A Brand Of Togetherness

In an attempt to restore and exploit Hilton's potential, Ladbroke and HHC last week agreed to create a new single identity for the chain by cooperating on sales, marketing, loyalty programmes and the development of new hotels. Inconsistencies in the Hilton brand have been apparent for some time, says Mike Platt, commercial affairs director of Hoggs Robinson, the business travel agency. Some of our customers react by saying they cannot afford a Hilton while others say they want somewhere smarter, he says.

For a brand wishing to convey a global image, there is nothing worse than creating customer confusion, says Ad-rian Day, executive director, corporate identity at Landor Associates, the US design company.

 

He believes that Hilton has suffered from a refurbishment programme that has perhaps taken too long and from two different logos. If you look different, customers perceive a difference in service which can lead them to question the strength of the worldwide brand. That is why it is important to have a single global identity, he says.

The Hilton story is a complex one. When Conrad Hilton bought his first hotel in Texas in 1919 he built up what became the first hotel company to be listed on the New York Stock Exchange, in 1946. Three years later, Hilton International was formed as a separate subsidiary to turn the group into a global company. It expanded into Latin America and then Europe in 1953, with the Castellana Hilton in Madrid.

But in 1964 the brand was split when Hilton International was spun off as an independently quoted company under an agreement which gave HHC the rights to the Hilton name inside the US and Hilton International the sole use of the name outside the US.

Trans World Airlines bought Hilton International in 1967 and sold it 20 years later to Allegis Corporation, the parent of United Airlines and Hertz, the car-hire group. But Allegis sold it to Ladbroke just a few months afterwards for $ 1.1 billion. Ladbroke then rebranded some of its UK hotels as Hilton National.

According to Andy Milligan, a director at Interbrand, the UK-based brand consultancy, given its chequered history, the Hilton brand has survived remarkably well. In a survey by Interbrand, Hilton emerges as the sixth known brand in leisure and travel market, after Disney, British Airways, Singapore Airlines, Hertz and Club Med.

Operating an international brand owned by two separate companies can lead to dissonance with the development of the brand internationally, says Milligan. But it is difficult to think of a more well-known and reassuring brand internationally than Hilton, and its quality has never really been seriously undermined.

But others say that the brand has suffered from a lack of investment. Last year Hilton was replaced by Holiday Inn as the top hotel brand for the European business traveler market in a survey by Business Development Research Consultants, a London-based marketing research company. Hilton had been first in terms of brand recognition, usage and preference every year since the survey began in 1990.

Jonathan Bodlender of Horwath International, a hotel consultancy in New York, says: Hilton Hotels Corporation kept a lot of old hotels, some of which were sub-standard, and although they are supposed to have been updated, they may have debased the image that Americans have of Hilton hotels outside the US.

HHC counters by saying that in recent years it has worked hard to upgrade the national network of hotels and to ensure consistency. It has also purged the company of sub-standard franchise properties.

In the UK, Ladbroke operates 25 Hilton National mid-market hotels. But Ladbroke believes that since they share the same name as the chain's smartest hotels, such as the Langham Hilton in London, guests can be disappointed. It has not been made clear enough that these are two different brands, he says. In re-unifying the brand, there is a danger of causing further confusion between the different types of Hilton hotels. HHC and Ladbroke propose to jointly develop a mid-market Hilton brand, which is likely to be an international version of the Hilton Garden Inns in the US. But Hilton International proposes to keep its mid-market Hilton National brand in the UK.

The legacy of the split brand raises another potential problem. HHC used the Conrad name for its hotels outside the US, while Hilton International uses the Vista brand for its hotels in the US. Hilton International which will run Conrad hotels, says it must keep the Conrad name and add Hilton to it and market Conrad Hilton as the group's top brand.

Paul Steele, senior VP, sales and marketing, Hilton International says the name may not be attached to all the sub-brands. We are trying to identify ways of keeping the benefits of the Hilton name without swamping the individuality of the products by forcing Hilton on them.

Marc Grossman, senior vice-president of corporate affairs at HHC, acknowledges that product differentiation will be a challenge but says the agreement will allow both companies to capitalise on the name. Instead of a situation in which two different companies are trying to put together their different brands, we and Ladbroke start off with sharing a brand name, he says. The goal is to maximise the brand and the details will receive a great deal of attention.