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Personalization equals loyalty for millennials
February 4 2014

Forget points-based loyalty programs. Millennials can only be wooed by personalized hotel experiences. The problem, ALIS panelists said, is how to pay for it. 

Highlights
  • “Personalization equals loyalty,” Facebook’s Lee McCabe said of the millennial generation.
  • Hoteliers need to make tradeoffs to pay for personalization, said Hyatt’s John Wallis.
  • Millennials prefer to avoid human interaction if possible, said “token millennial” Teresa Lee. 

LOS ANGELES—Self-described “token millennial” Teresa Y. Lee didn’t waste time assessing the loyalty landscape for her notoriously fickle cohort.
 
“Our loyalty is up for grabs,” said the senior analyst at HVS. “It’s up to you to design a program we want to be loyal to.” 
 
Thus began a rapid-fire breakout session on millennials and loyalty during the 2014 Americas Lodging Investment Summit. 
 
John Wallis said Hyatt Hotels Corporation, where he serves as chief marketing officer, is up for the challenge. 
 
“I think A) we will create loyalty, but B) we as an industry are at a turning point in our game,” he said. “If you think about hotels, we haven’t changed structures in hotels for the better part of 50 years, and yet our customers have changed.” 
 
Traditional points-based loyalty programs are not the answer, sources said. For those born between 1980 and 2000, “personalization equals loyalty,” said Lee McCabe, Facebook’s global head of travel.
 
“They want to be wowed; they want experiences built for them,” said Benji Greenberg, founder and CEO of BCV, a social media consultancy for the hospitality industry. “They want to feel special.”
 
Fortunately, today’s younger travelers serve up oodles of personal data on a variety of website and social networking platforms. Facebook’s executives have recognized the potential and are working feverishly to make that information readily available to the company’s marketing partners, McCabe said. 
 
“What we’re working towards is a very efficient marketing platform, a marketing platform built around people. … You’re not marketing to cookies, but visible faces. You’re marketing to people,” he said. 
 
Hotel companies are getting better at this, Wallis said. The challenge is packaging relevant data to associates on property, most likely via property management systems. 
 
“As our data streams become more organized, we have the opportunity to deliver that more individualized experience,” he said. 
 
Paying for personalization
Providing a more personalized experience for each and every guest doesn’t come cheap, the panelists agreed. 
 
“Social is very cheap to set up and very expensive to run. That again is something where we’re going to have to do tradeoffs, and we’re going to have to make choices. … I spend more time everyday trying to figure out what we should stop doing than what we should do,” Wallis said. 
 
One potential tradeoff, he said, is cutting the sales force to make room for “community managers,” someone at each hotel who manages a pre-arrival team to connect with the guest before he or she checks in. 
 
Traditional marketing could go the way of the dodo as well, especially given how much content guests publish themselves via social networks, blogs and other outlets, Wallis added. 
 
HVS’ Lee confirmed his suspicion. “I think in terms of these status updates,” she said. Throughout her hotel stays, Lee is constantly searching for interesting photo opportunities or unique interactions that would generate “likes” from her followers on Instagram and Facebook. 
 
As if adjusting to such guest behaviors wasn’t enough, the hotel industry must balance the long-term needs of brand companies with the shorter-term needs of owners who are actually footing the bills, Wallis said. 
 
“That is going to become a bigger and bigger clash coming forward,” he said. “Its’ going to be on us as brand owners to actually go to real estate owners who only have a five-year window with a particular hotel.”
 
And time is of the essence. He said hoteliers need to make significant progress within the next six to nine months “if we really want to build that loyalty.”  
 
Need it now
The pressure of necessity is something millennials understand all too well. Raised in a world of high-speed Internet and 24-hour news cycles, this generation requires immediate gratification, HVS’ Lee said. 
 
Hoteliers are exploring new methods of communication to keep pace. Hyatt, for instance, has developed a Twitter concierge that answers guests’ questions 24/7. 
 
The company also tested an app through which guests could request items from housekeeping, among other functionalities. The project was a failure, Wallis said. Guests who requested something using the app wanted it immediately. Those who called via the in-room phone typically gave up to 40 minutes leeway. 
 
“It made us really think through … friction-free interconnection to change operations to deliver it fast. Otherwise we have a great app that’s being used but we’re dissatisfying customers,” he said. 
 
Greenberg noted a similar disconnect in expectations. Guest requests via social media are often unrealistic or too demanding to implement, he said. 
 
Despite such hang-ups, hoteliers can’t forget electronic means of communication, Lee of HVS said. 
 
“It’s a different type of service that millennials are looking for,” she said. They want transparency upfront so they know what to expect. And they expect apps, mobile check-in and other channels to work effectively. 
 
While the hospitality business might always require some element of personal interaction, millennials often prefer to avoid human interaction, she said. It’s not that they like to avoid people, but rather the human error that comes with them. 
 
The goal should be the “friction-free” stay, Wallis said. Every element of the hotel experience should perform up to and, in the best-case scenario, beyond expectations. 
 
“You can throw away the book about everything you did in the past. … A lot of it is awareness; a lot of it is training; a lot of it is understanding how you use the data to effectively make somebody feel recognized, wanted, appreciated, and then they’ll come back,” he said. 
 
COMMENTS   Show All
Chris
2/11/2014 8:48:00 AM
All very true, with these challenges come great opportunities at a very exciting period in hospitality.
Mathieu
2/6/2014 4:16:00 PM
Thanks for this article. Our clients are 100% aligned with your vision!
Michael Verde
2/5/2014 12:48:00 PM
Excellent article
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