Gary Loveman, CEO of Caesars Entertainment, isn’t shy about his feelings toward OTAs and how they have commoditized hotel roomnights, saying hoteliers should customize the guest experience to build brand loyalty.
OTAs are “the place customers go who don’t care about what you do,” said Gary Loveman of Caesars.
“We have to constantly surround the decision-makers with reasons to make their next decision at our facility,” Loveman said.
“We try to get to know customers near where they live and give them an experience that’s better than our competition,” Loveman said.
BALTIMORE—It seems as if hoteliers during the past year have simmered their disdain for online-travel agencies as the industry begins to understand the value of third-party demand—or at least hoteliers maintain that perception in public.
Not Gary Loveman.
Chairman, CEO and president of Caesars Entertainment for the past nine years, Loveman isn’t shy about expressing his belief that OTAs have commoditized hotel roomnights, and he shared those feelings Monday with an audience of approximately 1,000 hotel technology experts during the opening keynote of the Hospitality Industry Technology Exposition and Conference.
The OTAs are “the place customers go who don’t care about what you do,” Loveman said. “We need to distinguish ourselves from all of our competitors and provide consistency for our guests.”
It’s easy to understand why Loveman feels this way. He joined Caesars as COO in 1998 after teaching at Harvard University. He had never overseen an employee in his life and immediately he oversaw 14,000.
His mission was clear from the beginning: customize the guest experience to build brand loyalty. It’s something he felt passionate about from the beginning, and it’s a strategy that has built Caesars into a growth and profit machine, culminating in Harrah’s Entertainment $9.3-billion acquisition of Caesars Entertainment in June 2005.
It’s why gamblers who visit Las Vegas will stay and play at $250-million Harrah’s when $3-billion Encore and $9-billion CityCenter are within walking distance.
“We have to constantly surround the decision-makers with reasons to make their next decision at our facility,” he said. “We do it with brands like Harrah’s, Caesars Palace, Horseshoe, the World Series of Poker and, ultimately, the Total Rewards Program.”
Loveman said Caesars has taken an opposite approach to loyalty, giving guests many reasons to join their loyalty program and then rewarding members with “goodies” right away. Most programs make it hard to redeem points, Loveman said, but Caesars makes it easy.
“You gamble, you get what you want today. In fact, we’ll give you the comps in advance,” he said.
Why? “We want you to redeem; we want to exchange information.”
Caesars will reward guests with just about anything they want. The more money guests spend at Caesars’ properties annually, the more the company is flexible on rewards.
Because to Loveman, trading free parking or a comped trip to a casino in Tunica, Mississippi, for a nearly unlimited amount of guest-profile data is a no-brainer. Loyalty members—who tell Caesars where they live, how much they spend annually, what they buy and when they buy—help Caesars target the right customers.
“We try to get to know customers near where they live and give them an experience that’s better than our competition,” he said. “Then we get them to come see us someplace else.”
“If you decide to book on Expedia, you’re not going to be invited to these things,” he said.
Collecting data on gamblers in all of Caesars’ casinos helps them build a robust guest-profile system.
“You can have quite a good understanding of who is in your hotel,” Loveman said.
Caesars then takes that same data and uses it to make decisions, such as what they should charge on New Year’s Eve or how many rooms they should build in a hotel. Most of the decisions made by Caesars have been shaped one way or another by the loyalty program.
Technology, Loveman said, helps Caesars collect the data, research the data and build guest profiles. Without technology, the GM of a hotel-casino wouldn’t know a valued guest is coming to their property.
“We make it easy through technology for all our employees to know who’s who,” Loveman said.
Technology also helps Caesars employees interact with guests at the most critical moments. If a diamond-level gambler swipes his or her loyalty card and puts $10 in a slot machine, the GM at the hotel gets a text message. The staff member is trained to go visit that gambler and make sure he or she understands how much Caesars values his or her business. It’s a simple application that has proved to be very helpful, Loveman said.
“We want to be engaging you constantly with relevant offers,” he said.
Of all the progress Caesars and the hotel industry, in general, have made in terms of loyalty and brand marketing, Loveman said much of the industry still doesn’t get it.
“We remain largely unable or ineffective in customizing our experience to the guest,” he said. “Marketing Apple iPads—that’s for babies. That’s easy stuff. Marketing a commoditized product, that’s hard.
“We need to make it much more loyalty intensive.”
Loveman pointed to the U.S. airline industry as an example of an industry that has been commoditized and lost brand loyalty.
“In the airline industry, time and price are the only two variables that influence decisions,” he said. “If there is anything you don’t want to be, it’s the U.S. airline industry. This is exactly where we don’t want to be.”
Loveman said hoteliers should ensure third-party room distributors “remain only as the last resort for the uninformed.”
“I get discouraged when I see IT people who are focused on how people are buying travel rather making the travel experience itself memorable,” he said.
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