During
the years revenues increased, and although it is difficult to extract real revenue
numbers from CRM, almost all brands of Hilton increase in their revenue per
available room. In appendix 1 you see that e.g. Hilton Hotels RevPAR increases from
$87 in 2002 to $105 in 2006. Also, their room revenue increased over the years from
$2,56 million to $3,33 million which shows that the implementation of CRM software
was of very much success.

Another aspect to consider is the call center data (appendix 2). As the OnQ CRM
system should promise, call talk times should decrease due to the greater
availability of data, and service provided to the guest will be better. In appendix 2
you see a table with the call center data. The net revenue per call increased per
year, and also in the amount of total calls is an increasing trend. This indicates the
good advantage of the OnQ CRM system. Net revenue per call increased from
$73.09 in 2002 to $102.55 in 2007.

6. Recommendations for Hiltons CRM after the

Blackstone acquisition
Concluding from previous analysis it is clear that the implementation of CRM
technology was a success for Hilton. Especially in the hospitality industry it is very
important to listen to your guests and provide them the right service and satisfy
them. Due to the high competition of other large Hotel companies it is of highest
importance to analyze customer needs and fulfill their expectation so guests
become loyal. Although the CRM has proven positive results, you have to keep
developing and strengthen this process to stay competitive and create a competitive
advantage by this.

Our recommendation is to keep going on with the current system, but further invest
in CRM to keep innovating because of the following reasons:

The system used is developed in 2002, but a lot happened in the world of
technology in terms of big data and social media. Big data gives the
opportunity to personalize and manage close personal relationships with
guests (Dean, 2014). A lot of information is also available from social media,
and it is important to collect and interpret data the right way. Integrate all the
data resources from different social media channels help to improve individual
customer management (Malthouse 2013).
Further investment is necessary to gain relational intelligence, become aware
of the relationship customers have with Hilton and reinforce data (Avery,
2014). Gaining data is one step, but implementing the knowledge about guest
is a second. With the large amount of data a firm can obtain nowadays due
the technology, customer relationship management strategies can be
implemented in all marketing strategy parts of the hotel, for example
regarding people and processes.
Hilton can improve their part on customer segmentation. Hotels need to
quantify the value of relationships with their loyal customers before investing
in them (Noone et al., 2013). Actually this means that Hilton should measure
their customer centricity, and according to Shah (2006), this can be done by
taking in account customer equity, customer satisfaction, customer advocacy,
customer loyalty etc. These measurements will provide data to segment
customers in for example true friends, butterflies, barnacles, or
strangers, (Ramani & Kumar, 2008).
Competitors are also developing and implementing new CRM strategies, so
Hilton has to think about the future as well. Every large hotel chain wants
loyal guests, and Hilton has to prevent that guests become loyal to another
brand. They can do this for example by giving the customers more control
and choice about their stay.
Revenue increases as the customer loyalty increases. And to increase
customer loyalty further investments in CRM are necessary. Improving guest
experiencing by analyzing pre and post arrival information and developments
could be made with new technologies like applications and social media.

Conclusion
Since 2002 Hilton has set out their Customers Really matter initiative to strengthen
their relationships with their best customers. The backbone is their ONQ system
which helps them store and send customer data on an individual level. This data is
used extensively by staff to personalize their experience with their best customers
and to raise customer satisfaction. Hilton still lacks clear performance assessments
on customers, rather focusing on rooms and property, making it difficult to call
Hilton a fully customer centric organization. However, results of this assessment
where very positive. After implementation of the CRM initiative almost all brands of
Hilton show an increase in their revenue per available room as well as the net
revenue per call. Based on these findings we recommend the Blackstone Group to
continue with their CRM initiative and invest in it for further improvements. Possibly,
looking at big data and social media to gain new customer information as a means
to further personalize and strengthen the relationship with the customer. Hilton
could improve their customer segmentation by transforming the obtained data in
the right way and by measuring the value of the guests so they can perform a
customer-centric strategy.

References
Avery, J., Fournier, S., & Wittenbraker, J. (2014). Unlock the mysteries of your
customer relationships. Day, G. (1994), The Capabilities of Market-Driven
Organization, Journal of Marketing, 58 (October), 3752
Dean, J. (2014). Big Data, Data Mining, and Machine Learning: Value Creation for
Business Leaders and Practitioners. John Wiley & Sons.
Enz, C. Hospitality Strategic Management: Concepts and Cases, 2 nd ed. (Hoboken, NJ:
Wiley, 2010).
Malthouse, E. C., Haenlein, M., Skiera, B., Wege, E., & Zhang, M. (2013). Managing
customer relationships in the social media era: introducing the social CRM
house. Journal of Interactive Marketing, 27(4), 270-280.
Noone, B. M., Kimes, S. E., & Renaghan, L. M. (2003). Integrating customer
relationship management and revenue management: A hotel perspective. Journal of
Revenue and Pricing Management, 2(1), 7-21.
Ramani, G., & Kumar, V. (2008). Interaction orientation and firm
performance. Journal of Marketing, 72(1), 27-45.
Reinartz, W., Krafft, M. and Hoyer, W.D. (2004), The Customer Relationship
Management process: Its Measurement and Impact on Performance, journal of
marketing, 41 (3), 293-305
Williams, A. (2006). Tourism and hospitality marketing: fantasy, feeling and
fun. International Journal of Contemporary Hospitality Management, 18(6), 482-495.

Appendix
Hilton 2001 2002 2003 2004 2005 2006
Hotel
s
Room $2,565,871, `$2,524,306, $2,471,302, $2,735,158, $3,030,171, $3,334,146,
Reven 863 671 966 951 471 538
ue
ADR $149 $126 $125 $128 $138 $149
RevPA $87 $84 $82 $88 $97 $105
R
RevPA 105.0 107.1 105.4 104.8 104.7 104.8
R
index
1. Revenue and Competitive Measures | Source: Hilton Hotels Corporation

Call Center Data Total Calls Net Revenue per Call

2001 24,824,937 $73.09
2002 24,864,291 $77.64
2003 24,282,151 $84.39
2004 25,803,572 $85,57
2005 27,475,261 $90.30
2006 27,421,289 $99,29
2007 28,626,204 $102.55
2. Call center data Hilton reservation contact centres | source: Hilton Hotels
corporation