Q&A: Hilton Steps Up Customer Loyalty Efforts

The hotel industry is going through a rough patch. But even in tough times, consumers are looking for an occasional getaway, according to Adam Burke, svp-customer loyalty at Hilton Hotels, which earlier this year kicked off its Hilton HHonors Double Points loyalty program. The program allows Hilton customers to earn twice the number of base points for stays at more than 2,400 hotels worldwide. (Hilton includes brands such as the Waldorf-Astoria, Hampton and Doubletree.) HHonors, which runs through April, comes at a time when hotel net income is expected to drop 14 percent in 2009, per PKF Hospitality Research. In a recent interview with Brandweek, Burke discussed the new program and how the Hilton family of hotels is faring in a down economy.

Why kick off a promotion like the Hilton HHonors Double Points customer loyalty program?

Adam Burke: Our customers get a regular stream of offers that are tailored to meet their specific needs, and that was the genesis behind this Double Points program. In the past six to 12 months, there has been a significant increase in customer awareness and utilization of hotel programs. We found that people are increasingly realizing that there is tremendous value in the Hilton HHonors program. It’s very easy to earn HHonors points and redeem for rewards.
BW: How is the Hilton family of hotels weathering the recession?
AB: We are very fortunate because we [encompass everything] from focus service brands like Garden Inn and Hampton all the way through to luxury brands like the Waldorf-Astoria and Conrad. The good news is that customers—irrespective of their hotel needs or price point—can always find a product with us that meets their needs. That’s equally important—not just the distribution of our hotels, but the quality of the brands. Since J.D. Power and Associates [a market research firm] started their hotel statistics survey, our brands have [garnered] the lion’s share of first place wins for customer satisfaction, irrespective of how their needs change. We have the right product for them. The second part of it is, our brands are very focused on value. With Hilton Garden Inn, Homewood Suites and Hampton, you are getting a lot of value for the dollar you pay with services such as a complimentary breakfast and a complimentary Internet package.
BW: How has the Hilton HHonors program been faring thus far? Are more members redeeming points for hotel stays in a down economy?
AB: We did a program like this some time ago. It’s been a good five plus years. We have gone very much towards a targeted approach. The reason we [re-launched that program is] is over time, we found that some customers are motivated by a points offer, and others, by a mileage offer. We try to put the right offer in front of someone based on their needs.
Double base points is something that has worked very well historically and in the current economy, much of the reason why we’re doing this is because we want to make sure people have every reason to want to stay with us.
BW: Has the recession caused hotels to rethink the way they approach the term “vacation?” What does a “hotel stay” really mean in a down economy? Is there even room for such luxuries as that?
AB: We’ve all heard the buzzword ‘staycation.’ That’s not a new concept to us. We’ve always had a significant mix of both leisurely stays and HHonor rewards nights, people who are taking long-term true resort stays, as well as very close-to-home short stays. Currently, we have just as many people who are coming to us for a one or two night stay as for a quick getaway.
People are very value conscious. In trying times, it’s more important than ever that we all still take the time to refuel and recharge. We’re making sure the right packages are available for people whether they’re planning on a long-term stay or doing things closer to home.

BW: Which advertising media are you focusing on? Which are the most effective and why?
AB: When you look across the broad spectrum, it’s everything from TV to radio to cable to traditional media outlets, including newspapers and periodicals. It can also mean a heavy emphasis on online advertising. The tools you use depend on which brand you’re talking about. With Hampton [a mid-priced hotel] you’ll see a greater emphasis on radio, whereas, with a brand like Hilton, it’s more towards TV. It really varies depending on the brand. When you look at it from a marketing standpoint, we view all of them as viable channels. It’s just a matter of which one is more appropriate.
BW: What do you think is the right approach: Increasing or decreasing ad spend in a down economy?
AB: It’s the age old question: ‘How do you handle a downturn in the marketplace?’ My argument is, as the pie gets smaller, it’s more important to maintain a share of voice. The smarter marketers are the ones who are finding ways to capture increased market share during a downturn. I would not just focus on marketing spend and what’s most cost effective, but ask myself, ‘What is the ROI of these opportunities?’ For instance, we’re not looking at online because it’s inexpensive. We found it’s a very effective way to get our messaging out and allows for a high degree of interaction with customers. It’s less about being cost-driven and far more about being optimizing, maintaining and growing a share of mind and voice during an economic downturn.
BW: Somewhat off-topic, but we can’t help but wonder: How did Hilton manage to accommodate the huge crowd gathered in D.C. for President Obama’s inauguration last month?
AB: D.C. was absolutely sold out, including all of the surrounding areas. It got to the point where a lot of people were opening up their homes to not just family and friends, but a friend of a friend. It was like a giant area slumber party. We actually had Hilton HHonors club members redeem honors point from around the time of the inauguration to a week and half out. The reason is because we offer no blackout dates with no capacity controls. With our rewards program, as long as a standard room is available for purchase, someone can redeem those rooms.
BW: Favorite dream destination vacation. And how would you spend it?
AB: If it’s my wife and myself, it’s definitely going to the Conrad Maldives Rangali Island. We have a spectacular property there that is one of a kind. It’s consistently ranked as one of the top in the world, and can only be described as Robinson Crusoe gone to heaven … We also have the world’s first, underwater restaurant.
If it’s with my family, we always love going to the Grand Wailea Resort Hotel & Spa in Maui. It’s just a wonderful escape. The people in Hawaii and at the Wailea are just fabulous. The hotel has so many options. There’s [so much to do and see there]: water skiing, waterfalls and also the world’s only water elevator. Our kids just absolutely adore it.