Hilton is the world's best-known hotel name and the market-leading hotel operator in the UK. But for many, the brand once synonymous with glamorous international travel has recently lost its lustre.
In the UK and Ireland alone, the Hilton Group's profits were down by 14% to £107.7m in 2002 according to Datamonitor. To some extent, this has been the result of a series of tourism crises - war, terrorism fears and SARS - which have made Hilton's core customer, the US businessman, reluctant to travel.
But the Hilton name specifically may have become too omnipresent. It could also be suffering from a lack of personality. According to FutureBrand, travellers are 'eschewing the ubiquitous hotel offering of mini-bar, chocolate on the pillow and porn channel and demanding a more targeted, personalised experience'.
Jasmine Montgomery, strategy director for FutureBrand, says: 'The Hilton brand has one fundamental flaw. Say Hilton to someone and they think of hotels. That's it. They don't think of sexy clientele, exotic architecture or great service.'
In this sense, Hilton has been outmanoeuvred by upmarket competitors such as Hyatt and Marriott, along with 'boutique' hotel operators including Ian Schrager and Malmaison. They recognise that the hotel sector is polarising into luxury and budget categories, with the middle ground squeezed.
It is interesting that Hilton's luxury offering Conrad Hotels is flourishing.
Conrad's level of occupancy increased by 12% in the past two years and room revenue jumped by 17%. Although Conrad shares Hilton's Honours loyalty scheme, the brands are kept deliberately separate, arguably preventing Hilton benefiting from Conrad's glittering reputation.
So how can Hilton reinvigorate its brand? We asked Tyler Brule, founder of Wallpaper magazine, chairman of Winkreative and general arbiter of style, and Nick Mercer, commercial director of Eurostar.
VITAL SIGNS
Hotel groups by market share, retail value, UK and Ireland (%)
2001 2002 2003
Hilton 7.6 7.6 7.7
Whitbread 6.7 6.8 6.8
InterContinental 4.9 5.0 5.2
DeVere 2.7 2.8 2.9
Thistle 2.2 2.2 2.1
Others 75.8 75.6 75.3
Source: Datamonitor
DIAGNOSIS 1 - TYLER BRULE, Creative director and chairman, Winkreative
There are many areas where I like to think of myself as adventurous, but travel brands aren't one of them.
In the air I'm a dedicated British Airways, Qantas or Lufthansa person. On the ground I want a hotel brand that I know will deliver. Independent and innovative properties are fine when there's less at risk, but if you're doing five cities in four nights you want the insurance of a solid brand.
I am bombarded with hotel and holiday offers from the big players and I still don't know what Hilton's offer is.
The US is not a nation of outstanding travel brands. With the main US carriers ranking lowest on the innovation scale, the same could be said of its hotel groups. Hilton also has to overcome the hurdle of being seen as a stack 'em high, sell 'em cheap brand. Not the most attractive offer to potential guests.
There is room for an international mid- to upper mid-market hotel brand using the 150- to 200-room concept. Most of the established brands continue to get it wrong and Hilton is a brand that could certainly have a crack at it.
REMEDY
- It sounds easy, but the logo needs a refresh. It needs to be more masculine, stronger, confident. Add some colour.
- Be known for something. Beds? Gym? Best shower cubicles? Club sandwich?
- Launch some different formats.
- When the above are fixed, launch a clever DM strategy. It only takes one banker at UBS to spread the word.
- Build a college to train and maintain staff.
DIAGNOSIS 2 - NICK MERCER, Commercial director, Eurostar
Hilton has been at the forefront of international travel for so long.
It is a high-recognition brand that you might associate with an early Bond movie or the jet-setting era of Boeing 707s. Yet it is ironic that its corporate history, with different owners of the Hilton name, has contributed to its loss of confidence.
Like all large hotel chains, Hilton has suffered from the war in Iraq and SARS. But it is the rapidly changing economic climate that has had most impact, forcing Hilton's high-value clientele to search for cheaper accommodation because of shrinking travel budgets.
Hilton's business plan assumes the market will recover, but price-conscious travellers may never go back to the days of paying $400 (£226) a night.
It is in danger of being squeezed out of the market without substantial change.
Hilton has found it difficult to get to grips with the complexities of distribution. Is the room rate being offered direct to guests best value or not? Hilton should be offering the best value around to ensure that its brand is not damaged.
REMEDY
- Be distinctive and elaborate on what the brand stands for - what is the Hilton definition of luxury and convenience?
- Apply this fresh thinking to the relevant geographic markets.
- Radically overhaul room rates to ensure they are best value. Adopt principles of dynamic pricing.
- Provide something different - such as offering guests a free phone call to a loved one to say they've checked-in.
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