New York Hospitality by Vijay Dandapani

Western Hemisphere Travel Initiative (WHTI) & RFID passports

Yet another aspect of the controversial Western Hemisphere Travel Initiatives goes into effect today under which oral declarations to prove identity and citizenship will no longer be sufficient. Travelers will be asked to present certain documentation from a specified list when entering the United States at land or sea ports of entry. Prior to today, travelers at land crossings (usually the Canadian border) could enter the US by merely stating that they were US citizens. Travel by air has required the presentation of a passport since January 23rd of last year. Today's added measure also affects citizens of Canada and Bermuda who are currently exempt from document requirements. Travelers disinclined to get a passport do have other choices such as a "passport card" and an "enhanced driver's license" (EDL) that documents US citizenship. Some Canadian provinces are considering introducing EDLs for their citizens.

The initiatives impact on tourism are likely to abate over time as the world gets used to heightened security measures both to ward off document fraud and thwart terrorism. But some of the changes seem designed more to convey the impression of security than actually enabling it. One such change that could be of interest to hotel operators but equally to fraudsters is the RFID chip in passports. According to an article a couple of years ago in Technewsworld, a German expert pointed out that not only could the chip in the passport be hacked but it could also be cloned. Assuming that the government has got past security glitches, RFID chips can be of use in swiping information directly into the PMS systems of hotels making the registration process even quicker and eliminating data entry errors that hinder marketing efforts. Thus far no PMS or hotel company has indicated an interest in that area.

Middle East hotel news

A recent reuters news item that "Saudi authorities, breaking with religious codes that require women to be accompanied by a male guardian, have decided to allow women to stay in hotels on their own" did not garner much attention in the US presumably because Saudi Arabia is not a frequent destination for US travelers; besides the Saudi strictures against women were not usually applied rigorously to the few foreign women who traveled there alone. The royal decree required the Saudi Ministry of Commerce and Industry to lay down new regulations that simply require women to show personal identification including a photograph, which hotel managers must register with local police (presumably as a formality). But along with the "liberalization" for hotels came a ruling on women driving - a welcome step for Saudis and foreigners alike.

In the same region, Forbes has a story on the extensively opulent hotels that are opening. The article notes that "in the Middle East, it's not only oil that's booming. Business and leisure travel to the region has climbed 18% a year since 2005". That has sparked interest in the "palace-style hotels that once pampered kings and aristocrats". One such hotel is the "Emir Amin Palace Hotel in Beiteddine, Lebanon. Its 22 elegant, spacious guest rooms and stunning views of the Shouf Mountains from the garden afford guests an exclusive perspective of the lifestyle of princes and the land they once roamed". However, with the situation in Lebanon still in a state of flux, foreigners may want to tarry a while before they explore the erstwhile abode of grandees.

Dynamic pricing for the super bowl

The New York Times reports that a three-night stay over Super Bowl weekend at the Ramada Limited Airport North in Phoenix went for a cool $2,382.78 while cautioning that the "deal" may no longer be available! Dynamic pricing is increasingly accepted by hotel guests but almost always with resignation especially during high traffic events like the Super Bowl. The Times notes that "the swankier hotels and resorts in the Phoenix area, of course, have been booked for months, or even years, for next Sunday’s game. But the astonishing room rates that even roadside properties are demanding say something about the three-day spectacle the Super Bowl has become." The Ramada Limited cited in the article is indeed a roadside hotel and the internet gives adequate warning of what to expect. Presumably, given full disclosure, guests are voluntarily paying nearly $800 a night but that is unlikely to translate into a complaint free stay given the excessively high rates. Hotel owners are free to set their own prices under virtually any franchise system and, most likely, Ramada's owners, Wyndham Worldwide, had nothing to do with rate setting for the Super Bowl but that is where the complaints will end up.

An interesting variation from the by now standard dynamic pricing policy is one followed by Travelodge in the UK. Some owners of the chain in London charge a fixed rate for all rooms and then levy a "“transparent event premium" of upto 40 pounds. With a continual stream of events in London every day, the premium almost always gets levied resulting in complaints that the "advertised rate" is never available!

Marketing in a recession

With equity markets in free-fall around the world thus far spectral visions of a downturn are morphing into real tangible losses and pain for a lot of people. While the financial sector losses are still to materially affect bottom lines in the industry - although development has already been constricted in many places - it is perhaps not too early to revisit low to no-cost marketing strategies as customers hold on more tightly to their wallets. Taking advantage of adversity involves more than making lemonade out of lemons it involves a pro-active approach that includes:

- Focus on websites that offer free listings such as Travelpost and hotelbook (commissions due).
- Check yourself out on Google and conduct a website functionality audit that takes a comprehensive look at source of business to the hotel's website, home page wording and layout, target words, facility of booking and of course, the essential search optimization review.
-Put out press releases, particularly those targeted at your home town newspaper - while it is nice seeing one's hostelry in national and international media, too often marketers focus on far flung sources of business to the exclusion of demand generators in their backyard.
-If trade show booths have become unaffordable, it may still be worthwhile to attend and build awareness.
- Put the marketing focus on employees in other departments through cross training. Every employee must always be a salesperson for the hotel; in a recession that aspect becomes particularly acute. Starting with the GM down to line employees the emphasis must be on the USPs of the hotel at every point of customer contact. Guest interaction could be used as a reward for employees by gaging and monitoring customer responses.

Hotels are lagging economic indicators, and merely confirm the presence of a recession once it is underway. Nevertheless having an entirely reactive marketing program in response to demand that has declined puts the property behind the eight ball. Some of the foregoing measures and other initiatives can be applied regardless of the broader economic picture but a greater emphasis and a fresh look is warranted when there are dark clouds on the economic horizon as is the case now.

"Hot" hotel hotspots

The Wall Street Journal (subscription required) reports on the security risks involved in logging into hotspots in Cafes, airports and hotels - a topic this blog addressed in April of last year The Journal article notes that "many Wi-Fi users don't know that hackers posted at hot spots can steal personal information out of the air relatively easily. And savvy criminal hackers aren't settling for just access to credit cards, bank accounts and other personal financial information; they love to sneak into your company's network, too". It quotes Shawn Henry, deputy assistant director of the Federal Bureau of Investigation's cybercrimes division as saying that "businesses that offer Wi-Fi, like hotels, often don't know that their networks have been breached and many times don't report incidents they know about for fear of bad publicity". If Mr. Henry is right about his surmise on hotels, it is well nigh impossible to gage the extent of the problem in hotels. But the Journal also quotes Tom Brennan, manager for AccessIT Group, a company that assesses companies' security vulnerabilities who opines that "the chances any one person will be hacked aren't high, the payoff for criminals can be great" which is more likely the situation with hotel hotspots and indeed the security breach example cited in the Journal article occurred in a public park.

None of the above calls for complacency on the part of hotel IT staff and incidents reported by guests ought to be disseminated to help operators combat the problem vigorously. Some of the measures operators can take were mentioned in the April 2007 post on this blog and is reproduced below:

For starters, just asking the correct name of the hotspot connection helps ensure a false connection is not logged into. Secondly, disabling a laptop's automatic feature that conencts to the "nearest" hotspot ensures the lazy way out does not result in loss of data. Having a personal firewall outside of corporate firewall (which typically does nothing in a hotel) will help. Corporate guests who have a corporate VPN (virtual private network) have an advantage over general consumers as they can "tunnel" into their corporate network and thwart hackers. Like in most aspects of technology Wi-Fi convenience tends to compromise safety and keeping a step ahead of the hackers is a continual process. Hotels that put out as much information to their guests as possible are doing their customers more than a service as the measures are likely to win appreciation and loyalty.

Recession on the anvil?

The New York Times has a front page report with the headline "Americans Cut Back Sharply on Spending". The article notes that "strong evidence is emerging that consumer spending, a bulwark against recession over the last year even as energy prices surged and the housing market sputtered, has begun to slow sharply at every level of the American economy, from the working class to the wealthy. The abrupt pullback raises the possibility that the country may be experiencing a rare decline in personal consumption, not just a slower rate of growth. Such a decline would be the first since 1991".

Presumably such an across the board tightening of the belt would strike at the lodging industry sooner than later. Publicly traded lodging stocks reflect that sentiment as the Dow Jones Hotel Index, a proxy for that group, has seen a steady downward trend for the last month. After reaching some heady heights last year when it crested 800 in July 2007, the index has tumbled down to 545 a steep drop of over 30% from its apex. Individual hotel scrips duly reflect that with Starwood (HOT) sliding down from its July 2007 high of over 70 to 39.45 on Friday. But does all that necessarily presage a recession? Much of the NYT reporting relies on anecdotal evidence that cites the performance of individual companies. While those results may be indicative they do usually do not stand up to statistical scrutiny. Most recession calls are made well after the downturn has passed and thus far the lodging industry has had a modest upturn in 2008 results per Smith Travel Research. Nevertheless, hotels are lagging indicators of the state of the economy and respond to overall economic changes a posteriori. But based on the available evidence, a steep correction in room rates similar to hotel stock prices is highly unlikely this year.

China redux

Just when it seemed that there was nothing more to import from China, the Financial Times (subscription required) Travelodge, the budget hotel chain owned by Dubai International Capital, is planning to build up to half of its new hotels using ready-made modules imported from China. The paper notes that "The first such hotel, with 120 rooms, is being completed in Uxbridge, west London. A 307-bedroom structure near Heathrow is expected to be completed by the end of 2008. Travelodge aims to add 40 hotels a year until 2020, half of them built using the modular approach. The steel modules - which are slightly larger versions of the standard shipping container - are provided by Verbus Systems, a London-based company that owns the patent to the technology. Each unit typically contains two hotel rooms, complete with bathroom, wiring, wardrobes, carpeting and even a bed if required".

Modular or pre-fab rooms have been in use in the US for decades and are favored for ease of construction and consists of prefabricated concrete components that range from full size, pre-finished rooms to even entire buildings. However, the design for Travelodge's modules features 86 individual, pre-made steel modules, stacked up and bolted together. Finishing touches like FF&E will be done on site. The company expects to revolutionize hotel construction by,among other factors, stressing its portability. Presumably, when demand exceeds normal supply the modules can be wheeled in and dismantled as demand tapers off. That could potentially change the dynamics of investment in the hotel industry as the notion of a fixed asset takes on a new meaning. Travelodge expects to save 10% in construction costs amounting to an annual saving of nearly $20 million.

NY shows the way!

New Yorkers have reason to feel a little better while boarding flights from NY. Travelmole reports that NY state's "Airline Passenger Bill of Rights" is now in effect, mandating airlines to provide refreshments and working restrooms for passengers stuck in planes at NY airports for more than 3 hours OR face penalties up to $1000 per passenger. Sounds fair enough! While not applying to tarmac delays, the new bill is a shining example of consumer power in an industy bedevilled by poor customer service!

Tourist meltdowns

In a trademark irreverent look at "popular" tourist destinations, Gadling has come up with some "overrated tourist traps." Most travelers couldn't agree more. NYC, one tourist destination that delivers most bang for the buck has its share of pet peeves - deli food markets and their increasingly assembly line options catering to a busy office crowd, small movie theatres, garbage-strewn "local" neighborhoods, anytime rush hour traffic, holiday shopping crowds , MTA weekend service, vehicle exhaust-mixed sidewalk cafe menus, hole-in-the-wall takeout eateries and smoke-spewing peanut vendors at Times Sq. Next door neighbor New Jersey has two of America's least unremarkable attractions - Atlantic city and Six Flags. The former leaves you cold while the latter's wild-life safari boasts the most wild animals you never see!

As Gadling correctly observes, "worthless trinket" shops and cheesy souvenirs are the worst aspect of travel anywhere. As a country, we are pretty liberal about merchandising landmarks and national institutions. The US flag appears on swimsuits and socks and the Empire State building graces everything from coffee mugs to carpets. Quality doesn't seem to matter either. The cheapening of world-famous landmarks and national treasures needs to stop! Other countries observe guidelines about what can go where!