PowerPoint Template
By : Cindy Budiman Devina Sastria
Edwin Salim WigunaJuvena Elizabeth
Franchising at Hilton Hotel Corporation
Contents
Support to The Franchisee
HHC’s Principles Of Franchising
Franchise Development Process
Hilton’s Business Model
History
Future Plans
HISTORY
History
History
HHC began Franchising.
1946
1949
1964
1965
Hilton International Co. (HIC) was formed.
Hilton controlled by 2 unrelated corporation :•HHC•HIC
Hilton Hotel Corporation (HHC) was
formed.
History
History
1997
1949
1999
Alliance between HHC and HIC
Expanded portfolio with the acquisition of Promus Hotel Corporation
2001-2003
Global expansion through acquisition and franchising continued at HHC
HILTON’S BUSINESS MODEL
Hilton Brand
Text
As of 2009
Hilton’s Business Model
BusinessBusiness ModelModel
BB
FF
CC
DD
AAOwned Hotels
Leased Hotels
Managed Hotels
Franchised Hotels
Joint Ventures for International Operations
Timeshare Ownership
EE
Franchise Portfolio
Franchise development process
Reasons for Franchising
The hotel market is booming and gaining more attention from franchise investors.
Lodging industry is projecting strong growth in the future.
Great opportunities for this type of business exist in the U.S and worldwide; the lodging industry is constantly expanding.
Little or no capital investment required. To expand globally and gain brand
recognition
Franchise Development Process
Approval Process: Steps 1-9
21-step Franchise
Development Process
Design & Construction: Steps 10-21
Approval Process
Franchisee contact HHC developer and will receive UFOC (Uniform Franchise Offering Circular).
Decision for the site of the hotel.Completion of FLA (Franchise License
Application).Payment of Initial fee.Project summary submitted.Approval letter from Franchise Administration.Get Hilton Standard Manual and set up a pre-
design meeting with the architect.
Design & Construction
Franchisee send preliminary plans and specifications to the Hilton project manager for review and comments.
After final approval construction of the hotel began.
Franchisee sent monthly updates/repotsThe project manager may visit the site up
to three times during construction for inspections.
Decide the opening date.
Design & Construction
Obtain a Certificate of Occupancy from local Building Department.
Pre-opening checklist. Installment of the required
property management system and training for using the computer equipment
Final consent by QA team The Hotel Open !!!
Franchise Fee at HHC (as of 2008)Initial License Fee Initial fee based upon the number of guest
rooms in prospective hotel. The initial fee ranged between $50,000 and $85,000 for the first 100- 275 guest rooms and $300-$450 per room thereafter
Franchise Royalty Fee Ranged between 3-5% of monthly gross rooms revenue
Monthly Program Fee Ranged between 3-4.3% of monthly gross rooms revenue
Computer System Fees Up-front software OnQ High Speed Internet Access (HSIA)Fees are based on the size of the hotels and the number of workstations and it rangedbetween $40,000 and $150,000
Other Fees For Frequent Traveler/Guest Reward program, training, ongoing computer system maintenance and related fees, etc.
Franchise Growth
YearU.S.
FranchisesCanadian
FranchisesForeign
FranchisesCompany Owned
2009 189 11 29 296
2008 188 11 27 291
2007 175 11 25 306
2006 167 11 30 400
2005 157 10 2 68
Source : “Hilton, Hotels, Suites, Resorts, “www.entrepreneur.com.
HHC’S PRINCIPLES OF FRANCHISING
HHC’s Principles Of Franchising HHC believed that a franchise relationship
should be a long-term commitment made to benefit both parties.
“The purpose of the HHC Principles of Franchising is to provide a clear definition of the
expectations of the franchisor and franchisee to help us both build an even greater foundation
for a solid, long-term relationship.”
Both HHC and its franchisees shared a mutual interest in maintaining the product and service quality at a competitive edge.
HHC’s Principles Of Franchising
HHC also charted out growth and development programs for its franchisees through principles of development, multiple brand considerations, and market awareness and fairness.
The principles of development focused on fair play, teamwork, mutual respect and open communication.
HHC also gave its franchisees multiple brand considerations as it had a wide range of hotel brands and brand extensions, each with a unique and differentiated product and service profile, and at distinct price points.
What Franchisees Expect from HHC HHC should protect the value of its brands. HHC was committed to deliver outstanding service
to its franchisees and to help them maximize the value of the system.
HHC should maintain the superiority of its brands by continuously monitoring and conducting research on trends and standards within each brand’s competitive set.
Develop and manage programs and processes to maintain HHC’s product and service quality at a competitive edge.
HHC to monitor quality and performance, and develop leading-edge programs and products.
What HHC Expects from Its Franchisees
Uphold brand value, product and service quality standards, and HHC’s culture of complete guest satisfaction.
Total commitment to building customer loyalty.Ensure that the employee team members were
well-trained and focused on delivering HHC’s commitment to product and service quality.
HHC invited its franchisees to communicate openly and regularly to provide input to improve its brands and relationships.
Take a proactive role in building new HHC brands in its (franchisees) markets.
SUPPORT TO THE FRANCHISEE
HILTON SUPPORT
Spent more than $700 mil in a year Worldwide marketing and sales
• Promoting the brand in top media• National and regional advertising• Public relations• National programs, such as Hilton vacation
package, easy escape getaway packages
Total technology solution•OnQ system, a technology platform that
linked all its brands and hotels to enhance customer service and loyalty.
•Maximize the operational efficiencies.
Hilton Support (cont.) Hilton reservations worldwide
• In 1999, $30 million central reservation system (CRS) called HILSTAR.
• Toll-free 1-800-Hiltons in the US and Canada.
Cross-Selling• Hilton horizon system, linked the reservation
availability and facilitated referrals to other nearby hotels within the Hilton gamily of hotels.
Hilton HHonors• Frequent guest reward program.• As of 2004, 13 mil loyal HHonors members.
FRANCHISEE ADVANTAGESHilton is a name that is synonymous with
first class hospitality.Franchising with Hilton is a satisfying and
rewarding experience.Hilton gives committed service and
support.
Enjoy Shopping, Dining and Live Entertainment at Downtown Disney®
FUTURE PLANS
Future Plan
HHC focused on franchising and management contracts, which required little or no capital investment.
Capital improvement on owned hotels.
Franchise financing programs, which are $50 mil outstanding loans and $69 mil debt.
Latest DevelopmentOn July 3, 2007, Hilton was acquired by
the Blackstone group for around $26 billions.
The deal was at $47.50 or a 40% premium from yesterday's closing stock price.
In 2009, HHC launched new corporate name and logo.
Next, Hilton moved its headquarter from Beverly Hills, CA to McLean, VA.
Latest Development
• Launched iPhone and iTouch application in the lodging industry.
• Formed senior management team to make expansion plan and execution in Middle East and Africa.– 19 properties, and over 5,000 rooms
spanning Egypt, Levant and Africa.• In 2009, named as #1 hotel brand in
Middle East and Australia.
HILTON RANK on FORTUNE 500Rank Company 500 rank Revenue ($ millions)
1 Marriot International 203 12,160.0
2 Harrah’s Entertainment 254 9,780.7
3 Hilton Hotels 296 8,162.0; 572.0(profit)
4 MGM Mirage 315 7,588.0
5 Starwood Hotels & Resorts 381 5,979.0
6 Wyndham Worldwide 546 3,842.0
7 Boyd Gaming 768 2,397.5
8 Penn National Gaming 797 2,244.5
9 Las Vegas Sands 801 2,236.9
Source : Fortune Magazine, April 30th, 2007 issue
World Hotel Group Ranking 2009
www.themegallery.com
“Have a Pleasant Stay With Us”
Top Related