Hhonors Case Study

1002 WordsAug 10, 20105 Pages
Hilton HHonors Strategic Response to Starwood Preferred Guest: The Battle for Customer Loyalty Hilton HHonors is a program which was designed to build loyalty to the Hilton brand worldwide. Membership in the program is open to anyone who applies at no charge. Members earn points toward their Hilton Honors account whenever they stay at a HHC or HIC property. Like many other reward programs, as members accumulate points they can redeem them for HHonors hotels or use them toward products and services from partner companies. Along with being a well-recognized name, the major advantage or strength of the Hilton hotel chain and the HHonors program is that it allows their members to “Double Dip”. This means that their members can earn mileage…show more content…
Cumulative Effects of Customer Satisfaction and Retention = Customer Loyalty | Conditions | Percentage of Members who are active | Members | Active Members | Stays Per Active Member | Nights Per Active Member | Average nightly revenue per stay | Revenue | Revenue Increase from 1998 Actual | Actual 1998 | 53.58% | 2650 | 1,420 | 2.5 | 4.9 | $158.00 | 1,099,364 | 0 | 5% Increase in active members due to increased retention | 58.60% | 2650 | 1553 | 2.5 | 4.9 | $158.00 | 1,202,333 | 102,969 | 5% Increase in active members due to increased retention and 1 nights stay increase | 58.60% | 2650 | 1553 | 2.5 | 5.9 | $158.00 | 1,447,707 | 348,343 | 10% Increase in active members due to increased retention | 63.58% | 2650 | 1685 | 2.5 | 4.9 | $158.00 | 1,304,527 | 205,163 | 10% Increase in active members due to increased retention and 2 nights stay increase | 63.58% | 2650 | 1685 | 2.5 | 6.9 | $158.00 | 1,836,987 | 737,623 | As you can see, a 5% increase in the percentage of active members within their existing members (retention/loyalty) would result in a 9.4% increase in revenues. If HHonors had a 5% increase in active members and each active member stayed only 1 additional night during the year HHonors would see a 31.7% increase in revenues. The best part is that we know from research and history that initial customer acquisition is the most expensive part
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