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Inclusive marketing: on the same page on same-sex customers

July 28, 2012

This blog has twice in the recent past noted how businessess continue to let personal preferences dictate business decisions that not only end up affecting the bottom line negatively but are often also illegal. That unfortunately seems to be the case with the perhaps slyly named restaurant chicken restaurant chain, Chick-fil-A, finds itself at the center of unwelcome national attention owing to its owners' letting personal preferences cloud business decisions.

The president of Chick-fil-A said that "the company was guilty as charged of allegations it opposed same-sex marriage.  The restaurant chain's leader, Dan Cathy said the family-owned business supported "the biblical definition of the family unit". HIs comments predictably have brought on a media firestorm for the chicken food outlet with many same-sex couples planning to stage a national "kiss-in" at Chick-fil-A restaurants on August 3rd. Other protests include one from  oston Mayor Thomas Menino who wrote the company president a letter "urging him to abandon plans to open a franchise on the city's historic Freedom Trail.  And the owner of the popular Muppet characters has ended its promotional partnership with the chain."

The chicken restaurateur has attempted to calm things down and issued a statement saying "“we have no political agenda, policy or position against anyone, especially the LGBT community" and went on to specifically point out that "we will not champion any political agendas on marriage and family." Perhaps they could have avoided the contretemps altogether had they taken a leaf out of the Marriott playbook. In Chairman Bill Marriott's personal life, marriage is something reserved for a man and a woman, a view that is not imposed either on the company's employees or customers.  In fact, he explicitly states that "We have to take care of our people, regardless of their sexual orientation or anything else." As it should be.

While Ignoring the foregoing could potentially cost Chick-fil-A lost revenue, embracing the gay marriage market, as was predicted here last September,  has brought forth millions to New York. The Financial Times reports that "Legal gay marriage has generated $259m in benefits for New York City’s economy over the past year as same-sex couples spent money on custom-made suits and gowns, catering and flowers and their guests flocked to hotels and restaurants." That ought to be self evident to any right thinking business.

Customer engagement and brand vulnerability

July 21, 2012

The July issue of the eponymously named quarterly of leading consulting firm,  McKinsey & Company suggests five ways to ramp up customer engagement; all of which could go a long way to combat vulnerability the subject of a report titled Hotel Group Brand Vulnerability by another management consulting firm, cg42.

The Quarterly points out that "No organization can avoid coming to grips with the rapidly evolving behavior of consumers and business customers. They check prices at a keystroke and are increasingly selective about which brands share their lives."  More relevantly, particularly for travel related organizations, customers,  both current and potential, "form impressions from every encounter and post withering online reviews." The  multiplicity of customer interaction moments referred to as "touch points" in a variety of areas leads to customer engagement being the responsibility of everyone.

McKinsey breaks the foregoing down to five key areas for action termed "no regrets" moves as a way to get things going even as the processes and environment continually evolves. The suggestions include:

    (i) a "customer-engagement summit" that goes beyond the traditional business-planning porcesses where line and staff managers align on a clearly articulated vision for engagement. It also requires coordination across touch points along with a full understanding of the "customer engagement eco-system" or universe.

    (ii) creation of a customer-engagement council; an operational + decision making body.

    (iii)appoint a chief content officer stemming largely to cope with the many diverse channels that continually emerge in these digital times.

    (iv) create a "listening center" not to play big brother but to monitor feedback from the many touchpoints via new media and be ready with quick responses; de-rigueur these days.

    (v)challenge the customer-engagement budget. As in any "new" intitiative the consulting company foresees  a perceived lack of funds to be an impediment to the above and suggests that what is required instead is a new perspective that finds monies invested "in the wrong places".

The seemingly bewildering array of touchpoints and a lack of engagement can lead to brand vulnerability as cg42's report on hotel brands amplifies. The firm's research delves into the "vulnerability of the major hotel groups and their loyalty programs among their most valuable customers – the primary frequent-traveler member" and notes the "inter-relationship between the loyalty program (a potent touch point) and the associated hotel brands." 

cg42's study is a must read for all hoteliers but also for anyone in the loyalty marketing field. For hoteliers there are some nuggets of good news and pointers that could go a long way to resolving the many unresovled frustrations of travelers, a primary object of the study. Among the latter: nearly 80% of surveyed travelers revealed that they prefer internet access and breakfast to be included in the hotel rate. The good news for hotel companies is that loyalty programs offered by online booking sites came in very nearly at the bottom with a mere 33% finding value in them. The only item that fared worse was the need to use a travel agency which clocked in at 23%.

The demand-supply equilibrium: When blue sky forecasting leads to the blues

July 14, 2012

A recent report on Bloomberg Businessweek carried the headline "Marriott's worries rattle hotel sector stocks" and notes that the hospitality leader had "reined in its prediction for fees for extras like Wi-Fi. It also says demand growth is slowing in the Middle East and in Asia, where economic growth is weakening. The company was particularly concerned about demand for higher-end hotels.

Bloomberg's report also noted that a mere month ago the company announced plans to have 4,000 hotels in 90 countries with  much of the growth to occur in China. Marriott was not alone as another leader,  Starwood Hotels, also planned on doubling its presence in China. Neither company appears to set much stock on reports about luxury brands such as Burberry and Chow Tai Fook who are seeing steep declines in sales in China.

One age old reason for it is the mixed messaging emanating from acknowledged experts. These include feasibility intermediaries who steadfastly hold to an optimistic forecast despite rising economic uncertainty and that major cities such as London and New York are "underhoteled", Ditto for analysts from investment houses such as Goldman Sachs who exuberantly cite that "global demand growth remains positive" while inexplicably stating that "there are no indications that supply is increasing in the U.S."  The latter does not comport with reality in many urban centers and particularly in New York where the past 4 years have seen a nearly 30% growth in supply.

The disconnect between expectations and reality in terms of customer supply is also played out for mega events like the Olympics.  London's hoteliers raised hotel rates by as much as 35% on average only to find many rooms remaining available. Now with the games just a few days away as this report in the UK's Guardian newspaper notes, hotels have now started to slash rates. No lessons seem to have been learnt from nearly identical outcomes for the last Olympics in Beijing when rapidly falterning demand prompted a retooling to attract domestic consumers. Certainly yet another case of Yogi Berra's "Déjà Vu all over again."

Capricious consumers or wayward surveys?

July 07, 2012

Wyndham Hotels recently issued a relatively optimistic prognosis for the rest of the year saying "Global Vacation Budgets on the Rise". The hotel giant's survey was premised on the finding that "travelers around the globe are rising above recent economic uncertainty by not only vacationing this summer, but increasing their allotted budget to do so."

Wyndham's goal was to "better understand the vacation spending habits of Wyndham Hotel Group's global guests, the survey polled just over 5,600 adults in key cities throughout the U.S., Brazil, Canada, China, and the U.K. and had other interesting conclusions which are noted later below. However, the very idea of consumers feeling better about their financial situation and rising above a pervasive economic gray cloud is less than clear based on seemingly contradictory findings commissioned by different yet reputable corporates.

Firstly, the Consumer Reports Index put out by Consumer Reports has an almost wildly optimistic outlook suggesting "a sharp improvement in its consumer sentiment measure, which jumped to its highest level since October 2008."  Citing a decline in financial difficulties the index says that the gains in consumer confidence was "broad based" since the gains were amongst households earning less than $50,000 per year (as also for those in the $100,000 + bracket).  Since more than half of US households fall in the former catergory that would represent a material improvement.

se in sentiment (53.1 from 47.5 the previous month) was broad-based, with significant gains among those Americans in households earning less than $50,000 (+5.5 pts) as well as more affluent households earning $100,000 or more (+7.7 pts).

"With more than half the country earning less than 50,000, any improvement among that group may have a significant impact on the economy. They still have some distance to climb, but these are positive signs,

Source: PR Newswire (http://s.tt/1h2lU)

rise in sentiment (53.1 from 47.5 the previous month) was broad-based, with significant gains among those Americans in households earning less than $50,000 (+5.5 pts) as well as more affluent households earning $100,000 or more (+7.7 pts).

"With more than half the country earning less than 50,000, any improvement among that group may have a significant impact on the economy. They still have some distance to climb, but these are positive signs,

Source: PR Newswire (http://s.tt/1h2lU)

Consumer Reports' rosy scenario is directly contradicted by Bloomberg' Consumer Comfort Index (CCI) issued almost simultaneously.  Bloomberg's darkly pessimistic prognostication. With "slower job growth and an unemployment rate that’s exceeded 8 percent for 40 straight months" Bloomberg's CCI said consumer confidence "dropped last week from a two-month high as fewer Americans considered it a good time to spend and their views of the economy languished." The financial services company also gloomily pointed out that lower gas prices failed to perk up consumers.

On a similar note for a related industry Standard and Poor's Industry Investment Review suggested that the "fundamental outlook for the leisure facilities sub-industry for the next 12 months is neutral, reflecting a slow-growing U.S. economy." For the state of New York ADP also chimed in with a negative outlook on consumer confidence saying "New Yorkers are pinching their pennies".

While it is unclear yet which consumer will emerge in the latter half of this year, Wyndham's survey had interesting asides on the profile of international travelers. Most Americans intend to spend "any extra money on extending their vacations with a majority of their budget outside of hotels spent on entertainment and excursions in contrast to their Brazilian and British counterparts who look to "fork out more on dining and shopping". The latter is a good outcome for cities like New York which have far more to offer in terms of dining and shopping and spending figures from inbound travel from Brazil and Britain reflects that.

 

 

 

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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.


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