New York Hospitality by Vijay Dandapani

(un)convention(al) visitor bureaus

Few phrases are as trite as "thinking outside the box" and yet it bears repetition particularly in the tour and travel industry given the warp speed with which changes come about. One (seemingly unlikely) group that is thinking far ahead and out of the box is the Association of Convention and Visitors Bureaus. There is a wire report on how this "influential Florida tourism group is now endorsing oil and gas drilling at least 30 miles off its shore, an about-face for the tourist industry and a harbinger of the controversial policy Congress will likely debate in the new year".

Previously Florida tourist groups had been vehemently opposed to drilling off their shores, but the Association of Convention and Visitors Bureaus now says it's essential for the state's economy.
"Changes in global energy markets have affected the price and supply of oil and natural gas and subsequently may have a future impact on Florida's tourism industry," the association said in a three-page policy statement. The group said a comprehensive, long-term energy policy, including "increased U.S. domestic oil and natural gas production, is essential to maintain a healthy, vital Florida tourism industry." Tourism is one of the biggest money-earners for the Sunshine State's gross domestic product, pitching in around $66 billion in 2007. The group did put in some riders to their endorsement to avoid giving a carte-blanche to the drill crazy crowd. These include "zero discharge of certain drilling fluids and that the federal government would share royalty and lease revenue with the state".

Far sighted and constructive thinking among tourism promotion agencies is a welcome change from the passive approach of mainly emphasizing tourist attractions although the latter too is clearly welcome as in initiatives such as these by the Greater Miami Visitors and Convention Bureau. What is not welcome is profligacy and unaccountability as in this case involving the Orlando/Orange County Convention & Visitors Bureau where the former chief executive walked away, upon retirement with a Wall Street like package of $744,441.

Hotel California?

The meaning of the lyrics "You can check out any time you like but you can never leave" in the Eagles song from the 70s has many interpretations at least one of which can be applied to today's business traveler per a new study of 1,000 travelers commissioned by Samsung that found that 57% never left their hotels.

The Times of London reports that "more than half of business travelers don’t leave the confines of their hotel when on a business trip. What’s more, one in four never even leave their rooms". While 58% of guests in the study say the thing they miss most of all on their business trips is their partner, some 38% say it is their pillow, 28% their home entertainment system and 12% their teddy bear.

The Times report notes that "with hotel guests demanding much more of their in-room entertainment systems, two thirds of respondents to the survey said that the gadgets and gizmos offered by hotels is now a major part governing the ultimate choice of hotel". Other interesting revelations from the survey include the fact that guest behavior is different if hotels are not upto snuff when it comes to their tech offerrings with as many as 36% of those surveyed saying they "would boycott future visits" and 32% saying they "would moan about it to friends, family and on travel websites". As many as 23% would actively switch hotels to find one with better gadgets.

Somewhat unsurprisingly, Samsung's representative said that "typically, Generation Y respondents, particularly business travellers, are not shy about making their technology demands known and their loyalty is based on using stylish, functional entertainment systems that they're already comfortable with. Most worryingly, [some travelers] don't give hoteliers the right to reply or to improve their systems. They simply never return to the same hotel again”.Seems like a marketing challenge for hotels to rise to. 

Bucking the tide?

Just about every aspect of the tour and travel industry(and, indeed, the broader economy) seems to have been hit fiercely by turbulent headwinds. And yet there are reports within and without the hospitality industry of launches that seem to defy gravity.

In the hotel sector none appears more defiant than the irrepressible Sol Kerzner who has chosen this moment to mark the grand opening of a "$1.5 billion hotel on Dubai's man-made, palm-shaped island". The 73 year old Mr. Kerzner has not held back on the opening ceremonies either and is reported to have showered over $20million on the opening "night bash at the salmon-colored Atlantis -- modeled after Mr. Kerzner's Atlantis resort in the Bahamas". Nevertheless, even Sol Kerzner appears to have tempered his future plans by announcing that he needs "to rethink hotel growth, staffing needs". Other hoteliers who continue to launch projects include Starwood with more hotels in the Middle East and closer home in St.Louis, MO, a new Indigo hotel is slated to open in two years.

In the airline sector, several airports including, Seattle, Chicago's O'Hare and Washington's Dulles open new runways just as domestic travel heads south. Some airlines also are adding international routes including to the US.

The IATA attempts to throw cold water on all the expansion plans by somberly reporting "a sharp fall in business travel" with "he number of passengers traveling on premium airline tickets dropped eight percent in September".

Recessionary scams

Besides the many negative consequences directly associated with an economic recession, downturns inevitably spur a variety of scams. Hotels need to be especially alert to scammers seeking to inflict economic damage on scarce hotel guests. The range of scams include:

• Inbox malware that seeks to extract personal and business information for nefarious uses - anything from personal identity details to guest lists and credit card details can then be lifted by the scammers. Malproofing methods can be found in Carnegie Mellon's site at their CERT center.
• The use of social networking sites as marketing tools for hotels leaves them vulnerable to cyberscams that are mushrooming among the social networks such as facebook.
• More garden variety yet ingenious scams include fraudsters posing as law-enforcement officials "investigating" credit card scams while asking for the hotel's database to plain robberies. 
• Thieves pose as guests prowl hotel corridors to walk into guest rooms being serviced by housekeeping and walk away with personal data. Guests often do not realize that they have been victimized as the thieves, if they come upon a wallet, steal only one credit card or merely a business card with a view to identity theft. 
• Thefts in the lobby are also likely to rise as thieves walk among guests during the busy check-in period and walk away with baggage left unattended by unwary hotel guest tired after a long journey while they await their turn to check-in. More brazen are outright robbery attempts as this recent one in New York.
• Parking lots of hotels are also more vulnerable to marauding thieves and robbers. Increasing the quality of lighting and patrolling, while more expensive, is a must. Guests can help thwart them by not leaving valuables in the car and parking in well-lit areas.

Some unscrupulous hotel operators are not above using the straitened economic circumstances to perpetrate some scams of their own. These include the so-called "dynamic-currency-conversion" fee levied on unsuspecting foreign guests to "mistaken" postings for services such as newspapers, phones, movies and sundries that were never used.

New markets - visa free travel for Koreans

Visa-free travel for Koreans to the United States began this Monday, a result of a long overdue (given their economic status as the 10th largest economy) change in US policy, that could significantly increase the number of visitors from the Republic of Korea (South Korea).  The first visitors somewhat predictably went to Hawaii and arrived at Honolulu international airport. Hawaii alone is expecting 80,000 additional visitors! That would be welcome relief for the beleaguered islands. The mainland too stands to gain from pent up demand particularly given the presence of substantial numbers of Korean-Americans in the North East and in Southern California.

The visa free regimen for Korea was part of an initiative launched by President Bush last month and includes six other nations: Hungary, Latvia, Lithuania, Estonia, the Czech Republic and Slovakia. Hospitality operators in gateway cities reeling from the current economic climate would do well to target Korea and some of the other wealthy and populous countries including Hungary and the Czech Republic.

Lawsuits against negative customer reviews?

User generated content has revolutionized customer service in a variety of service industries mostly for the better. Nevertheless, hotel (and other) reviews in UGC sites like Tripadvisor.com frequently find operators at their wits end battling patently biased and inexplicably false reviews posted. Seems as if some operators within the industry and without are choosing to reach for the courts to counter what they believe to be inaccurate reviews.

Strax Rejuvenation and Aesthetics Institute in Lauderhill, FL, a cosmetic surgery and "rejuvenation" center is suing a woman over an eleven-sentence review that was posted on citysearch, and The Grand Palms Golf & Country Club in Pembroke Pines is suing a woman for a similarly negative review.

The Florida Sun-Sentinel reports that "These suits are extremely common and starting to make their way through the courts,” said Lyrissa Lidsky, professor at the University of Florida. “Courts are starting to develop balancing tests to guarantee it’s a legitimate libel suit before they uncover the poster’s identity.” She was referring to anonymous posts. As for the libel suits, the Florida professor notes that "it's often hard to know if such libel lawsuits are legitimate or if companies just want to muzzle their critics".

As for Grand Palms, they filed suit in "October against Jessica Rapillo, accusing the New Yorker of posting a defamatory review that caused a noticeable drop in business. According to the lawsuit, the review on a travel Web site called the Grand Palms "the most disgusting, bug infested, rundown hotel."

The Sentinel article quotes Lidsky as warning that "anonymity on the Internet is not guaranteed. Businesses can subpoena service providers to track down who wrote a review, she said. "All of us are seeking information about the products we buy and the people we come into contact with," Lidsky said. "A simple Google search is very common before you embark on any business venture. A company is foolhardy if they don't monitor what is said about them online."

Turnaround management

In New York, as elsewhere, the financial tsunami has proven to be a six-sigma event (when valuation drops by more than six standard deviations) resulting in Revpar drops of greater than $100 for some hotel operators. The Wall Street Journal and the FT both have articles on guides that serve companies across industries to better handle economic adversity.

The Journal's article has many pointers that can be of used for hotel operators. These include better communication with employees. Crises tend to have leaders (GMs included) operating behind closed doors (some of that stems from a desire to not convey their own sense of panic as also not to be embarrassed by the bad results) and away from staff. More typically, the tendency to blame staff lower down spikes dramatically in bad times but that does not typically address the problem of falling Revpar. A third thing to avoid is " fragmentation and infighting". "When a company is having problems, so people are not very outgoing. They're not nearly as collaborative, lose respect for other people and become very discouraged easily. So leaders have to make sure that there's some shared feeling about the goals".

The WSJ article points to leaders who have led successfully in times of crisis and cites the example of Continental airlines during the power outage in the summer of '08. People assumed another terrorist attack but Continental managed creative ways of keeping their Newark hub in operations. While other airlines lost money during that period, Continental made money. Lastly, the journal notes that successful turnaround managers are those who do not just focus on cost cutting but those who show "respect to their people".

The FT has a different focus that is helpful all the same. A crisis put the "puts the CFO (Controller) in the driving seat of the business".  Where should he/she start: "daily cash meeting with key lieutenants to keep liquidity levels closely monitored". Secondly "keep CEOs (GMs) and boards up to date on the simplest of questions: do we have enough cash to survive a week, a month, a year or even two years". "third, gain control over who your debtors are and their financial health" That includes not selling to people who cannot pay back. "The CFO's (Controller) role, however, is not just to run the numbers but also to question any predictions made by management". The FT also notes that companies need to "Stress test the business. Take your worst-case scenario and stress test it at even more pessimistic levels". That would include dropping revpar to levels not seen since 2003. 

Better portends?

British Airways , one of the world's largest airlines, saw its shares surging as the "airline revised higher its growth revenue forecast for the year to at least 4%, up from 3%, and said management believes it can achieve a small operating profit". Notably the airline found that "booking activity in October felt the effects of turmoil in the financial markets but has since started to recover". As the airline sector arguably feels economic headwinds ahead of others including lodging that could be good news.

Nevertheless, others such as Disney who are more directly involved in lodging have reported no such uptick. In fact Disney has started discounting by nearly 45% (visitors offered seven nights for the price of four) at its resorts which is great news for the consumer and unlike BA, Disney's CEO, Bob Iger notes that "forward bookings had declined" as the "pace of bookings at our [US] parks has slowed meaningfully since the time of the Lehman bankruptcy".

In the meanwhile, Lodging, like many other small businesses can take to some of the successful tactics highlighted in this Forbes report. They include really listening to customers citing the Mirror Lake Inn, an 84-year-old high-end resort in Lake Placid,NY and continuing to investing in training and quotes the example of Evergreen Subaru in Auburn, Maine. 

Travel gage

Cheapflights.com, a search-engine devoted to looking up the lowest costs on airfares is probably one of many available via the web but what sets it apart is a nifty tool that tells users how expensive is it to fly from one's hometown. Cheapflights.com averaged what it costs a family of four to fly from one's home city and came up with a number for some of the most popular cities in the US. " That number was compared with the average cost-of-living in that city based on the U.S. Department of Labor statistics. An index rating below 1.00 for a city indicates the Travel Price Index is lower than the cost-of-living there; a rating above 1.00 shows the Index is higher than the cost-of-living".The index called travelnomics labels cities that come in at less than 1.0 as "very affordable" and from 1.12 and above as expensive.

Interstingly, New York City was one of the lowest in the list with an index number of 0.57 and Los Angeles came in at 0.80 and San Francisco at 0.71. Many major (but smaller relative to NYC) cities exceeded the national average with Houston leading the pack at 1.30 and Salt Lake City at 1.24. A probable explanation for the anomaly, fewer flights out of cities like Salt Lake and Houston as compared to LA and NYC ensuring less competition. In today's adverse economic climate, the gage likely is a useful tool for individuals and corporations planning air travel.

Travel in tough times

MSNBC's travel columnist has an article entitled "6 reasons we love to travel now". While the focus of the column is on travel bargains that the economic downturn has sprung the underlying theme is a beef that the industry (and that includes all elements - TAs, airlines and hotels) neglects the customer during better times. Ignoring his arguably false premise for now, the article does bring out some of the goodies on tap for the customer. These range from $150 room rates in midtown Manhattan courtesy of Priceline and Hotwire to upgrades in fancy resorts (the Four Seasons Resort Nevis) in the Caribbean. Others that find mention include the J.W. Marriott Hotel in Lima where a guest was upgraded to a suite and a traveler (a professional speaker) who was upgraded (as the only passenger) to first class on Lufthansa (perhaps his vocation had something to do with it).

MSNBC is not the only site featuring travel bargains. The New York Times last week had a piece on Holiday Travel Bargains that listed the Arpoador Inn in Rio de Janeiro, Brazil where "standard rooms start at 190 reals or just $91 at 2.12 Brazilian reals to the dollar, down from about $122 in August".  AAA is doing its part too as an Oklahoma business daily notes that "North America’s largest leisure travel agency network, is partnering with domestic and international travel industry leaders to offer special savings on an unprecedented set of travel experiences". The savings on AAA travel can be found on their website that directs customers based on their zip code.

Beyond the US, economic travails are prompting travel promoters worldwide and they include Australia where tour operators hope a domestic interest rate cut will spur business and Germany where the Financial Times reports that airlines are "airlines are setting the sky as their limit in their attempts to maintain and attract corporate customers". The paper also notes that "the economic downturn is prompting travel providers to offer a growing range of frills for business travellers". Unsurprising as economics 101 would point out that when supply exceeds demand, the incentives for suppliers to exceed expectations are greater.