Introduction This study aims to apply the application of value chain to a selected organisation in a service industry. This study aims to use Hilton Hotels as the focus of this paper. The main purpose of this study is to examine how Hilton Hotels builds a relationship with its customers, how it improves the added value to retain customers and what should be improved under the context of value chain to improve the better services in order to effectively deliver customer satisfaction and exceed their expectation.
The paper will start from providing brief information about Hilton Hotels and then move on to analyse and discuss the key issues. About Hilton Hotel Hilton Hotels is one of the leading international premium hotels in the world. The company was founded by Conrad Hilton (Hilton Hotels, n. d. ). It offers full-services hotels and resorts to customers in many major cities around the world. Through different kinds of customer service programmes, it attempts to develop a good relationship with the targeted market. It also attempts to use the ‘Hilton Honors’ which is customer loyalty programme to retain existing customers (Hilton Hotels, n. . ). The programme does not only enable Hilton Hotels to assess quality premium services from the hotel and its affiliated firms, but also helps them to experience the feeling of privilege. How effective are the organisation’s resources in delivering its service offering? Based on the concept of value chain, it can be assumed that Hilton Hotels attempts to add value to its offerings with the use of effective support value chain activities. Hilton Hotels uses different support value chain activities to sustain the effectiveness of primary activities to exceed customer satisfaction and expectation.
These can be explained below. Primary Value Chain Activities of Hilton Hotel Inbound Logistics Hilton Hotels have several suppliers in each country in order to have sufficient supplies as part of a good quality service for customers. There are three most important areas that Hilton Hotels pays a lot of attention on because they influence people to pay more for premium services. These include food and drink, pick-up and other motor service and interior design. For example, Hilton Hotels decides to use different suppliers for fresh meat and vegetables to get the best products from suppliers with specialised offers.
Once the goods are delivered, food and catering department of Hilton Hotels will store them in the right temperature until they are required. Before they are put in the stockroom, catering staff will put different colour stickers on the package. For example, fresh meat will have the maximum lifetime of five days. If it arrives on Monday, the blue sticker with the word ‘FRI’ should be put on the package to inform the chef and other kitchen staff that it should be used by Friday or otherwise, it should be binned to avoid food poisoning. The same practice is also true for car courtesy service and interior design.
For example, Hilton Hotels has a contract with Mercedes Benz and other luxurious car brands to support its car courtesy services, while its interior design is done by a professional firm which will be in charge for all events held at the hotel. Operations As previously explained, this stage involved with transforming the goods into the finished offerings for end users. At Hilton Hotels, there are many goods that need to get through the operations process before being delivered to the end users. For example, all rooms will be cleaned once the customers check-out to ensure that that they are ready to serve the next guest.
Outbound Logistics This is about delivering the finished goods to final users. For Hilton Hotels, this is about the presentation of both tangible and intangible products to customers. For example, the room must be spotless and equipped with facilities as promised and advertised. Also, the food should be cooked in the right manner, such as if the customer asks for a medium rare steak, they should get what they have requested. Once the food is cooked, it should be served to the customer within five minutes and the table must be cleared within ten minutes.
Marketing & Sale This is about developing the marketing communication and promotion strategies that meet the needs and demands of customers. The marketing communication message used by in the poster is ‘Never feel away from home …… When living any of our over 514 hotels worldwide!!! ’ This slogan informs the target market that wherever they go, they can always be comfortable like staying at home at the Hilton Hotels which has more than 514 outlets worldwide. Hilton Hotels does give some discounts to customers during the low season.
It does not do this on a regular basis like many budget accommodations. This is because it targets customers who are less price-sensitive and they are willing to pay more for premium services. Service Through the customer loyalty programme ‘Hilton Honors’ to monitor behaviour of customers. This loyalty program enables card holders to access other premium quality services from the partnership companies of Hilton Hotels, such as car rental firms and airlines. The loyalty scheme allows the hotel to improve the products and services to meet new demand in the market more effectively.
Support Value Chain Activities of Hilton Hotel Firm infrastructure Hilton Hotels is an international hotel chain with many resorts and leisure accommodations in many cities around the world. Customers should expect to get the same quality standard of leisure hotel services. This is because Hilton Hotels has an effective system to control the performance of the company. There are five main factors that Hilton Hotels uses to maintain its performance in all cities. These include cleanliness, quality, service, maintenance and atmosphere (Roubi & Litteljohn, 2004).
All hotel rooms and common areas of the hotel should be spotless, the service should be delivered in a professional manner, cars, tools and equipments should be maintained and checked to ensure that they work effectively when required and the interior design should provide comfort. All of these elements are part of the organisational culture of Hilton Hotels. Human resource management Both frontline and management workers of Hilton Hotels are well-trained to deliver a perfect customer serving. Hilton Hotels tends to select employees with the right skills and knowledge.
It is revealed that Hilton Hotels welcomes and prefers employees who have degrees from hospitality institutes in Switzerland. However, those with appropriate experiences are also welcomed. All workers of Hilton Hotels are required to attend both on-the-job and off-the-job training programmes to ensure that they are equipped with the right tools to carry out a good customer service. At the same time, to motivate all workers to work towards the assigned tasks with their best effort, Hilton Hotels provides its workers with financial and non-financial rewards.
Some employees who have been working for the hotel for more than two years are eligible for organisational rewards, which are in the form of shares that are sold to workers at a discounted price (Watson et al. , 2007). Technology department Like other companies in the hospitality segment, the technology development and web-technology is used by Hilton Hotels to improve customer satisfaction in terms of fast and instant customer service. Hilton Hotel develops an official website which enables customers to book a hotel room, make a request for the airport pick up and other additional services.
The website of Hilton Hotels does not only make it easy for customers to access the services of the hotel, but it also enables the hotel to promote its brand and offers worldwide at the lowest cost (Lo et al. , 2010). Procurement Hilton Hotels is very selective about its suppliers. This is because it positions itself as the international premium hotel chain. Thus, apart from good quality products and services that these suppliers have to provide, they must also follow the rules set by Hilton Hotels.
Hilton Hotels requires all of its suppliers to be environmental-friendly and should not be involved in any kind of unethical issues, such as sweatshop and using underage workers (Hilton Hotels, n. d. ). How is Hilton Hotel attempting to build a relationship with the customer? Under the concept of value chain, it can be assumed that the targeted customers of Hilton Hotels are those who are quality conscious and they are willing to pay extra for the best service. Hilton Hotels uses differentiation strategy to develop a good relationship with customers and this enables it to retain customers more effectively.
Differentiation & Value Chain – Customer Service Based on the analysis in the previous section, it can be assumed that Hilton Hotels develops a strong bond with targeted customers through value chain differentiation strategy. This is done by making its customer service different from others in the same segment. Hilton Hotels aims to offer the best leisure products and services in the industry. This strategy does not only enable it to charge customers premium price, but it also allows Hilton Hotels to retain and influence the repeated purchase behaviour (Vukmir, 2006).
The loyalty scheme ‘Hilton Honor’ does not just makes customers feel that they are more privilege than others, but also enables them to access many premium services. Hilton Hotels must work hard to ensure that the promised offerings are delivered to customers. Differentiation & Value Chain – Technology To keep customers updated with new offers, Hilton Hotels sends electronic mails to customers who sign up for the service. The technology makes it easy for Hilton Hotels to develop a customer database and this can help them to monitor the behaviour of targeted customers more effectively.
Hilton Hotels also utilises other new forms of media to keep a good relationship with customers through social networks like Facebook and YouTube. This enables customers to share experiences about their stay at Hilton Hotels. At the same time, this also allows Hilton Hotels to keep customers informed about recent events and activities. Conclusion According to the analysis in the previous sections, it can be assumed that there is little evidence about customer satisfaction towards the services of Hilton Hotels.
However, based on the review of Hilton Hotels on TripAdvisor website (2009), it can be seen that it receives four out of five stars and 87 percent of customers who stay at the Hilton recommend it to others. The only problem that many customers appear to complain about is the pricing tactic of Hilton Hotels. Thus, under the current difficult economic conditions, it seems that customers will become more price-sensitive as they have less disposal income or start being cautious about their spending habits.
They may look for substitute leisure accommodations which offer quality lodging services at affordable and reasonable prices. This means that even customers with a high spending power may still want to stay in a hotel room without breaking a bank. Therefore, there are two possible tactics that Hilton Hotels can consider in order to add value to its offerings. These include (1) promotional offer or competitive deals; and (2) complimentary or free gifts.
The first strategy does not only add value to the offerings and exceed customer expectation, but it is also attractive to those who look for value for money. By contrast, the second strategy will satisfy customers who pay a full price on services. Complimentary offers would be perceived by them as a thank you gift from Hilton Hotels. This tactic will also make high spending-power customers feel privileged. Thus, it can be concluded that both strategies should effectively add value to the offerings of Hilton Hotels and satisfy customers with different spending powers.
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