When Formula One auto racing’s season-opener in Australia gets under-way this weekend the eyes of the world will be on it. One sponsor has less reason to be worried about the outcome than the others.
The result of a race is usually all-important for sponsors. The higher the race position of the cars their logos appear on, the more exposure they tend to get on television. On the other hand, the worst case scenario is that the cars crash as this puts the brakes on the TV exposure. One sponsor has managed to swerve around this risk.
Hilton is one of the world’s largest hotel operators with more than 856,000 rooms across 5,200 properties in 105 countries. It is also one of the world’s most well-known brands so you wouldn’t expect it would need to promote itself through sponsorship. But, despite its scale, Hilton has rivals so exposure through sponsorship helps it stay ahead of the game which is why it is involved with F1. Indeed, it is one of the oldest sponsors in the series.
Hilton’s logo is on the rear-wing end-plate of the cars run by McLaren, the second-most successful team in F1 history. It has been a sponsor since 2005 when the deal was announced by McLaren’s former team boss Ron Dennis and Ian Carter who was then the chief executive of Hilton International and is now President, Global Development, Architecture, Design & Construction.
Hilton’s 13-year tenure as an F1 sponsor is more than double the average which came to 5.7 years in 2016. Last year it announced that it will remain with McLaren until at least 2021. There is good reason for this.
Customer loyalty schemes are increasingly becoming key battlegrounds for hotel chains. Online competition has driven down pricing and customers know they have to shop around to get the best deal. It puts a premium on loyalty and has fuelled an overhaul of retention programmes which were once seen as incidental to the core business of a hotel chain. They are now key to driving revenue and marketing due to the customer data which is captured. The more unique the benefits, the greater the chance that customers will sign up. This is where F1 comes in.
Hilton doesn’t just use its F1 partnership to drive awareness of its brand but to tempt travelers to sign up to its Hilton Honors loyalty scheme. They can use their points to bid for items like race suits, behind the scenes tours of McLaren’s F1 garage and even the chance to work for the team at a Grand Prix.
This is complemented with member-only competitions offering prizes such as VIP trips to races where the winners eat at the same restaurants as the drivers and stay in the same hotels as them. Hilton has this kind of access as McLaren prioritizes its hotels when the team is traveling. That is just the start.
Prior to joining Hilton Carter spent more than a decade with General Electric Plastics followed by a stint at Black & Decker Corporation where he was responsible for all operations outside of the Americas. It didn’t just make him a skilled and seasoned executive but gave him a focus on products. He put it to use on the F1 sponsorship which boosts Hilton’s properties through drivers appearing in hotels and regional offices, pit stop practice cars being used as team building exercises and replica showcars going on display in lobbies. It doesn’t stop there.
Carter coupled this with a smart B2B strategy which has seen Hilton build relationships with hotel owners in F1’s corporate hospitality area and sign deals with other sponsors through relationships forged in the nerve center of the series, the paddock. With a total of around 200 sponsors in F1 Hilton still has plenty of ground to gain even after nearly 15 years in the series.
It has carefully integrated its F1 sponsorship into its business divisions to drive revenue rather than just exposure as is usually the case. This insulates it from the unpredictability of race results and makes it easy to track the return on investment and thereby justify the deal. That is the formula for Hilton’s staying power in F1 and Carter explained to us how he came up with it.
What does Hilton provide to McLaren (other than cash)?
Hilton have been a trusted partner of McLaren for over a decade. McLaren rely on Hilton as their hotel partner of choice at every Grand Prix where there is Hilton presence as well as outside of races for their general business travel. McLaren also host a range of meetings, events and utilize restaurants in a great number of our 5,000+ global properties. In addition, Hilton accommodate many of McLaren’s partners as an extension of the strong relationship we hold with the team.
When did your McLaren partnership begin?
Our Partnership with McLaren was announced at the Belgian Grand Prix in 2005 and in the subsequent 13 years it has developed and grown, with a further extension being announced last year seeing the Partnership continue until at least the end of 2021.
How did the deal come about (who approached who and when)?
In early 2005, we looked at the attractive global nature of Formula 1 and partnerships opportunities that existed. We felt like a team option was best for our business and as such we met with Ron Dennis at the McLaren Technology Centre before concluding a mutually beneficial agreement shortly afterwards.
Why did you choose F1 rather than another sport?
Hilton do have Partnerships outside of F1 in other sports and properties, like our Partnership with European Tour Golf or Live Nation, however given Hilton’s positioning as a stylish, forward thinking global leader of hospitality we felt that there were multiple synergies with Formula 1. Not only do a number of local properties benefit from the business McLaren provides, but also our brand is exposed approximately every two weeks in front of an enormous global audience, this in turn allows us to connect to a broad range of target consumers. In addition, Formula 1 has over 200 blue chip brands invested in the sport, most of which are either existing, or potential, partners of Hilton, so the B2B opportunities that F1 offers ensures that we are able to use a Partnership to drive revenue and support business growth.
How is F1 of particular benefit to your industry?
For an industry that is based upon travel, a global championship with regular races throughout the year in different countries fits nicely alongside our desire to inspire travel for pleasure and business needs. Beyond this there are a number of areas where we can learn from the sport – innovative technology, team work, attention to detail, constantly striving for success and pushing boundaries.
What are the key target markets for your partnership?
As we operate in over 100 countries with 14 world-class brands, there is no one market we focus on with our McLaren partnership. Naturally we exploit the 17 race locations where we have a Hilton presence around races, however as F1 is viewed in more than 200 territories, it provides brand benefits to all our properties around the world.
How does Hilton use its partnership with McLaren to benefit members of its Hilton Honors loyalty scheme?
Through our Partnership with the McLaren F1 Team we not only aim to acquire new members to grow our award-winning loyalty scheme, Hilton Honors, but also use the Partnership to reward almost 70 million members who are stay in our properties and earn reward points. Through the Partnership we are able to provide members with a variety of exciting, authentic, and extraordinary opportunities; one example of this is through our auction platform where you can bid for items like behind the scenes tours of the McLaren F1 Team garage, money can’t buy tours of McLaren’s headquarters in the UK, the chance to work for the team at a Grand Prix or even last year members could use their points to bid for a Fernando Alonso race suit worn earlier in the year.
What feedback have you had from Hilton Honors members about the McLaren partnership?
We have had nothing but positive feedback from our Honors members about this partnership. Clearly this relationship particularly resonates with the large number of motorsport fans who are part of our programme as it allows them access to something they would never otherwise be able to experience. However, Formula 1 also appeals to a great number of individuals who enjoy sport, travel and luxury experiences. One member who came to the US Grand Prix last year commented, “This is the best experience of my life, something I will never forget”.
How has the Hilton Honors scheme evolved over the past decade and how has the McLaren partnership helped with this?
The Hilton Honors programme has progressed significantly over the past few years. New pioneering innovations as digital check in allows you to choose your room in advance of your stay as well as use your phone as a remote for the door so you can bypass reception should you wish. This is available if you download the Application. Aside the new members McLaren have helped us acquire and retain, they have provided inspiration for new technologies and allowed us communicate these benefits through the strong marketing platform they can provide. The great benefit of our long term Partnership with McLaren is that we have been able to mould the partnership entitlements to the needs of the business and in doing so have ensured that this Partnership is able to support Hilton Honors’ continued growth.
What are the key results have you had from your partnership so far?
Whilst we can’t share specific numbers, we have seen an uplift in revenue from both Formula 1 business and consumer stays. A great number of new individuals have joined the Honors programme as a result of this partnership and our brand has been exposed to billions of individuals across the world since we have partnered with the McLaren team. Finally, a great number of our team members – both in our local hotels as well as our global and regional offices have been motivated and rewarded through this partnership. The fact that the Partnership with McLaren has lasted 13 years and last year we renewed this agreement for the years ahead shows we are more than happy with results the Partnership is delivering.
How do you use your McLaren partnership to motivate and incentivize staff?
We use the Partnership to motivate and incentivize our staff – both at corporate offices around the world as well as at individual hotels. There have been a great number of initiatives from internal Fantasy Formula 1 games, through to driver appearances in hotels and regional offices, pit stop practice cars used as team building exercises, F1 themed gift desk drops to simply having F1 replica showcars on display which help provide a buzz around hotels and offices alike. These kinds of activities are important to both motivate employees but also for raising internal awareness of our Partnership to ensure that the benefits and entitlements are used as widely as possible so we can gain the largest possible return on our investment with the team.
Please give an example of how you activate your sponsorship
Some example activations have included a ‘Sleep over at McLaren’ where we brought in dozens of Doubletree by Hilton beds to the McLaren headquarters allowing F1 fans the chance to stay overnight and watch the Australian GP live from the team’s base. Last year we ran the first ever McLaren Mascot competition where families could enter their children to be part of the team at the British Grand Prix which was a tremendous success. One of our most successful ever competitions was to ‘Win the life of a Formula 1 driver’ where an Honors member stayed a Hilton hotel like the driver does and experienced everything the driver would over the course of a Grand Prix weekend. There are many more examples from PR stunts to experiential activities which have delivered some great business benefits.
What are your objectives for the sponsorship?
The primary objectives are to: Drive new incremental revenue into our properties; Acquire and retain Hilton Honors members by providing unique experiences; Gain global media coverage; Inspire and motivate Hilton Team members
What common brand values do you share with McLaren?
Our values Hospitality, Integrity, Leadership, Teamwork, Ownership and Now which are all identifiable with the way McLaren goes about their work. We have drawn on the McLaren team to further help motivate our team members with activities that represent these values.
What has been your proudest moment so far during your sponsorship?
The first time I saw the Hilton logo on the McLaren car in 2005 was an extremely proud moment for me knowing that we were now part of such prestigious team. Just last year we hosted 150 members of our leadership team at McLaren’s Thought Leadership Centre (part of the F1 facility); seeing what they took from this impressive facility to improve their area of responsibility was also particularly pleasing.