New York Hospitality by Vijay Dandapani

Warming upto guests - literally.

A report in Britain's Sky.com notes that Holiday Inns has introduced a "Human Bed Warming" service for its hotels in the United Kingdom. It will be offered at it's London Kensington hotel throughout the following week as "a free five-minute "human bed warming service". The news item says that 'If requested, a willing member of hotel staff will jump in your bed, dressed head to foot in an all-in-one sleeper suit, until your nightly chamber warms up". A Holiday Inn spokewoman in the UK described it as akin to a ""having a giant hot water bottle in your bed"! The hotel chain even got physician sleep expert, Dr Chris Idzikowski, director of the Edinburgh Sleep Centre in the UK, to endorse the idea saying that " who noted that the idea "could help people get off to sleep". Dr. Idzikowski also pointed out that "There's plenty of scientific evidence to show that sleep starts at the beginning of the night when body temperature starts to drop. A warm bed - approximately 20 to 24C (68-75F) - is a good way to start this process whereas a cold bed would inhibit sleep. Holiday Inn's new bed warmers service should help people achieve a good night's sleep especially as it's taking much longer for them to warm up when they come in from the snow." Probably true but one would hope that no accidents result given that a non-human bed-warmer could just as easily do the trick.

The cold chill brought on by the recession has resulted in other such marketing ideas to warm up the bottom line including bringing in "readers" for bed-time stories. Hyatt's Andaz in Liverpool in the UK offered to sate the bedtime story yearnings of hotel guests. The hotel brought in the somewhat quirky writer and journalist Damian Barr who observed that "Most people haven't been read to since they were children, and they don't bring a lot of books to hotels," he says. "I always pack a selection, because you get tired of being in the CNN world." The hotel noted that the "service is free, and no books are off-limits — even racy ones.". Barr responded to security concerns by saying that 'If somebody was perhaps responding to the reading in a way that was inappropriate, I would try to stay in the safe confines of my armchair. And hotel security is always on standby." Perhaps, but since its introduction a year ago it was not emulated elsewhere.

Within the US unorthodox marketing ideas include the Valentine's day promotion offer from Harrah's in Atlantic City. A Wall Street Journal report  notes that the resort is "bringing gambling lovers performances by Air Supply - quite possibly the world record holder for number of songs written with the word “love” in the title - BB King and Buddy Guy, as well as a chocolate tasting hosted by Jacques Torres and, presumably for the singles looking for love, a champagne and lingerie party at a bar." The offerings also include a "crash course in love".

All a far cry from uses anticipated by the architects of the Statler chain of hotels at the turn of the last century when they expected a hotel, among other things, to be "a place where a traveler can obtain shelter and rest... and the atmosphere of its public lobbies and dining rooms should be such as will neither offend nor repel the woman guest.

Contactless payments on the anvil for hotels?

Measuring ROI for new technology is not too dissimilar to advertising. The trite old adage about 50% of advertising works with no idea about which 50% may not quite apply to technology but hotels do invest in new technology such as TVs on bathroom mirrors or i-pod docking stations without clear metrics for evaluating their ROI. What is often clear is that customers "demand" such amenities before long resulting in revenue slippage to competitors who do install them. Non-financial metrics frequently accompany the roll out of new technology in hotels.

Contactless payments use RFID (radio frequency identification) that enable customers to make a payment by merely flashing their credit cards near a reader. The transaction is done without a signature or receipt for transactions below $25. Apart from savings in time for both customers and merchants, the technology has benefits such as avoiding physical contact (via the card) that may be of interest to compulsively sanitary individuals.  Yet despite the fact that contactless payments such as Chase bank's Chase "Blink" cards which have been around for over two years have yet to catch on in hotels. From hostelries having vending machines to resorts with remote outlets stand to benefit from its implementation which over time should catch up with more traditional high ticket sales.

Alnother customer-centric technology that is aong similar lines is the announcement of web-enabled payment systems via smartphones. A new launch is "Square" by a co-founder of Twitter with a device and application geared to enable credit card payments to Apple's iPhones.

eweek reports that "users make a purchase by swiping the credit or debit card through the reader, which would be plugged into an iPhone that has the Square payment application on it. The reader parses the card data and converts it into and audio signal, which is picked up by the phone's microphone and onto the Square app.The data is encrypted and sent via Wi-Fi or a 3G connection to Square's servers, which talk with payment networks, including Visa, Mastercard and American Express. The purchaser signs for the transaction with their finger on iPhone's touch screen."  While the technology is not similar, the visual is akin to what one encounters at any Apple store with its salespeople walking around with mobile iPhone credit card readers. For resort hotels mobile check-in could be a game changer.

Budget hotels in Asia: Rife with economic opportunties?

The term "budget hotels" has, for long, been used to refer to hotels at the lower end of the price spectrum despite the dictionary meaning of the word "budget" being "the amount of money that is available for, required for, or assigned to a particular purpose". True to all aspects of the industry connotation for the word was the recently concluded Budget & Economy Hotels Asia 2009 conference in Singapore

The conference, the first of its kind, covered a range of issues affecting Budget and Economy hotels in the largest markets for the segment including India, China, Thailand and Singapore while gaging prospects in what seems to be an underserved and fast booming segment of the industry in Asia. Sponsored largely by the industry giant in the field ACCOR, the conference was kicked off by its Asia Pacific CEO, Michael Issenberg who highlighted some of the path-breaking trends in the segment such as "manchising", a hybrid of franchising and management, that seems particularly relevant to the budget & economy segment in that part of the world.

Startlingly large GOP ratios (40-50%) and meteoric growth rates (1000% in 9 years!) in China and India (100% in 10 years) were combined with the sobering reality of oversupply in (parts of) China and enormous regulatory and infrastructure barriers in india, the two biggest markets for the region. Japan and Singapore were no different in terms of financial performance though with vastly different (and better) development tracks in terms of efficiency, transparency and ROI ratios. On the latter, the financial contrast between its brethren in the upper echelons of the industry was succinctly summarized by the effective, if trite, acronym ROI for the budget sector versus ROE (return on ego) for the luxury and upscale segments.

The pressing issues of the day for the segment were no different to others in the industry and in other parts of the world. These include financing (the lack of), technology, green issues and the seemingly extinct long-haul customer, guests originating from the heretofore robust markets of North America and Europe. Deal flow seemed to have thinned out particularly in markets like Thailand and Vietnam and was hard to come by even in hugely under-served markets such as India.

Nevertheless, the overwhelming consensus of most speakers and attendees was that the segment, particularly in Asia, had withstood the global financial crisis far better than their counterparts higher on the totem pole and was poised to reap even greater rewards as the world emerges from its deepest economic slump in decades.

Plutonomy and hotels

Reuters reports that Starwood Hotels & Resorts third quarter profits was better than what analysts expected. However the report notes that the company "which operates mostly luxury and other top-tier properties, has been particularly sensitive to the decline in business travel and corporate cost-cutting. It has cut average daily rates dramatically to appease vacationers." The report goes on to quote an analyst as saying that a "recovery (has been) priced into these stocks, and people are just sort of reading the tea leaves from each of the companies about how and when that's going to happen."

If the foregoing perspective is more right than wrong it foretells a very slow recovery for hospitality as a revival in luxury is an essential component of any broader lodging (and overall economic) recovery. The notion that the luxury segment as represented by the rich & super-rich consumer drives overall economic growth was first neatly encapsulated by a Citibank executive in 2005 with the term Plutonomy. The Citibank report of 4 years ago said that "the richest 20% (in plutonomic economies) may have been responsible for 60% of total spending".

Starwood's perspective notwithstanding, the luxury market in the broader economy is reporting signs of life as another Reuters news report quotes a Bain & Company report that forecasts "positive growth for 2010 and quotes a partner in the firm as saying that "luxury goods markets are stabilizing (and) we are seeing less discounting and mark-downs (unlike in Starwood's report) and more signs of increasing consumer confidence." It is not all positive though as Bain predicts "luxury sales in mature markets show continued softness and that 2009 sales will be down 16% in America, 10% in Japan and 8% in Europe versus 2008."

Still luxury (and other) hoteliers can, perhaps, take a leaf out of some other resourceful luxury marketers seeking to overcome a major obstacle to luxury's revival: luxury shame. The Wall Street Journal reports that some are "encouraging Internet shopping, as many brands have been doing to overcome luxury shame—epitomized by the showy act of walking out of a fancy store with a big shopping bag—is one of the main reasons for the estimated 20% jump in online luxury sales this year as per Bain & Co." Another tactic for "taking some of the guilt out of shopping—offering a charitable-giving component—is gaining traction as well."

While hotels can't have guests stay virtually in their properties they can promote their properties and seek to alleviate any guilt from luxury shame amongst guests by offering to donate to their guests' favorite charity a ratio of the room rate at the end of their stay. Another move could be to incorporate more plebeian cars instead of Maybachs and Rolls Royces as part of their transportation stable as a way of alleviating luxury guilt.

Hotel rates: past the nadir?

Hotels.com put out a press release headlined "New York City Hotel rates drop 30 percent" but also goes on to note that the city's hotels still rank as the most expensive in the US coming in at $196 (Albuquerque, NM came in as the "cheapest"). Also in small print is the fact that the Big Apple together with Las Vegas fell the hardest of all cities surveyed. 

Somewhat unsurprisingly given the financial contagion that has swept through the world, other major metropolises around the world did not seem to fare much better with Dubai reporting a 26% fall in rates for the first half of the year. Moscow led the world in falling rates with a 52% plummet followed by Mumbai, India with a 42% free fall. Consulting firm PKF reported a continuing loss in rates for London saying "that they saw rates drop by 7 percent in August compared to the same month in 2008." The consultancy also noted that "although rates are not falling as hard as they were during the start of the recession, things have yet to start to recover."

Yet a couple of analysts from Citigroup and one from Goldman Sachs in this Forbes article and AP report seem to see rosier days ahead for investors in lodging products saying that hospitality companies "will reap big rewards from a rebound in the economy". Their bullish outlook for hotel stocks are "despite lingering questions about whether these (lodging) companies can refinance debt fast enough in a slow recovery."  Their optimism stems from a view that  there is "not some permanent shift in Americans' taste for places to stay." Fair point, except it does not consider increases (in some places significant as detailed in this Bloomberg report) in inventory. In mature markets like the US that could remain a significant damper for some time to come even as the broader economy resurrects.

Celebrity write-offs

Gypping hostelries of their due is as old as the lodging industry. The authoritative "Laws of Innkeepers" by John Sherry notes that there is universal legislation "governing hotel fraud (which) classifies the crime of fraud on innkeepers as a type of larceny, which does not, however, in law, amount to larceny, for the reason, among others, that the subject of the theft is not 'property'. It is an offense relating to theft and is now designated as 'theft of services'."

While Joe Sixpack is unlikely to get away without settling the bill for a hotel stay, celebrities seem to do so with unfortunate regularity banking on their name recognition to bamboozle staff and management into extending credit when it is not due.The LA Times reports on the latest luminary who attempted to do so - actor Randy Quaid who was held by the authorities in a small Texas town for not paying his bill at a hotel in Santa Barbara, CA where he initially produced a dud credit card before leaving without making good on his charges. 

Quaid is merely one in a long line that includes somewhat controversial pop-star Lindsay Lohan who apparently ran up a substantial unpaid tab at the swank Chateau Marmont and Naomi Campbell who purportedly stiffed the Moscow Ritz for a relatively small amount when the hotel presented her with charges for damages to the room.  Nor have political personalities shirked from walking away from hotel bills as was the case with this hotel in Memphis, TN.

Most hotels have credit policies in place that would preclude such losses from regular guests. Nevertheless, some brazen non-celebs manage to get past even the vigilant as is the on-going case involving the" catch me if you can" fraudster who is still eluding hotels and authorities across several countries. Britain's Daily Mail reports that a fake "Saudi Arabian prince has been leading police on a merry dance through Europe, Australia and New Zealand. The cheeky cheat has been running up tens of thousands of pounds in unpaid bills, living the high life in the best hotels, drinking the finest champagne - and slipping away without opening his wallet."  It is unlikely he remains at large for long and likely will suffer a fate similar to a Jamaican national in Namibia who failed to pay his hotel bill and ended paying with his freedom.

Clearly, minimizing revenue shrinkage requires being alert to following credit protocols regardless of the "status" of their client. Putting star clients politely but firmly on notice when credit limits are flouted should be part of standard operating procedures in any establishment.

A penny for your thought (room) - Fat Finger Rates

The Crowne Plaza in Venice, Italy created news worldwide due to what appears to be a fat finger rate of 1 cent per room. Fat finger rates have been around since the dawn of online commerce with incidents occurring in all fields of retail. Best Buy was a recent "victim" while travel sites have committed such bloopers fairly frequently. Travel site Expedia, a few years ago,  had a rate snafu that they initially refused to honor irking travelers before relenting and agreeing to honor the rate or at least its equivalent value for another booking.

Few merchandisers harness the unexpected worldwide PR exposure to their advantage and the hotel in Venice seemed slow off the mark in responding with a Reuters newsreport noting that staff at the hotel, some 25 km (16 miles) outside Venice, declined to comment. The parent company, Intercontinental Hotels Group, also failed to respond saying that a spokesman "was not immediately available". That is unfortunate, as the hotel group chose to honor the fat finger rate unlike Best Buy which plainly refused to honor the large screen TV "purchases" made uner the non-offer of $9.99. The hotel's 90,000 Euro mistake could well have been turned into a positive PR opportunity highlighting its reputation for rate integrity. 

A penny for a room can, however, be a genuine offer. That is the case with some Red Roof Inns in the US per an offer on the economy hotel chain's website  The lodging chain hopes to garner positive PR as well as convert penny pinchers into dollar spenders once they have stayed at a Red Roof Inn. The initiative is essentially akin to "free offers" that seek to keep the marketing conversation going:with new customers to the product or service as the real value of a free offer is the ability of the merchandiser to follow-up and continue the marketing conversation.when the time is right and the prospect is ready to take advantage of the services.  Red Roof Inn clearly hopes to entice the penny spenders to use the chain as their lodging of choice.

Customer first vs customer knows best

The Wall Street Journal has an article by writer Kelly Spors entitled "The Customer Knows Best" which examines how the internet has enabled companies in diverse industries to easily find out what consumers think. The article notes that companies, particularly small businesses, "are using the Internet to involve customers in decisions on everything from what to sell, how products look and work, how much they cost, and even how the company operates, like what hours a store should be open or how its floor space should be laid out." It goes on to quote an executive from a foundation that promotes entrepreneurship as saying that "Your customers might be better at designing your product than your elite team of product designers, who might be hiding in an ivory tower somewhere." 

The hospitality industry is probably a pioneer in consumers designing a product with former customers turned entrepreneurs like Kemmons Wilson and Cecil Day going on to start international chains Holiday Inns and Days Inns based on their experiences. More recently, user-generated-content is substantively about using customer feedback to tailor the hospitality experience both in operations and design. But even in design ideas both individual hotels and large companies such as IHG have taken to drawing upon suggestions from customers.  For instance, the newly opened MAve Hotel in New York City got its name from potential customers based on a contest. IHG's Innovation Hotel is touted as a "a showcase of some of our best ideas in sustainable tourism" and includes a "have your say" feature on its website where the company looks to "get your feedback on the innovation hotel" which they presumably will attempt to incorporate.

Nevertheless, as the Journal article notes, the approach has its drawbacks including "the risk that the crowd that provides input isn’t representative of the people who might buy the product (service) later on." It also could stymie innovation with entrepreneurs going along with a safe middle of the road approach to products, service and delivery. The hotel industry probably would have not seen a number of design ideas and products from the boutique concept to a focus on bedding as most of these owe their provenance to innovative ideas that came directly from entrepreneurs and managers from within the industry.

Ultimately, while putting the "customer first" in every aspect of service is de rigeur, it is probably infeasible to design and build a hotel on a "customer knows best" or democratic basis without sacrificing innovation to a substantive degree.

Managing International Travel

The Wall Street Journal has an interesting report in its managing section on how a California based company, Teknovus, has set itself apart in terms of understanding its overseas customers. The article could be interesting for hotel practitioners for a couple of reasons. Teknovus adopted a simple formula to bridge gaps in understanding caused by diverse. The company "required new overseas hires to spend time in the U.S., and he encouraged U.S. employees to call their international counterparts often" as part of an effort to "build mutual understanding (and) learn about different customs, and the reasons for the differences."

While hotel employees and management simply cannot travel to diverse countries to gain an understanding of cultural differences, there are other ways to mimick what Teknovus did for its staff, domestic and international. That could include cultural sensitivity training that address customers preferences of overseas customers based on marketing source codes. Knowing the foreign language in question obviously is a big help particularly for some customers from the far-east with limited knowledge of English. That can help get over self-limiting measures as these in this Japan based hotel.

Another interesting aspect that can be gleaned from the article is the fact that companies such as Teknovus clearly endorse the primacy of international travel over the frequently touted alternative, video-conferencing, a medium, that has oft been touted as limiting hotel stays as this recent survey seems to suggest.

Fast vanishing premium guests

The Wall Street Journal reports on woes in the airline industry with an article headlined "Economy Takes Toll on Premium Airline Passengers. The financial crisis has hit, among others, British Airways which has a lot of exposure to the banking sector on its London-New York route and its flights to other finance centers, including Hong Kong and Tokyo. The airline has lost first- and business-class traffic by as much as 9% in September from a year earlier. That slowdown has impacted other travel areas such as Asia as well.

The same report notes that the 'lodging business hasn't escaped unscathed' with some higher-end hotels making inventory available to segments like airline crews, government travelers that. That "cannibalizing" of business heretofore spurned, can only have a negative cascading effect on hotels that made do with that end of the customer continuum.

The New York Times also has a report with a stark headline that reads "Travel Industry Shaken By Economic Downturn". The article notes that domestic hotel occupancy down 5 percent from the previous September and "the higher-price segment of the hotel industry, which had been holding its own, now also seems to be feeling the pain". Adding to that economic pain has been the faster rate of cancellations of existing reservations which are now running about 50 percent above normal at full-service hotels according to Bjorn Hanson, of the Tisch Center for Hospitality, Tourism and Sports Management at New York University.

Other parts of the country do not seem to be faring much better. The Miami Herald has a report headlined "South Florida luxury hotels tested in hard times". Apparently "the boom times are over for South Florida's young roster of ultra-luxury hotels as a global slowdown could show whether the region has put too much stock in wealthy travelers". The article quotes the sales director of the luxury hotel, the Setai who predicts that a sizable number of guests this winter will balk at the South Beach resort's $1,100 standard daily rate, forcing him to extend a $620 weekday special into the weekend.

At another part of the country in Beaumont, TX in a distinctly different segment a very different (and heartening) story is playing out with the Beaumont Enterprise reporting that "Hotels full; grab a room at checkout if you can". The reason Southeast Texas hotels are full has a simple explanation: Hurricane Ike. Many hotels and inns are still waiting to reopen because of damage from the Sept. 13 storm while others are filled with contractors and relief workers. The Beaumont Convention and Visitors Bureau. notes that there are"stories of people going from hotel to hotel trying to find a room. It's a crapshoot with the demand for hotels so great that the bureau receives around 30 to 35 calls a day about hotel rooms, which is up from pre-Ike average of five calls a day".