Cinplex Entertainment
HHW: Loyalty Wars
Discussion Isuues
• What is the decision problem of Jeff Diskin? What alternatives are left with him for HHonors program with announcement of competitive rewards program by Starwood? • What should he do? Why?
Conventional FMPs V/s Modern
• Cumbersome v/s Easy • Manual v/s Technology based • Tangible benefits v/s Service, Relationship • Short term v/s Ongoing • Local v/s Global • Limited scope v/s Large scope
Types of Promotions
Immediate Rewards Price Rs. Off/ Price Packs Premiums/ Contests Delayed Rewards Coupon for next purchase ‘Free’ Mail-ins /Rewards Programs
Non Price
Diskin’s Dilemma
• Problem
• Customer Retention • How to respond to Starwood program
• Alternatives
• Do not react and continue with existing • Match Starwood program • Withdraw from loyalty game • Modify existing program but do not match point-by-point
Criteria
• Is current program beneficial? • Does it give loyalty?
Is loyalty program profitable?
• • • • 17.5% increase in utilization in one year (pg. 9) 20% increased yield (pg. 7) How much is added by HHW Total nights of stay by Members (Table B)
7,015,000 paid
180,000 reward nights 1,708,800 nights through airline miles (712,000 *2.4) 8,903,800 Total
• Total nights occupied at Hilton/ HI network(pg. 6)
8,903,80000/22.5 = 39. 6 mn. nights
Is loyalty program profitable?
• Total nights at Hilton/ HIC
(91,100 + 62,900)*365 = 56.2 mn. Nights
• Occupancy
39.6/56.2 = 70.4%
• 1 in 5 members @ hilton because of membership only (pg 9) • I.e. 20% of 22.5% = 4.5% nights directly due to program • Fixed cost 68%. 80% of all revenues above goes to profits.
• Cost – nothing to hotel groups
Does it make sense to Franchisee
• Does it pay to join the program? • Total nights by members = 7.015 mn • 1 out of 5 due to member directly means that 1.4 mn nights are additional with the program • 80% margin. $158 per night – average tariff (Ex 4) • Total additional income to hotels =
Discussion Isuues
• What is the decision problem of Jeff Diskin? What alternatives are left with him for HHonors program with announcement of competitive rewards program by Starwood? • What should he do? Why?
Conventional FMPs V/s Modern
• Cumbersome v/s Easy • Manual v/s Technology based • Tangible benefits v/s Service, Relationship • Short term v/s Ongoing • Local v/s Global • Limited scope v/s Large scope
Types of Promotions
Immediate Rewards Price Rs. Off/ Price Packs Premiums/ Contests Delayed Rewards Coupon for next purchase ‘Free’ Mail-ins /Rewards Programs
Non Price
Diskin’s Dilemma
• Problem
• Customer Retention • How to respond to Starwood program
• Alternatives
• Do not react and continue with existing • Match Starwood program • Withdraw from loyalty game • Modify existing program but do not match point-by-point
Criteria
• Is current program beneficial? • Does it give loyalty?
Is loyalty program profitable?
• • • • 17.5% increase in utilization in one year (pg. 9) 20% increased yield (pg. 7) How much is added by HHW Total nights of stay by Members (Table B)
7,015,000 paid
180,000 reward nights 1,708,800 nights through airline miles (712,000 *2.4) 8,903,800 Total
• Total nights occupied at Hilton/ HI network(pg. 6)
8,903,80000/22.5 = 39. 6 mn. nights
Is loyalty program profitable?
• Total nights at Hilton/ HIC
(91,100 + 62,900)*365 = 56.2 mn. Nights
• Occupancy
39.6/56.2 = 70.4%
• 1 in 5 members @ hilton because of membership only (pg 9) • I.e. 20% of 22.5% = 4.5% nights directly due to program • Fixed cost 68%. 80% of all revenues above goes to profits.
• Cost – nothing to hotel groups
Does it make sense to Franchisee
• Does it pay to join the program? • Total nights by members = 7.015 mn • 1 out of 5 due to member directly means that 1.4 mn nights are additional with the program • 80% margin. $158 per night – average tariff (Ex 4) • Total additional income to hotels =