New York Hospitality by Vijay Dandapani

Artificial Intelligence and travel

The idea of a genie in the form of AI that can do anything a personal assistant can do and some took a step closer to reality with the launch of an app for the iPhone. San Jose's Mercury News has an article that reports on how  Siri, a San Jose company, announced on May 27th that it would offer an "intelligent agent" for Apple's iPhone that would "be able to find movie theaters, book restaurant reservations and airline flights, buy from online retail sites and even answer trivia questions like "How many calories are in a banana," all by understanding spoken commands.

The paper quotes Dag Kittlaus, CEO of Siri, which emerged from stealth mode to announce the product, as saying that "The future of search isn't search. It is a conversation with someone you trust." In a demonstration the CEO asking SIri "I want to see Star Trek" and within milliseconds the phone displays a result that shows a nearby theater where the movie is playing. If needed he could have click on the result and Siri would buy the ticket for him. Quite nifty and could just as easily point to hotels in the neighborhood of the user.

Others have tried AI, or at least claimed to have done so including Rearden Commerce's Rearden Personal Assistant but the product, arguably falls short in terms of restricting users to what's "loaded up" on Rearden. For instance, if users had a preference to use Open Table as opposed to Zagat they are likely to have a problem as the PA only allows for the latter. Nevertheless, Rearden is on a tear to raise new money and expand the platform to have a larger universe for its business clients.

With consumers able to home into their choice of hotel, airline, restaurant or car rental based on an enormous universe, it seems like distribution channels are in for a shake-up, yet again, if AI really takes off.

Zootel - hotel in a zoo

Guests visiting the Zoombezi Bay zoo in Columbus, OH may soon be able to live with their objects of fascination if the zoo's authorities have their way.  The Columbus Dispatch newspaper reports that "Zoombezi Bay's debut last summer drew 408,711 visitors, and, judging by the variety of license plates in the parking lot, many were out-of-state vacationers." That has prompted the non-profit's authorities to consider "whether there's enough demand for an on-site hotel or resort, which would give visitors the option of staying overnight without leaving the premises. Hotel & Leisure Advisors of Cleveland is conducting a study that will help the zoo decide whether to pursue the project. Unconventional design ideas for the hotel/lodge include a "treetop lodge". Presumably ADA compliance would form part of the development process. 

As a niche product it probably has a fair chance of success even in recessionary times and while there may be some objections to a non-profit developing a hotel, it could be overcome by by bidding it out to traditional hotel operators as that would ensure operational efficiency as well.

Hotel development in a recession

The worldwide effects of the recession seems not to have stayed the hands of developers around the world. Europe has endured steep revpar cuts akin to the US as a recent report in the Wall Street Journal details: "occupancies fell 8.9% in the first three months of the year compared to the same period last year, according to STR Global, an industry research group. Hardest hit were those in Eastern Europe, down 19%, and southern Europe, down 16%."

Yet as BusinessWeek reports "big chains such as Intercontinental, Marriott and Starwood were now launching niche luxury brands in Europe, in a bid to offer clients more glamour for the money they were prepared to spend on hotels. Last month, British-based Intercontinental opened its first boutique hotel in London, named Indigo. Marriott International was also launching a boutique brand in 2010, with hotels set to open in Paris, Madrid, as well as Washington, Chicago and Los Angeles. Sheraton-owner, Starwood plans to open its first European luxury hotel in Barcelona this year and two in London next year."

One of the fastest growing hotel markets, India has seen the sharpest occupancy drops since the financial crisis and "major hotel chains have slashed room charges by up to 30 per cent because of falling occupancy rates on account of the recession." But a (well-founded) belief in the country's overall potential sees a continual spate of development deals. Le Meridien (Starwood) plans no less than five new hotels  Local real estate major Emaar MGF launched yet another hotel in Jaipur and another regional player in the south of India, the Muthoot Pappachan group, plans a several hotels there.

The US is not to be outdone with the Washington Post reporting that Disney is planning a 500 room resort outside Washington D.C. Also in the fray in the big league category is Kansas City with its 1000 room hotel proposal downtown. Like most others these projects, if they come to fruition, are planning on opening in a revived economy at least two years hence.

Engaging Employees in a downturn

Employee engagement as a management practice was first brought to the fore by the Gallup organization whose Gallup Management Survey of US workers found that "when it comes to innovation, business leaders aren't necessarily looking to traditional sources, like research and development departments, to contribute big new ideas. Rather, they're counting on ideas from their employees, customers, and partners to help drive the organization forward. And engaged employees are most likely to contribute those innovations".

Engaged employees are also considerably more productive in good times and bad but it is in times of adversity, that the differences are more starkly highlighted. So what constitutes an engaged employee and what does it take (on a continual basis) to engage them?

Gallup suggests that engaged employees "works with passion and feels a profound connection to their company. They drive innovation and move the organization forward". This results in employees being more productive with the company being more profitable and safer while creating stronger customer relationships besides causing employees to stay longer with their company.

Much of the foregoing would seem intuitive to seasoned managers and yet fostering engagement remains a challenge particularly in adverse times. Unfortunately, a more recent Towers Perrin global survey shows that "only two out of 10 employees are truly engaged although nine out of 10 want to be". That was despite prior research by the firm that underscored the many benefits of employee engagement including "additional discretionary effort by the employee beyond what was considered enough". A direct positive correlation between customer satisfaction and employee engagement was also identified.

The MGM Grand Hotel and Casino in Las Vegas seems to have taken the employee engagement idea to heart as an article from earlier this year in BusinessWeek indicates. The article quotes Charles A. Scherbaum, an associate professor in the psychology department at Baruch College, City University of New York who praises the company and its CEO Gamal Aziz for "understanding the payoff from stimulating its 10,000 employees." The professor notes that "There are a lot of great hotels in Vegas,"  but "What's going to differentiate MGM Grand? It's service, and that's the employees." Scherbaum observes that "In more difficult times, employee engagement is more critical as managers have to make a lot of negative decisions with real impact on employees." He notes that "96% occupancy won't continue.What's going to happen when they have to cut back on staff?"  Aziz, the company CEO agrees saying that he has "worked to keep employees aware of the challenges, including the broader capital crisis, group cancellations, and the fact that guests are not spending as much per visit." Remarkably, since few CEOs deign to think so, Aziz notes that "every challenge he faces in the corner office, the rank and file is aware of on some level."

But even the MGM Grand falls short in the eyes of the Baruch professor who thinks the company's "decision to cut funding for some of his leadership initiatives is a mistake that could prove short-sighted. The MGM Grand may have enough qualified managers now, but they run the risk of having a dearth when things rebound and they really need them." That last observation remains the bane of companies across the spectrum of industries as this site has previously noted cutting costs by divesting oneself of leadership talent is a sure recipe for being behind the eight ball when the economy picks up. 

Communal Hotel Pools?

Pooling one's resources takes on a new meaning in some swanky hotels. The Miami Herald reports "thanks to a sluggish economy, locals can pretend they're staying at swanky places this summer because half the pools out there are open to non-guests on certain days to make the places look occupied". The paper notes that the "stunning swimming hole" at the Four Seasons in Brickell, Miami will starting this Saturday "be open to non-guests on weekends, featuring stellar views of downtown, cool towels, Evian spritzes and cocktails that are never far away. It's not completely free, however, with day passes going for $25 per person and cabana packages at $150". Other hotels cited in the article for opening their facilities heretofore reserved solely for hotel guests include the Ritz-Carlton, South Beach whose pool "may not be open to nonguests on weekends, but every Tuesday and Thursday between noon and 5 p.m".

Some other  major cities such as New York's hotels have always allowed non-guests for a fee. These include the Le Parker Meridien where non-guests may purchase a $50 all-day pass, good for access to its state-of-the-art workout facility and classes and the Brooklyn Marriott in Brooklyn, NY.

Franchise Renaissance?

The depth of the recession is likely to see a deeper interest in franchising both by owners, particularly lenders with REOs on their balance sheet. The recession appears to be generating interest for franchises amongst former corporate employees as this article in the Wall Street Journal and Franchisedirect.com note. Franchisedirect says that "franchising will be something that we’ll be reading a lot more of in the coming weeks and months" while the Journal article says that "Franchisers contend that franchises are a natural alternative. They argue that their time-tested, how-to business model offers people a greater likelihood of success than striking out on their own—assuming that the franchisee is willing to play by the company’s rule". The WSJ article quotes a "franchise expert" on the pitfalls in franchising and details the requisites for successful franchising.

But as any hotel owner and operator will readily attest to, hotel franchising is arguably so unique that the challenges in acquiring and operating a hostelry demands more savvy, rigor and capital than most others. So how are hotel franchises doing under the new economic paradigm?  Some public brands have seen their stock downgraded by analysts while others have scaled back on their projections for the next couple of years while still others such as IHG have had a resounding vote of confidence as evidenced by the renewal of long term franchises. Many others are looking east for, hopefully, greener pastures in Asia and the Far-east in the interim.

As yet the outlook for boutique hotels is unclear. Recessions have historically been unkind to non-branded hotels. Preliminarily that aspect appears to be true this time around as well as this offering by the unsurprisingly named cheapflights.com for boutique hotels indicates with major cities like New York, Las Vegas and Chicago hiving off  as much as 25-45% from their rates. Other cities such as Portland, OR have seen occupancies drop far more than the national average.

However, the prognosis for boutiques may not be bad once the economy recovers as boutiques are not merely independents but hostelry that combine character, design and functionality all catering to a new demographic that is distinctly different. An example of the appeal of design to that demographic, albeit in a different industry, even in this recession can be seen in this article in the Wall Street Journal. The other positive for savvy boutique operators is the presence of the world wide web and its enormous potential and influence as a distribution system. When consumer spending picks up, such operators are likely to see their coffers refilled more quickly than others without having to deal with some of the financial burdens of a franchise.

Old vs New Media: The NYT and UGC

The New York Times last week (laudably) started a new column entitled "The Haggler". The paper says that it would like "readers to send in their complaints about specific transactions that have gone haywire: outrageous cell phone bills, airline ticket trouble, car rental nightmares — you get the idea. The Haggler will then call the company, get to the bottom of what happened, and, with any luck, right a wrong.

The article does not mention hotels but as a service industry, hospitality is almost certain to generate reader responses. The future column's focus is hardly new and were The Gray Lady to keep abreast if not ahead of the times (no pun intended), she might have tried her hand at sponsoring a user generated content (UGC) site instead. While hotels that are "featured" on the NYT's site are very likely to respond with alacrity, any responsive (and savvy) hotel operator or owner knows all too well the compelling aspects of genuine UGC site reviews. And there are many ranging from putative industry leader Tripadvisor to Yelp and lesser known yet effective sites like disqus. Not only do they provide real time continual updates which a weekly column like Haggler cannot but have far greater geographical reach. Should the NYT launch one, its brand name alone ought to help propel its UGC to the top ranks.

Key card security: The urban myth redux

That electronic key cards store proprietary credit card data of guests is a story that seems to have more legs than a millipede. Despite being debunked over the years as an urban legend, the story surfaces yet again on a UK based security website with the weight of credit reporting agency (and guardian of identity theft) Equifax behind it.  The article notes forewarns holidaymakers who "do not realise that hotel key cards can contain their name, part of their address and their credit card number” confirmed Neil Munroe, External Affairs Director, Equifax. “And, in the wrong hands, that could provide some really useful information to get an ID fraud scam going. If consumers’ hand the cards back in to the hotel reception, or throw them away when checking out, they could make themselves particularly vulnerable to this unseen crime".

It is unclear where Mr. Munroe of Equifax got his information about hotel electronic key cards but people in the industry know that hotels use only one of three electronic tracks to store information pertaining to guest arrival and departure details. The secure aspect of these cards were once explained by the delightfully named Mr. Hacker, deputy director of government affairs for the Ohio Hotel and Lodging Association who noted that "key cards usually have three tracks for potential information of which banks and credit card companies use two tracks, but hotel key cards only use one track". He goes on to explain that "the software product that has been given to the hotel community actually prevents the use of the first two tracks on the magnetic strip,  So the guests are not in fear at all of having any personal information on those cards whatsoever."

There are others (including this detailed article in smartertravel.com) who have countered the inaccurate technical information on this issue to no avail. Perhaps, someone with a name other than Hacker can come forth to put the matter to rest?

Buiilding brands

Millward Brown, a subsidiary of advertising and communications giant WPP has come out with its 2009 list of top 100 global "valuable" brands. Topping the list for the third year in a row is Google followed by Microsoft.  Nigel Hollis, the Chief Global Analyst for MB sets three principal pointers in this article in the Financial Times on what goes to making a great brand. These include a need to adapt to local needs and culture, the ability to seek to tap a human truth or to get a basic human motivation and to align the organisation around the global brand strategy.

Unfortunately, none of the hospitality majors including those with new hotel brands as this in 2008 made the cut into MB's list and the only brands tangentially, if tenuously, linked to hospitality are MacDonald's, Pepsi, Budweiser, Red Bull, and KFC (in that order). A brand, as they say, is the sum of its parts. For hotels vrirtually all aspects of a company's operation such as customer interface, communicating with employees and its core corporate philosophy together with its advertising&marketing efforts.goes towards establishing brand preeminence. Many of the premiere hotel brands have most if not all these elements down pat but clearly more needs to be done when the likes of State Farm, Auchan and Bradesco (?) make it but there is no room at the top for hotel companies.