Hilton Loyalty Programs: A Research Proposal

Subject: Tourism
Pages: 10
Words: 2823
Reading time:
10 min
Study level: PhD

Introduction

Introductory Statements

There are various factors that attract customers in hotels and restaurants. They include security, price, location, comfort, experience, parking, and loyalty programs among others (Dell & Pajunen, 1997). The impact of these factors on attracting customers varies according to the preference of customers. In this light, the customers consider the factors according to their priorities. These priorities do not follow a predetermined order. Instead, each customer will have an individualized hierarchy of prioritizing these factors (Hassanien, Dale & Clarke, 2010). This paper focuses on the effect of loyalty programs to attract customers to hotels. Particularly, it will consider the Hilton Bentley in Miami South Beach. It will aim at determining whether the Honor Loyalty Program is the main contributing factor for the high number of customers. Therefore, it will design a research proposal that will explain how research can be conducted in this case.

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Statement of Problem

Hilton Bentley Hotel in Miami has a lot of honor customers. When the hotel management compares the honor and non-honor members, they are almost convinced that the customers choose the hotel owing to the hotel honor programs. However, the hotel has implemented many programs that attract customers. Therefore, there is significant uncertainty that revolves around the impact of the honor programs. The company has not determined whether there the program is the main factor that attracts and maintains the customers in the hotel. This ambiguity has posed a financial challenge for the managers. In this case, they are ignorant of whether the revenue they have invested in the program is worth it. Therefore, the hotel is facing a budgeting dilemma that needs to be addressed.

Significance of the research

According to the problem statement, Hilton Bentley in Miami wants to determine whether the loyalty program is the main factor that attracts customers to the hotel. In this case, the paper will aim at designing research that can help in investigating whether the loyalty program is the main driver that attracts customers. As a result, it will help in solving the dilemma by determining the usefulness of the program for the company. Afterward, the company can allocate funds in an appropriate manner. Therefore, it will ensure that the hotel does not use a lot of funds on the wrong factor. In addition, it will ensure that it does not invest little funds on the essential factors that drive its prosperity.

Problem Background

The Honor loyalty program is an initiative that aims at awarding customers for the services that they use in the hotel. When a customer visits the hotel, they are awarded a certain amount of points on their loyalty cards. The points accumulate as the customers continue visiting the hotel. In this program, the points are proportionate to the amount the customer use in the hotel. A high expenditure earns more loyalty points than a low expenditure. The points are then redeemed by the customers when they decide to redeem them. During redemption, the customer is allowed to access some services without paying for them. However, the number of points on the loyalty card determines the services that the customer can access. The program has a defined hierarchy of membership that progresses according to the number of visits and the expenditures. The stages in the program include blue, silver, gold and diamond. Blue is the least in the hierarchy while the diamond is the highest in the hierarchy.

The hotel has invested highly in loyalty programs. In this light, the 2012 financial report showed that the hotel used $358 for a loyalty program in a single night. This adds up to about $10740 per month. Therefore, the annual cost for the loyalty program was approximated to $128880. In the year 2011, the cost in a single night was $351. As a result, the report indicated that the program used $128115 for the whole year. The cost in 2011 was slightly lower than the cost in the year 2012. This implies that the company received more honor members in the year 2012 than the previous year.

The report shows that the diamond and the gold members account for a sizeable part of the members. In fact, both of them take 49 percent of the members. In addition, the two states account for 51 percent of the Hilton Honor revenue. This implies that the financial solvency of the company relies on gold and diamond member. On the other hand, the remaining 51 percent includes the non-honor members, blue members and silver members. However, the large number of honorary members does not imply that the program is the main driver of membership.

Research Questions and Hypothesis

Question and Hypothesis 1

The first question we are addressing in the research is related to the impact of loyalty programs on attracting customers. Are the customers selecting the Hilton Bentley Hotel owing to the honor loyalty programs or the other factors? This question aims at answering the question that revolves around the effectiveness of the loyalty programs as compared to the other factors attracting customers to the hotel.

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The hypothesis makes a predetermined assumption for the answer to this question. In my opinion, I could assume that the customers do not select the hotel because of the loyalty program. This hypothesis cannot form the basis of this research. Therefore, it is the null hypothesis. Therefore, I seek to develop a second hypothesis stating that the customers select the hotel because of the loyalty program. This hypothesis can form the basis of this research. As a result, it is referred to as the alternative hypothesis.

Question and Hypothesis 2

In this case, the research seeks to understand the effect of the hierarchy of the various stages in the honorary members. Therefore, it incorporates a question that revolves around these stages. Is the tier of the members a determinant in the selection of the hotel? This question will aim at determining whether the customers are attracted by the various hierarchies of memberships. It seeks to understand whether this hierarchy affects their decisions for selection.

In this case, the question will have two differing hypotheses. In the first case, I might assume that the tier does not affect the selection. This is the null hypothesis. Similarly, it cannot sustain research. On the other hand, I may assume that the tier affects the selection of the hotel. For this question, research can be developed and accomplished.

Question and Hypothesis 3

In this question, the research seeks to analyze the nature of the honorary members. What are the demographics of the customers choosing the hotels owing to the loyalty programs?

This is a one-way question that would trigger a one-tail hypothesis. In my opinion, the customers in the honorary membership are above the middle class. In this case, they choose to get some awards for the heavy expenditures they make. They do not only look for the basic necessities of security, but they have enough funds to maintain their honorary membership.

Question and Hypothesis 4

In the fourth question, the research will determine the demographics of the members selecting the customers owing to other factors except for loyalty programs. In this case, it poses a question that focuses on the nature of these members. What are the demographics of the members selecting the company due to other factors? Similarly, this question triggers one-tail research. In this question, it is my opinion that the members who choose the hotels owing to other factors are within and below the middle class. This means that their income can sustain basic leisure instead of luxuries.

In reference to the research question, it is extremely crucial to understand that research cannot be based on more than one research question. In addition, it cannot consider more than one hypothesis (Leedy & Ormrod, 2009). However, research can answer more than one question. Therefore, this research will consider a single question that can answer the rest of the questions sufficiently. In this light, it will research the first question. Are the customers choosing the Hilton Bentley in Miami owing to the loyalty programs or the other factors? Therefore, it will be based on the corresponding alternative hypothesis.

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Literature Review

There is existing information concerning the factors that determine the selection of a hotel. Various analyses have been conducted aiming at identifying the impact of these factors on attaining and maintaining customers. In this case, researchers suggest that loyalty programs are not the major factors that determine the selection of hotels. They suggest that there are other important factors that prompt a customer to prefer a hotel to another one. In this case, they assert that these factors include price, free parking, comfort and quality of service. They state that a customer cannot choose a hotel that has a loyalty program while the cost is very.

This would imply that the loyalty award did not have any benefits. Also, they suggest that the customers consider and value the comfort they have in a hotel. In this case, the researchers argue that the basic aim of a hotel is relaxation and leisure. Therefore, a hotel must fulfill this basic need of the customer. Failure to fulfill it leads to the customers deviating from the hotel. In fact, Weissenberg suggests that a loyalty program acts as a mere complement to the services that the hotel offers. In fact, statistics show that the loyalty program attracts about 19 percent of the customers in many companies. On the other hand, price accounts for 47 percent while free parking attracts 43 percent of the total number of customers in a company. Therefore, he suggests that the loyalty program appears almost at the bottom of the list of factors that drives membership. This implies that the loyalty programs have an insignificant effect on attracting and sustaining the loyalty of customers.

Methodology

Population and Sampling

The population will comprise the customers who visit the hotel for its services. In this case, the customers will be identified from the database of the hotel. In addition, the customers can be considered and involved in the research when they visit the hotel. In this case, the customers visiting the hotel are very many. This implies that the research cannot reach all of them. As a result, the research has to consider a smaller number than the whole population. This small population is the sample population (Cochran, 1977). In this light, the sample must be collected in a professional manner. This will ensure that the sample population reflects the nature of the whole population.

In this research, random purposeful sampling will be used to collect the sample of the population. Random purposeful sampling incorporates two sampling methods. In this case, random sampling aims at collecting the samples without considering the outcome. On the other hand, sampling purposefully ensures that the sample collected is relevant to the research (Cohen, Manion & Morrison, 2008). Therefore, the sample will be all-inclusive ensuring that the sample is unbiased and reliable. Moreover, the sampling method ensures that the sample varies in age, gender and tier of membership. This variety ensures much credibility and validity of the result.

Moreover, the research will consider two data sets in the samples. The data samples include the honorary members and the ones who are not in the honorary membership. The honorary members will vary in accordance with their tier. The tiers include blue, gold, diamond and silver. The sample will have an equal of respondents from each of the tiers. This will enhance and facilitate the variation of information.

Instrumentation

The research will use various tools during the collection, recording and analyzing data. Firstly, the research will need some questionnaires. These questionnaires will have five questions which will help in the analysis. The questions will include the following:

  1. Are you an honorary member or a common member?
  2. Did you choose a hotel because of loyalty or other factors revolving around the hotel?
  3. Does the guest tier affect your decision concerning your selection for the hotel?
  4. What personal characteristics informed your selection for the hotel based on the loyalty programs?
  5. What personal characteristics informed your decision to choose the hotel based on other factors?

The questionnaires will be flexible in nature. This means that the questionnaires will leave some space for change and manipulation (Chow, 1988). It will ensure that they can be changed and manipulated to incorporate the new theme. In this light, the research considers the possibility of the new themes which will arise in the process of data collection (Bulmer, Vaus & Fielding, 2004).

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Secondly, the research will use phone calls for data collection. Therefore, it will require mobile phones which will enable the hotel to reach the customers from their homes. In this case, the phones will be used together with sound recorders. The sound recorder will ensure that all information collected from the respondents is included in the analysis. In this case, the research cannot rely on mere human memory since it is prone to forgetting.

Procedures and time frames

Data collection will be done using in-depth interviews with the respondents. The interview will focus on the five questions that are listed in the questionnaires. Each question will take one minute. As a result, the questions will take a maximum of five minutes. However, the interview will be more informal rather than formal. Therefore, each respondent will be given an allowance of two minutes to express their opinions. In addition, it will allow social interaction and free conversation. For some frequent customers, they will be called through the telephone and mobile phones. In this case, the phone calls will be recorded using the sound recorders. These recordings will be consolidated in a common file for the purpose of analysis.

Analysis Plan

The analysis will be carried out alongside data collection. This will ensure that the questionnaires can be updated so that they include some arising themes. In addition, it will ensure that some irrelevant themes can be deducted from the questionnaire (Strauss, 1987). This will ensure that the research is valid and reliable. In addition, the research contains two data sets. The datasets include the honorary members and the ones who are not honorary. The analysis of the two data sets will be done separately (Strauss, 1987). In this case, the analysis of the data sets will be done by different analyzers. This will ensure that the analysis is done in a liberal and unbiased manner. The analysis will be compared and contrasted to ensure that it incorporates the two sides holistically. In this light, the disparities of the two data sets will be harmonized. On the other hand, the similarities will be retained.

Validity and Reliability

In this research, the validity, reliability credibility of the results is the most essential factor. Therefore, the proposal has ensured that the three characteristics are met. Firstly, the sampling method used in the research is random purposive sampling. In this case, the method does not choose the sample in favor of any certain desired outcomes. Instead, it collects the sample regardless of the outcome. In addition, it considers the relevant people who can give viable information. As a result, it is reliable and credible. Secondly, the use of flexible questionnaires ensures that the arising themes are incorporated in the research. This means that the research will not seek for the information it considers important only. Instead, it will be flexible and elastic in nature. It will allow the addition of themes that the respondents give in the interviews. In this case, the research will be reliable and credible.

Moreover, the data and information will be recorded using an audio recorder. This will ensure that the analysis considers the exact information from the respondents. It will eliminate the possibility of data manipulation. Otherwise, data manipulation will result to unreliable conclusions. Another factor that facilitates the credibility of the results is the number of data sets included in the research (Thompson, 1992). In this light, the research considers two data sets. The datasets include the honorary members and the ones who are not honorary. This will ensure that the opinions given by the respondents vary sufficiently. In addition, the two data sets will vary in gender and age. This will ensure that the variations enhance much independence. As a result, the results will be valid and credible.

Conclusion

The proposal that has been described above will form the basis for solving the challenges facing the Hilton Bentley hotel. In this proposal, the main goal was to determine the influence of the loyalty program on the selection of hotels by the customers. In this light, it has reviewed the existing literature concerning loyalty programs. In addition, it has described research that will help to close the gap existing in research. The gap exists because the researchers have not carried out research focusing on the Hilton Bentley. This implies that the literature is generalized and unreliable in this case. Therefore, the research is satisfactory and worthy.

References

Bulmer, M., Vaus, D. A., & Fielding, N. (2004). Questionnaires. London: Sage Publications.

Chow, M. (1988). Questionnaires. Ottawa: Public Works Canada, Architectural and Engineering Services.

Cochran, W. G. (1977). Sampling techniques (3d ed.). New York: Wiley.

Cohen, L., Manion, L., & Morrison, K. R. (2008). Research methods in education (6th ed.). London: Routledge.

Dell, S. M., & Pajunen, J. (1997). The butterfly customer: capturing the loyalty of today’s elusive consumer. Toronto: J. Wiley & Sons Canada.

Hassanien, A., Dale, C., & Clarke, A. (2010). Hospitality business development. Amsterdam: Butterworth-Heinemann/Elsevier.

Leedy, P. D., & Ormrod, J. E. (2009). Practical research: planning and design. (10th ed.). Upper Saddle River, N.J.: Prentice Hall.

Strauss, A. L. (1987). Qualitative analysis for social scientists. Cambridge [Cambridgeshire: Cambridge University Press.

Thompson, S. K. (1992). Sampling. New York: Wiley.