When we asked Hilton how it's updating its brands for a new era, we expected to hear mostly about color palettes and breakfast options. But the company instead said workforce satisfaction was the most critical ingredient.
Over 14 years, hotel operator Hilton Worldwide has doubled its number of hotel and resort brands to 19 and more than doubled its number of rooms to 1.1 million. During the pandemic recovery, the McLean, Virginia-based hotel giant is looking to fine-tune its brands and portfolio, especially in light of its introduction in January of its first economy brand, Spark by Hilton.
“From a macro perspective, in terms of services we provide across the chain scale, everything’s getting touched up and evolved in a way I’ve never seen in my 14 years in this industry,” said Matthew Schuyler, chief brand and communications officer. “It’s like a Big Bang.”
When franchise and management companies talk about their brands, they often speak about brand standards. These distinctions help brands stand out for guests and developers.
Yet Schuyler, responsible for positioning the company’s brands, points to labor relations as a critical component. Happy workers equal prosperous brands, he noted.
Labor as a Backstop to Brand Quality
Brand marketing is just talk if there isn’t a matching operational delivery. So Hilton has worked hard to cultivate an energized workforce to deliver on its brand promises.
When asked what he’s most proud of in his 14-year tenure at Hilton, Schuyler said it was the company’s improvements to its workplace culture over many years. As signals of progress, he pointed to independent rankings that find Hilton one of the best and more diverse workplaces according to employee surveys.
“When we started, we couldn’t make the lists, and when we broke in, we were at the low levels,” Schuyler said. “By around 2016, we were topping the lists. I think we’re number one on lists in about a dozen countries now.
For example, Fortune magazine has named it one of the World’s Best Workplaces in the past seven years. It’s currently the only hospitality company on the 25-slot “Great Places to Work” list.
Schuyler said how it handled the pandemic disruption as sensitively as circumstances permitted helped it maintain good relations with its workers. When it had to lay off workers because hotels were closed, it created a job board with listings for openings in other sectors such as retail, grocery stores, and warehouses that, Schuyler said, at one point had 100,000 listings.
“We drew down on the goodwill we had built up with our colleagues in a big way during the pandemic,” Schuyler said. “We’ve built our ‘bank account’ back, maybe not fully to the pre-pandemic levels. But, in a recognizable sense, it’s back.”
It’s not just labor relations that matter to brand management. Hilton also sees partnerships with non-travel brands as a key path to staying relevant.
For example, connected fitness was a trend that surged in the pandemic, and Hilton is adding at least one piece of Peloton fitness equipment to each of its roughly 5,400 U.S. properties.
“It’s a great example of what we call a ‘strategic mash-up’ that transcends individual brand standards,” Schuyler said. “It matters at a Hampton, and it matters at a Waldorf. It’s delivering on the service expectations of new age travelers.”
In a similar mash-up, Hilton last year partnered with Mars Petcare, a U.S. pet care company, to offer free online consultations for guests about issues that come up when traveling with a pet cat or dog at Hilton’s seven brands that are pet-friendly, representing more than 4,600 hotels in North America. The pet-friendly move was in response to approximately 23 million U.S. households getting dogs and cats during the pandemic. Today, 4,600 out of the company’s 5,400 U.S. hotels welcome pets.
Some mash-ups will be brand-specific. A case in point: New lifestyle brand Tempo by Hilton, which will open its first hotels this year. Bluestone Lane will curate Tempo’s food-and-beverage offerings. That Australian-inspired coffee shop brand is buzzy among many millennials and people with a “millennial mindset” — a demographic Tempo covets.
Meeting Next-Gen Customer Needs
As Schuyler’s team continuously evaluates Hilton’s brands, they track each brand’s relevance — or “relatability,” in Gen Z-speak — to emerging customer behaviors.
As blended travel comes of age and “flexcations” linger, Hilton sees average lengths of stay increase. That trend has made food delivery more appealing to hotel guests as an alternative to always dining out.
“In some of the prototypes for our new hotels and renovations, we have a delivery mechanism where the driver doesn’t need to come into the property,” Schuyler said. “They can leave the delivery at the property through a custom-built entryway for these types of drop-offs.”
Asset Managers Want Less Waffling
Michelle Russo speaks for many hotel real estate asset managers when she complains that hotel groups haven’t re-evaluated their brands enough.
“We do A/B testing all the time on revenue strategies, so why don’t we do it on brand standards?” said Russo, the CEO and founder of HotelAVE (Asset Value Enhancement), which has a $7.5 billion portfolio representing a few dozen hotel operators in North America.
Food and beverage is one way for the dozens and dozens of hotel brands to distinguish themselves from each other.
“But owners don’t want money-losing food and beverage anymore,” Russo said.
But at the same time, guests are paying some of the highest rates they’ve ever paid for hotels, yet North America saw the biggest decline in guest satisfaction worldwide. A full-year 2022 study by Shiji’s ReviewPro found a drop of 3.5 points from the 2019 level across all hotel groups — and a four-point drop at three-star hotels, in particular. The results dovetailed with research last year from J.D. Power.
When asked about this industry-wide critique, Schuyler said they had heard it from Russo and others.
“A/B testing warms our hearts,” Schuyler said. “We call it ‘test and learn,’ but same difference. We have a data and analytics group that does nothing but this. They help us determine how guests and owners will receive our theories. We test everything from types of towels and pillows to messaging.”
Housekeeping is one example.
“During Covid, we decided to give guests ‘choice and control’ about opting in and out of daily tidying up,” Schuyler said. “We continuously test that as time passes. We’ve simplified our disinfecting process to ten key touchpoints for efficiency, too.”
Food and beverage is another area under review.
“A hot breakfast was a staple offering at our Hampton Inn brand, but during the first nine months or so of the pandemic, we instead offered boxed and sealed cold offerings,” Schuyler said. “Since then, we’ve been re-engineering the breakfast. Fewer offerings, down from 51 SKUs [stock keeping unit for kitchen items] to the high 20s. In other words, did guests want all ten different toppings for their waffles? We tested which were most popular.”
Every brand leader at Hilton has access to this data. A group called “Brand Performance Support” is tasked with looking at property-level performance, continuously evaluating SALT [Satisfaction and Loyalty Tracking] scores based on guest feedback via survey takers. Artificial intelligence can do sentiment analysis on keywords used by guests in their free-written responses to detect patterns. The group taps all this data to roster hotels, ranking them by performance. Then Hilton swoops in through a quality assurance process.
“We use data to press the owner to invest or improve,” Schuyler said. “The data tells a powerful neutral story to help us provide guidance, assistance, and nudging.”
Hotels have long done this work through paper surveys and the like. But digital touchpoints are helping refine the picture of what customers prefer.
“Improving customer satisfaction has been our singular obsession in Covid recovery,” Schuyler said. “How do we get back to what the levels were pre-pandemic? Our QA [quality assurance] auditors have been spending the bulk of their time looking at physical lapses at hotels, such as a need to update carpets or improve labor training.”
Like all hotel groups, Hilton takes a carrot-and-stick approach with owners.
“I would say it’s mostly carrot,” Schuyler said.
More Brands Coming
There’s a debate in the industry about whether there are or aren’t too many hotel brands. But from Hilton’s perspective, there’s room for more.
In January, Hilton introduced its first brand for the premium economy segment, Spark by Hilton. Schuyler said Spark wouldn’t be the last new brand from Hilton and that the group tends to like to create brands internally rather than grow the portfolio via acquisitions, setting aside perhaps its soft collections of independent hotels.
“I’d say we’re not capacity restricted in this regard [of adding brands], but we’re trying to be wise about where we put our energies,” Schuyler said. “If we see an area where we don’t currently offer a product and we see a growing customer need and an owner need in that sphere, and if we can fulfill that with our ecosystem, we’d look at it. But it would have to meet all of these criteria.”
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Photo credit: A guest room at the Embassy Suites by Hilton San Antonio Brooks Hotel & Spa. Source: Hilton Worldwide. Hilton Worldwide