Lodging Conference: Execs say M&A means loyalty changes
 
Lodging Conference: Execs say M&A means loyalty changes
30 SEPTEMBER 2016 9:19 AM

Hotel executives tackled a number of topics during the opening general session of The Lodging Conference, addressing consolidation, loyalty and technological advances.

PHOENIX—Although the mood was not quite as upbeat as in past years, hotel executives sitting on The Lodging Conference’s opening general session, “A view from the top,” spoke about their continuing efforts to keep the hospitality industry moving forward.

The industry has seen a number of major events and development through the past year, many of which will have lasting effects for decades. The executives shared their thoughts on the future of the industry after the completion of Marriott International’s acquisition of Starwood Hotels & Resorts Worldwide, how they can better use loyalty to fight back against online travel agencies and what technology can—and can’t—do to improve service to guests.

The eventual full integration of Marriott’s and Starwood’s loyalty programs will be positive, said Jim Abrahamson, president and CEO of Interstate Hotels & Resorts. Starwood Preferred Guest is the defining program because it created the point-based system and lifestyle around it, he said.

“I think (Marriott is) at the precipice of doing this right or doing this wrong,” he said. “There needs to be emphasis by Marriott in how they treat their customers.”

This is a prime opportunity for Hilton Worldwide Holdings, Hyatt Hotels Corporation and InterContinental Hotels Group to adapt their programs, Abrahamson said.

“If I were Hyatt or Hilton or IHG right now, I would redefine the program away from points toward experiences for a better stay for customers,” he said. “It’s not just about points anymore.”

Geoff Ballotti, president and CEO of Wyndham Hotel Group, disagreed, saying points are critical. Guests don’t want the points for a restaurant discount or a theater ticket, he said.

“They want the promise of earning points to go on vacation,” he said.

His company is trying to make the program less complicated, Ballotti said. Guests feel like they’re the greyhound at a track chasing down the rabbit, earning countless points and working through the redemption levels to only earn a couple of free nights.

“The extent that any of these brands could make programs less complicated and more rewarding is where the game will be won on loyalty,” Ballotti said.

Several of the panelists advocated for instant gratification in loyalty programs. Aside from earning a free night, guests want to be treated as a VIP because they are loyal members of a brand, said Bruce Patel, chairman of the Asian American Hotel Owners Association.

“If you can provide that service and amenity and that extra something that protects loyalty and supports loyalty, I think that’s the biggest thing to figure out as an industry,” he said.

Having to pay $4 or $5 for a bottle of water will alienate a guest, said Roger Bloss, founder, president and CEO of Vantage Hospitality Group. Give loyalty members free water, he said, give late check-out to the business traveler with a late flight and give a room upgrade if the hotel isn’t busy.

Consolidation
All of the consolidation activity is confusing for everybody, from guests to hoteliers, said Eric Danziger, CEO of Trump Hotel Collection. For brands to have value, they have to be clear about who they are and what they are to the consumer, he said.

“As a consumer, I don’t know how to follow 30 brands,” he said. “I think it’s not good for the consumer. Frankly, I don’t think it’s good for the owners.”

Owners expect the brand to perform for them and deliver something they can’t do on their own, Danziger said. They want brands to work every day to help owners be successful, he added.

Looking at the history of the industry, there’s no question there’s more consolidation to come, Abrahamson said. When looking at how to grow earnings right now, he said, they come through synergies.

His own company will have a role in the consolidation activity, Abrahamson predicted. In the past five years, he said, his company acquired six companies that provided strategic value.

“We will continue to do that,” he said. “It’s the advantage of scale.”

New technology
Technology is leading trends, Patel said. When people like Elon Musk are talking about self-driving cars, he said, it’s only a matter of time before guests can walk into a hotel, a key pops out of a kiosk for their room, a playlist starts to play when they walk into their room and the temperature automatically adjusts to their preference.

Advances in technology provide great opportunity for hoteliers, Danziger said, but the more important piece regarding new tech in hotels isn’t about getting it first, it’s about getting it right.

“The biggest consumer frustration is if the Wi-Fi doesn’t work,” he said. “It’s things they expected that were not reliable. It’s not about the number of things we add, but doing the things well so they’re dependable and can be relied upon.”

When asked about the possibility of robots taking over menial tasks for a lower cost and how he plans to drive profit, Danziger said hoteliers’ responsibility is to maximize profitability for the owner, but that requires giving guests what they want. Guests aren’t necessarily opposed to paying a lot of money if hoteliers give them what they want, he said.

“A hotel needs to have people, with care and concern and service,” he said. “You shouldn’t replace them with robots … I don’t think you should replace human beings in hospitality with something because it’s cheaper.”

Ballotti echoed Danziger’s sentiment, explaining how Wyndham lowered technology costs for owners while increasing focus on service to guests by doing away with the legacy CRS. The company stopped building its own property management system because it wasn’t best in class, he said, and moved its operations to a cloud service.

“We shouldn’t focus on legacy technology,” he said. “It should be on the hospitality side. … What our owners want is great quality and great service. That has to do with the team you have for hospitality. Loyalty has never been more important than it is today. Those are the things we believe we should all be focused on rather than developing tech in house.”

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