New York Hospitality by Vijay Dandapani
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Managers: Imperative to a workplace or redundant?

April 23, 2015

Two respected research organizations, one from industry and the other from academia offer seemingly contradictory prescriptions for the workplace.

Gallup, the global consulting company, recently ran a piece on its website that entitled "Managers Account for 70% of Variance in Employee Engagement". It is a workplace truism that is probably widely known but far less widely acknowledged.  The article states that "Great managers consistently engage their teams to achieve outstanding performance. They create environments where employees take responsibility for their own -- and their team's -- engagement and build workplaces that are engines of productivity and profitability."  If the stats for employee engagement are at an abysmally low 30% in the US they are at even more appallingly low 13% worldwide.

Gallup's research over the years has found that "Performance fluctuates widely and unnecessarily in most companies, in no small part from the lack of consistency in how people are managed" and the way out of that is to find "great managers" who will serve to "raises employee engagement levels consistently across every business unit" resulting in better metrics across the board. Gallup recommends that companies invest in processes such as predictive analytics like talent audits and talent assessments that go towards finding a great manager,

Running almost counter to the foregoing narrative, the venerable Harvard Business Review's blog has a new age take on the role of  managers suggesting that they could be on the endangered species list. In a somewhat inartfully titled piece "Here's How Managers Can Be Replaced By Software" Devin Fidler, who heads the Workable Futures Initiative at the California based Institute for the Future points out how researchers there for the past several years "have been studying the forces now shaping the future of work, and wondering whether high-level management could be automated". They have came up with a "virtual management system that automates complex work by dividing it into small individual tasks". Further, they have completed pilot programs with their software for" assignments in sales, quality assurance, and even hiring" and claim it is sophisticated enough to use it for Amazon’s Mechanical Turk micro-work platform". 

The author of the HBR piece suggests, without irony, that these solutions could "enhance work environments, increase employment opportunities, and provide new kinds of worker flexibility, to the benefit of all". The owners of the The Henn-na Hotel in Japan created a worldwide splash, not all positive, with their decision  to "employ" robots and obviate the need for front desk staff. A hotel or other organization without managers could quickly fatten the bottom line further but whether it is to "the benefit of all" will be debated a lot longer.

Reimagining loyalty programs

April 06, 2015

A post in last month in featured a Capgemini Consulting global report which found that loyalty programs "are failing to engage digital consumers". Entitled “Fixing the Cracks: Reinventing Loyalty Programs for the Digital Age" the Capgemini report finds that participation rates in loyalty programs are often low with 89% of social media opinions on loyalty programs being negative.

The consulting giant surveyed the loyalty programs of 160 global companies across seven sectors including Retail, Banking, Consumer Products, Telecom, Airlines, Hotel Chains and Consumer Electronics and went on to conduct a scan of 40,000 consumer conversations on social media to gauge customer sentiment towards loyalty programs.

The research revealed that most loyalty programs follow a basic transactional philosophy where rewards are based on purchase. Only a small minority of programs recognize and reward consumers for engaging and interacting with the brand in other meaningful ways. Furthermore, most loyalty programs lack personalization and fail to offer cross-channel redemption services. The negative social media sentiment on loyalty programs stemmed mainly from the lack of reward relevance, rigid reward structures, user experience issues with online channels, and poor customer service quality levels.

The Study's key findings include:

  • Just 11% of loyalty programs offer personalized rewards based on a customer’s purchase history or location data
  • 79% of loyalty programs use the mobile channel, and yet only 24% allow redemption through it
  • 97% of loyalty programs are based primarily on purchases made by consumers

Furthermore, a mere 16% of the programs reward customers for activities, such as taking online surveys, rating and reviewing establishments or referring friends to the program. Only 14% employ gamification mechanisms to reward customers. An example of the latter can be found in Starbucks use of enhanced Foursquare badges for those who check-in and frequently at a store including the awarding of discounts based on "status".  Unsurprisingly, as many as 53% of consumers admitted to abandoning at least one of the many loyalty programs they had signed on to in the preceding 12 months.

For hotels, the news was not as bad as in other industries like retail with 41% of hotel companies rewarding consumers for a range of behaviors that reflected active engagement on the part of the companies but airlines were even further ahead of the curve with 57% of them engaging customers. Hotels were really ahead of most others when it came to the percentage of unfavorable customer opinions on social media with 72% of sentiment on the wrong side of the continuum as compared to sectors like retail and telecom where it approached 100%.  Nevertheless, with an unprecedented and unregulated assault on the hotel model by hospitality poseurs like Airbnb hotels ought to bring that ratio down to well below the 50 mark by ramping up on engagement on the loyalty front.  




The Loyalty Paradox

March 17, 2015

Airline loyalty programs are being rewritten to provide the most benefits to those who spend the most. Leading the charge in that direction last year was United's Mileage Plus program which explicitly sought to give more rewards for those who spent more money followed by a somewhat complicated update this year that gave more miles for the same fare and flight to those higher up on the mileage totem pole and another set of rules on miles required to climb up that ladder.

Hotels too have been making changes to the rewards programs by making rewards proportional to the average daily rate as happened for Marriott and Starwood recently although Starwood's teaming up with Uber to offer points to those who use the app based ride-hailing while staying at one of their hotels takes some of the sting off of the changes.

However, a Harvard Business Review paper by MIT researcher Michael Schrage has a cautionary note for service companies that look to reward only the fat cats. Entitled "Why Your Customer Loyalty Program Isn't Working" the blog post notes that "the rise of social media platforms such as Yelp, Facebook, Twitter, and TripAdvisor guarantee that customers will get a global say on what loyalty should mean and who “loyal customers” really are. They’re rewriting the economic rules about customer value. Who is truly more valuable to an airline or hotel chain? A profitable repeat customer? Or a two-thirds as profitable customer (emphasis added) whose comments and critiques on Twitter and Yelp influence hundreds of prospects?"

The Harvard paper goes on to ask  "how valuable is a “typical” customer who makes suggestions to a hotel — or retailer or software developer — that can be worth hundreds of thousands in insight? When loyalty can be defined as innovative contributions and influential word-of-mouth as opposed to repeat high-margin business, traditional measures and metrics for loyalty decay into anachronism." That insight perhaps prompted Hilton to radically change their Honors program to offer free WiFi not only to all members but also enable points when booked through sources other than the company, a key differentiatior, thus far, from its competition.

The HBR paper ends by noting an apparent paradox in structuring loyalty programs "loyalty here is as much about ethics as it is business. Loyalty shouldn’t be a data-driven gimmick for capturing customers and market share. It is one of those rare virtues that can be both a means and an end for new value creation in healthy relationships between consumers and companies."  Perhaps airlines and hotels should settle down to the idea that the benefits do not always have to be tangible and immediately realizable.

Robotic customer service and moral dilemmas

March 02, 2015

Robots are making headlines in a variety of industries from transportation to hotels with none perhaps as dramatic as driver-less cars, a phenomenon that appears certain to enter commercial use sooner than later. While much of the news has been focused on the many positives of driver-less cars that range from giving mobility to the elderly to reducing traffic jams based on intelligent technology that re-routes cars very little has been published on the potential pitfalls.

The Financial Times picks up on the foregoing with a report on ethical and moral issues that are being discussed if not anticipated. In a hypothetical example cited "a self-driving car is ferrying its owner to the office. Suddenly, a school bus, traveling in the other direction, veers out of control and into its path. In a split second, the self-driving car must make a seemingly impossible choice: continue driving straight on and risk injuring several children, or swerve and possibly hit one of the cyclists."

The ethical aspects to robots pervading our lives was, however, raised more than a few years ago in a 2011  book titled "Robot Ethics: The Ethical and Social Implications of Robotics" where the authors note that robots are often tasked with the "3Ds" of life: jobs that are are dull, dirty, or dangerous.

Innovators in the hospitality space, however, seem to think that robots are capable of more, far more, including providing service. That at least is the promise of Japan's Hen-na hotel in Nagasaki which put out a press release last month that garnered much international attention.  When the hotel opens later this summer, the (all female) robots at the front office will greet (in four languages) check-in and escort guests to their rooms.  Other equally remarkably human looking robots will function as porters and housekeepers. All the robots are being made by Japanese company Kokoro courtesy of a Japanese government sponsored initiative.

The growth in use of robots in automobiles, entertainment, military and health care is exponential and its entry into hospitality is perhaps only to be expected with the financial premise of Kokoro's robotic hotel being the lure of an employee-less hotel. But what is left out of the Kokoro's press release is the slew of ethical and moral issues that are likely to confront the entire industry.

The issues, as yet unaddressed, include: What does replacing the entire housekeeping staff with robots mean for customer relations?  Can a robotic front desk agent discern when it is okay to make an exception to give a key card or reprogram a lock for a guest who has misplaced his/her card and/or smartphone for entering a guest room? Will a robot bartender shut out a customer with a higher tolerance for wine after 3 glasses assuming that to be the threshold? In the trial-lawyer driven culture of the US the legal consequences of a misstep whether intentional or not has huge implications. And the (negative) implications for employment are perhaps even greater.




Empowering consumers: Social media supplants brand standards

February 13, 2015

For decades the near sole arbiter of standards in hotels and restaurants has the franchisor at a branded location.  Ratings from Mobil (now Forbes Travel) and Michelin served to underscore quality as it was the franchisor who drove business to establishments that adhered to standards laid down at headquarters. 

Although much of the above remains largely true even today that model is continually being tested in the digital age from the two leviathans of user-generated sites: Tripadvisor and Yelp.In the decade plus period since  their establishment businesses have learned that more so than the directives and SOPs from brand central it is the searing and often spontaneous assessment of customers that can make or break most hostelries. 

Picking up on the foregoing are some municipalities. A Harvard Business Review blog article points out that "cities are beginning to see the value of using consumer-feedback sites to improve efficiency, provide citizens with important health data, and put pressure on unhygienic restaurants to clean up their acts". While noting that "local governments are not known for being at the forefront of innovation and technology" the article says that the algorithms developed by the authors have been used in "tech-friendly cities such as San Francisco and Raleigh, North Carolina" to demonstrate that digital and social technologies have the power to transform what used to be that most analog of processes, the disclosure and enforcement of public-health regulations".

By embracing social media for enforcement, governments not only serve current and prospective customers better but also cut down government waste. Heretofore, the inspection process was random with compliant and high quality establishments being subjected to the same inspection process as those that are on the wrong side of the issue.  With social-media driven technology, inspectors' time is better spent on likely offenders.

The HBR piece sums up the many benefits.  Per the "Centers for Disease Control, more than 48 million Americans per year become sick from food, and an estimated 75% of the outbreaks came from food prepared by caterers, delis, and restaurants. By partnering with social-media sites to provide digital disclosure, municipal officials can improve these numbers. They can also reduce costs and display information in ways that are easier for citizens to find and absorb".

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  • President of Apple Core Hotels, a chain of 5 midtown Manhattan hotels offering value and comfort in the heart of the city.

    Member of the board of Directors - Hotel Association of New York.



  • The views expressed in this blog are my own and not that of any company, association or organization.