Marketing Week: What is the identified gap in the market the Curio brand is designed to fill?
Jim Holthouser: Customers want more bespoke, unique localised lodging experiences. We are bringing together products that are distinctive and unique – they have their own story and history and put them under the umbrella of Curio. There is still a large percentage of the overall supply [of hotels] not branded – these hotels need sales and marketing engines like ours. From our own customer standpoint we can start brining these hotels in and add them to our inventory as cool, aspirational places you can stay and where our members can use their points.
MW: How will the Curio branding manifest itself?
JH: There will be minimum signage in the properties but some for reassurance and confidence. They will have our ‘stamp of approval’ and at the front desk there will be HHonors programme signage but we will ask each hotel to keep their own brand.
MW: How long did Curio take to develop and what’s the roll out plan?
JH: Once we got the greenlight for Curio it took 90 days to create Curio’s identity but we were thinking about it for three years. We have done some homework on this market to understand the potential and size. If you look across the world and independent hotels that fall into the upscale potential partner bracket there are a good 500 candidates for Curio – and we have got our eye on the UK.
MW: Hilton Worldwide now has 11 brands with more on the way .Why does it feel this level of segmentation is needed?
JH: They are not stepping on each other’s toes, the brands are all carefully defined and executed and offer different price points and offer different kinds of experiences. We know about the stay patterns of our Gold and Diamond Honors members. While there may be [brand] loyalists the vast majority of our customers stay at multiple brands over the year. For example if they are going to do a football tour the Hampton might be the right product while for a marriage reception and stay it’d be the Waldorf Astoria. We are constantly looking at new brand ideas.
MW: How does the company ensure consistency of customer experience across its brand touchpoints given many properties are on a franchise model?
JH: We do really well as a company to create brands and have all the mechanisms to ensure they are consistent. We look at Tripadvisor and other metrics and see we do pretty well with premium market share in every brand. We have social media monitoring for every hotel around the world – and every hotel is visited two times a year to check its brand standards. If you are going to franchise you have got to have greater controls. Any hotel [operator] that fails twice is put on notice.
MW: How does Hilton respond to recent criticisms that many hotel loyalty point schemes are complicated and convoluted?
JH: We don’t hear that from our customers – they can get any room at any place at any time if they want to use points. However, points are just he table stakes. What customers absolutely crave is recognition and the biggest challenge we have is making sure people get recognised when they check in. When you come to the front desk we know a lot about you – how often you have stayed, where you stayed last and when you might have reported a problem to us. It’s one of the reasons we have the HHonors signage and we put the power of information in the hands of the front desk people
MW: Where does Hilton see opportunities for growth?
I think one of the biggest dynamics in this industry will be the China outbound market If you go back five years outbound was a trickle, now we have the growth of the middle class As a hotel company doing business in 92 countries we are interested in tapping into this demand. It’s one reason we are so aggressively growing the brand in China, it helps the Chinese get to know our brands. We have a programme that we have put in place [for hotels] that do a significant amount of Chinese visitor business. The programme requires things like having a Mandarin speaker at the front desk and a welcome note and slippers. Most hotels operating the programme are in Asia but also in San Francisco and the London Hilton Park Lane. Chinese visitors will influence lodging products and services probably more than anything else because of their sheer numbers going forward.
MW: What strategy does Hilton have for staying engaged with Generation Z or “Millennials” who appear to have little brand loyalty?
JH: For all of our brands we are focusing on sustainability and energy conservation, which is important for Generation Z. The demographic likes technology and cool design and dealing with companies that have a heart. Some competitors are very singularly focused on Millennials but our view is that, while we have to understand Millenials and evolve our brands and places so that they appeal, baby boomers also want cool design and technology too.
MW: How are the Hilton brands deploying technology and what are the opportunities?
JH: All our channels continue to change. We have apps that allow echeck-in so you don’t have to check in through the front desk. A lot of our competitors are out in the media and talking about their ability to do these things but really it’s only in two or three of their hotels. Our strategy is to do technology at scale. We have done a good job of integrating tech into the customer experience before you arrive at the hotel and for when you leave the hotel and we make sure we put the right offers and promotions in front of you via tech, for instance if we see you have family with you and we have a junior suite available we can ask if you want to upgrade for another $20. What I see over time is the front desk playing a very different role. Technology will handle the transactional elements and labour will be redeployed to deliver service and hospitality.
MW: How does Hilton now allocate marketing spend to take into account social media and other channels not so easily trackable for ROI?
JH: Typically we put 20 per cent of our marketing investment into image marketing, 70 per cent into proven channels that can produce revenue for us and we know exactly what are ROI is. Five per cent of the budget is to experiment with – to play and learn.
MW: What can you say about the lifestyle brand planned to be unveiled later this year?
JH: [Hilton was legally barred from developing a lifestyle brand in 2010 for two years and had to jettison a concept called Denizen] The silver lining is that our thinking has moved on this. You will see a lifestyle brand emerging very different from what we would’ve done three to four years ago. It seems to me everyone is trying to launch brands that position upscale to where Starwood’s W brand sits. But the further you go up the fewer customers and fewer developers [of hotels] are available. We see a concept and opportunity called ‘accessible lifestyle’.