| FOR IMMEDIATE
RELEASE — September 26, 2005
Contact:
Richard S. Kahn, (516) 594-4100
Richard@Kahn-Travel.com
Taryn Schneider, (954) 525-1394
Taryn.schneider@comcast.net
Laurence S. Geller Provides First-hand
View of Recovery Efforts in New Orleans
NEW YORK, NY (Sept. 26, 2005) –
Laurence S. Geller, president and CEO of Direct Strategic
Hotel Capital, told attendees at the recent Hospitality
Sales & Marketing Association International (HSMAI)/NYU
Industry Strategy Conference that: “It’s a time
for serious urban planning, not for ad hoc rebuilding. There
needs to be some cohesive leader to plan for the smart rebuilding
of New Orleans, and it’s also a time for sophisticated
marketing.”
Geller, whose company owns the Hyatt New Orleans among
other hotels, went on to say: “It’s now time
for massive money to come into the New Orleans Visitor and
Convention Bureau to rebuild both business and leisure travel.
The Bureau needs to seriously build up its staff to manage
this. I hope the industry can put aside short-termism and
do the right thing.”
He predicted: “Leisure business will be back next
year, but the conventions are three years off.” But,
he added: “He who lives by the crystal ball ends up
eating ground glass” and further suggested it’s
not RevPar that we should be watching, but rather “total
RevPar, including all the money spent by the guests, which
equates to real ROI as opposed to Room RevPar.”
The 5th annual event co-sponsored by HSMAI along with
the Preston Robert Tisch Center for Hospitality, Tourism
and Sports Management at New York University, focused on
new marketing disciplines as they relate to return on investment
(ROI) and customer relationship marketing (CRM).
“There is no normal anymore,” said Dr. Laila
Rach, Associate Dean, Preston Robert Tisch Center for Hospitality,
Tourism and Sports Management at New York University, to
lead off the Industry Strategy Conference here, later followed
by Richard Harper, vice president of sales and marketing
for Mandalay Bay Resort, Las Vegas, who said: “Sales
and marketing directors need to define the rules of engagement,
empower the staff and get out of the way.”
A focus on database management, advertising online versus
traditional offline advertising, and crisis management as
it related to the recent hurricane catastrophe on the Gulf
Coast were other topics of discussion at the one-day event
held in New York City.
Robert A. Gilbert, CHME, CHA, President and CEO of HSMAI
said: “We experienced a jam-packed program where the
expertise flowed with ideas including the need for leadership
in the sales and marketing arena, the need to clearly define
success before proceeding with a program, and the fact that
five years ago HSMAI issued a study in conjunction with
NYU which said the skill set required for sales and marketing
is going to be different and now it is.”
Dr. Rach noted: “It’s back to basics. In order
to be successful in direct sales you have to respond to
the client.” She also noted that CRM “is still
in its infancy and requires a quality database.”
Mark Woodworth, Executive Vice President for PKF Hospitality
Research, introduced the results of a survey done in conjunction
with HSMAI examining sales and marketing expense trends
noting that “the U.S. lodging industry is well on
its way back to the top of the cycle for a full recovery
on the revenue side of the equation.”
However, Woodworth also noted that “revenue outgrew
expenses for all hotels in 2004 over 2003 except for full
service hotels, and the biggest increase in expenses is
labor costs.”
Payroll has been the fastest growing expense, according
to Woodworth because “you have to pay more, hire more
and benefits costs are up.” He also noted a 72 percent
increase in spending on the Internet.
The PKF/HSMAI survey indicated that ROI varies widely
by initiative with the greatest ROI for person-to-person
sales. On a scale of 1 to 5 the results were as follows:
- Person-to-person sales .................................................
4.16
- Hotel Websites .................................................................
3.98
- Public relations .................................................................
3.60
- Internet marketing and advertising ................................
3.41
- E-mail marketing ...............................................................3.15
- National and corporate advertising ................................3.00
- Local advertising ................................................................3.00
- Merchandising ...................................................................
2.84
- Direct mail ...........................................................................
2.62
Rick Garlick, Director of Consulting and Strategic Implementation,
Maritz Research, examined trends in customer relationship
management asserting that there is a difference between
a hotel and a hospitality company, with the latter being
the more successful, especially in satisfying its customers.
He suggested that the first thing hotels need to do is
ask themselves the right questions such as “Who is
your customer?,” “What do you want to do for
them?,” and “What do you want your hotel to
be?”
When you have answered those key questions you “then
maximize your marketing and CRM efforts just to those consumers
that fit the model.” He urged: “Every hotel
should have a loyalty program.”
He also noted that there are always three groups of customers
out in the marketplace including:
- Those that are always completely loyal to your hotel
or product
- Those that are loyal but may use other hotels or products
- Those that do not buy into your value proposition and
use only other hotels or products
Garlick suggests that it is not necessary to spend too
much effort on marketing to the number one group that is
fiercely loyal as long as you continue to service them.
He also notes that it is a total waste of energy and marketing
efforts to try and convince a group of customers that do
not buy in on your value proposition.
Therefore, the group that should be cultivated with your
CRM efforts is the number two group of customers that like
you, but also use others. “What we are trying to understand
is what messages appeal to those customers most.”
Dr. Rach asked Garlick why hotels have all of a sudden
discovered that they have beds in their rooms and are now
promoting these products to differentiate themselves.
Garlick noted that “Everyone is always looking for
the next cool thing and it’s all a matter of creating
perception of something different. You want to advertise
to the sweet spot of your customer.”
He told of a radio station promotion with claims of “less
talk and more music.” The ads created the perception
that there was indeed less talk and more music and surveys
done a year later indicated that consumers thought this
station had less talk and more music despite that this was
not necessarily fact.
He noted, “What people want for their loyalty is
to be treated special and feel that they have an entitlement
to being pampered. They are saying ‘if you don’t
treat me special I am going to take my business and go elsewhere.’”
The key to a good CRM program is a good database. “Without
a good database, it is not possible for a hotel or company
to communicate with the potential guests. The more I know
about you the customer, the more I can provide you with
special services and treatment,” added Garlick.
Bringing the CRM into the sales and marketing arena, Garlick
noted that the entire hotel staff needs to buy in on the
brand messaging with ownership from the top down. The marketing
message then becomes a brand promise and can be successful
if carried through. He noted for example, “the challenge
for Wyndham by Request is that it is not being met consistently
and executed by all Wyndham hotels.”
Dr. Rach agreed: “You have to become an evangelist
for CRM and get the front line to embrace it.”
Maureen O’Hanlon, senior consultant, Prism Partners
and HSMAI Chair, took the CRM discussion to the next level
with a panel of experts examining the ROI in Customer Relationship
Management.
Jill Noblett, vice president of Loyalty and Direct Marketing
for Cendant, noted that they have just recently linked all
the brands that Cendant purchased over the years under one
loyalty program and the company has “seen a huge shift
in the loyalty program customers reserving on line. We can
now measure more accurately business year over year.”
Sean Taggert, executive director Marketing Services for
Fairmont Hotels, said: “Data collection is very important
from the reservation system and the stay reports. How much
guests are spending on F&B, spas, golf, etc. can help
us refine our targets.”
Menka Uttamchandani, director, Business Intelligence,
Affinia Hospitality, noted that “for everything we
do we set up a control group and measure the difference
between groups.”
Taggert added: “It is important that CRM be a companywide
buy-in to be successful and marketing has to take more of
a role with the internal communication to make this happen.”
Ed Weiner, president and CEO of Media First International,
a leading buyer for large travel industry marketing and
advertising companies, discussed purchasing shifts between
traditional print and electronic media pointing out that
“traditional advertising grew 5 to 7 percent while
online advertising is growing at a rate of 15 percent, but
dollars haven’t shifted, rather more money has joined
the pot.”
Weiner urged attendees to “look at your online message
more frequently. Don’t be satisfied that you have
a great creative ad and run it forever. That doesn’t
work online.”
He noted that companies such as Dell Computers change
their online message depending on the call volume. “It’s
really yield management using advertising and marketing
campaigns to impact yield,” Weiner said.
He also warned about defining success by “how much
did I spend and what will I get back” because “it’s
more than a dollar value, there is a residual effect. However,
if you don’t define what your success is, you can’t
end up being satisfied.”
Online advertising is a delivery device that is instant,
said Weiner, adding: “In the old days you had bingo
cards and now you have click throughs.”
He left the audience with this profound statement about
marketing and advertising: “If it doesn’t scare
you it’s not innovative.”
HSMAI’s Bob Gilbert followed this session with a
panel discussion on the ROI of advertising.
Trip Schneck, president, TIG Global, urged attendees to
“explore incrementality and what the flow through
is and how profitable is this customer that’s coming
from online marketing.” With the addition of online
marketing “you have a medium that produces measurable
ROI.”
R. Lynn Burkholder, director of marketing for Hershey
Resorts, said: “Direct response can be measured and
we find that our customers are still reading newspapers,
watching television and opening their mail, but doing it
differently.”
Andy Assante, vice president, National Accounts for Expedia,
agreed with the other panelists when he said, “You
have to be everywhere” and pointed out that Expedia
advertises in traditional media.
Burkholder said her company looks at the revenues to cost
ratio to determine success of every campaign. “What
did we spend versus what’s the total return from guest
spending? What are they doing while they are staying with
us?”
Fran Brasseux, executive vice president of HSMAI, then
interviewed two vice presidents of sales to find the answer
to the question: Is Direct Sales Dead?
Rose Genovese, vice president of sales and marketing,
Affinia Hospitality, said: “No, we need to balance
a lot of things including revenue management. We do prospecting
differently. We do research on the Internet. However, I
foster more face-to-face meetings and telephone conversations.
We need to have more personal contact because things get
done better with personal contact.”
Richard Harper, vice president of sales and marketing,
Mandalay Bay Resort, Las Vegas, said: “The way sales
were done in the past is dead and we need to reinvent the
sales program. We’re going to focus more on direct
sales relationships.”
One of the things that Harper said is that “we start
relationships by simply responding. That first meeting is
going to dictate the way the relationship goes.”
In answer to the challenges facing sales and marketing
executives, Harper said, “talent is the most significant
challenge for the future.” Genovese agreed saying:
“this is the time to train talent, adding: “This
is our opportunity to warm up the bench and develop business
for the future.”
HSMAI is an organization of sales and marketing professionals
representing all segments of the hospitality industry. With
a strong focus on education, HSMAI has become the industry
champion in identifying and communicating trends in the
hospitality industry, and bringing together customers and
members at 15 annual events. Founded in 1927, HSMAI is an
individual membership organization comprising nearly 7,000
members worldwide, with 38 chapters in the Americas region.
For more information on HSMAI, contact
the Hospitality Sales & Marketing Association International,
8201 Greensboro Drive, Suite 300, McLean, VA 22102, phone
703-610-9024; fax 703-610-9005.
You can also visit the web site at www.hsmai.org.
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