Hospitality Marketing Blog.com

Toxic Hospitality Marketing Strategies

Madigan Pratt — Wed, 21 Oct 2009 14:05:44 +0000

Speaking before a conference of luxury Italian companies, luxury hotel operator Rocco Forte offered a stunningly concise summary of the toxic hospitality marketing strategies used by far too many hotels in these recessionary times.

“What happens in a hotel cycle [during a recession] is always exactly the same. Revenue dissipates, occupancies go down, hoteliers then sacrifice rates, discounting to boost occupancy. As they discount rates, they also decrease services and they cut back on every item of expense. Rates continue to fall as occupancy rises.” [Bloomberg Report]

Despite research from Cornell University, Smith Travel Research, PKF Consulting and others stressing that this is absolutely the wrong approach, hospitality marketing professionals continue to follow the same tired, brand destroying marketing strategies every time a recession comes along.

While travelers are looking to save money, they still expect a quality experience - especially luxury travelers. The experience is what most hotels advertised before the recession and what they built their brands upon. But is it being delivered now? With fewer staff to take care of their needs, reduced amenities, and more hidden charges, the quality of the experience is waning. Also waning, no doubt, is guest loyalty.

The Price of a Poor Experience

On the Harvard Business Publishing Blog author Peter Bregman recently wrote a great article entitled, “The Price of a Poor Experience.” In it Mr. Bregman presents interesting findings from research among hundreds of non-profit organizations and their successes and challenges to retaining members during the current economic downturn.

This is pretty much the same challenge luxury hoteliers face. They want to retain customers, encourage repeat visits and generate positive word-of-mouth - the most powerful form of advertising.

Here’s what the research showed:

There is no correlation between membership and price increases. In other words, customers didn’t leave simply because an organization raised its prices.
There is a direct correlation between membership and how likely a customer is to recommend the organization to a friend. This is known as the net promoter score - think of it as your word-of-mouth score.

If customers like an organization’s products or services enough to recommend them to others, then that organization could raise prices, even in a down economy, without losing customers. But if the organization downgraded the customer experience, then even lower prices would not prevent customers from abandoning it.

One could argue hospitality is drastically different, but human nature is the same across all categories. In the highly competitive hotel industry, people may be looking to pay less today but still expect to receive good value. Cutting rates while diminishing the guest experience will decrease a hotel’s “net promoter score” and brand value, which makes it more difficult to recover when the recession subsides.

Following a toxic hospitality marketing strategy can prove fatal. Cornell University, Smith Travel Research and PKF Consulting have written extensively on the topic recently.

Stay tuned to next post to learn what hospitality marketing strategies are successful in a recession and helped a small luxury hotel prosper in difficult times.

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A Conference Well Worth Attending

Madigan Pratt — Wed, 07 Oct 2009 15:03:31 +0000

Last week I was in St. Thomas speaking at the Caribbean Hotel and Tourism Association (CHTA) Small Hotels Retreat and have to admit it was one of the best conferences I have attended in quite some time.

Sponsored by HSMAI there were more than 250 attendees including hoteliers, allied members and suppliers. What impressed me most however, besides the quality of the material presented, was the amount of interaction taking place between all three constituents. It was obvious everyone was interested in gathering information and putting it to use in an effort to put the past behind and start down the path to recovery.

Lindsay Culbreath, Director of Sales for Smith Travel Research offered insights into the State of the Caribbean Hotel Industry. Although only 20% of Caribbean Hotels are currently reporting their numbers to STR Lindsay showed the impact of the current recession on the Caribbean hotel industry by reporting the following RevPAR figures:

	2006	2007	2008	2009 (thru Aug)
RevPAR	+5.1	+7.2	- 14.5	-22.9

Not the prettiest of pictures. STR is looking for Caribbean hotels to participate in its confidential industry survey which can only help hotels be more competitive in the future. Every Caribbean hotel should participate and can by contacting Linsday at 615 824 8664. For those hotels that do - your first year’s subscription to STR Reports will be free.

John Fareed, who helped organize the conference, spoke about “Winning Social Media Strategies for Small Resorts” and was as entertaining and insightful as always. Professor Eric Brey from the University of Memphis offered hoteliers a framework from which to assess and and deliver a Memorable Customer Experience. And today, surviving in the competitive hospitality arena - it is all about delivering and excellent guest experience.

If you would like a copy of Professor Brey’s presentation on “Driving Revenue - Creating Memorable Guests Experiences” you can contact him at ericbrey@memphis.edu. Just mention you found out about it in Hospitality Marketing Blog.

There were 12 different round-table presentations held during the two-day conference and every one was very well attended. Each table was set up for ten people and in most cases seating was two and three rows deep as hoteliers crowded around to hear the latest in marketing and operations.

Jamie Holmes, general manager of Nisbet Plantation and I presented a Case Study on “A Small Luxury Hotel That Prospered in Difficult Times.” We gave two separate presentations and in the end ran out of Case Study reprints. I am in the process of updating the Study and will summarize it next week on Hospitality Marketing Blog. You will also be able to download the full Case Study so look for details next week.

Alec Sanguinetti, Director General and CEO of CHTA, announced at the meeting that the Small Hotels Retreat has earned a permanent place on the roster of CHTA events and that plans are already being made for next year’s event. Of course details will follow. Seriously though, if you represent a small Caribbean hotel or have a product or service that a small hotel could benefit from I would strongly urge you to plan on attending next year’s event.

Safe Travels - Madigan Pratt

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85% of Hoteliers Just Don’t “Get It”

Madigan Pratt — Wed, 26 Aug 2009 15:29:59 +0000

Okay, so the research study didn’t actually come out and say it, but anyone reading the recent Market Metrics’ Research on user generated content (aka TripAdvisor) could easily draw that conclusion. For several years Market Metrics has been tracking the rising popularity of user generated reviews. Here are a few of the key findings from their most recent study:

90% of hotel managers think online reviews are very important
81% visit review sites at least weekly (TripAdvisor, Expedia, Hotels.com, etc.) TripAdvisor is believed to have the biggest influence on guests
70% of hotel managers are familiar with TripAdvisor’s Popularity Index that ranks hotels by city, and 90% of which believe the index is important and follow it regularly

Now here’s the number that I find astonishing:

Only 15% of hotels have policies or guidelines for how to manage user-generated reviews. In other words 85% just don’t “get it!”

How can this be? 90% of hoteliers think online reviews are important yet 85% are doing nothing about it?

Are they allowing their hospitality marketing professionals to spend money on advertising and promotion while doing nothing about TripAdvisor? Think about this - Market Metrics’ research indicates that all the money hotels spend on advertising and promotion is less effective than online reviews.

Need more? As far back as 2007 (ancient history by Internet standards) Nielsen Internet survey concluded, “Despite the ever expanding array of advertising platforms and sources, consumers around the world place their highest levels of trust in other consumers.”

Now I have seen plenty of articles offering ideas hospitality marketing professionals can use to develop a TripAdvisor strategy. The majority of the ideas are helpful, but the truth is each hotel needs to tailor their own strategy. It has to reflect their particular market situation, and match the available manpower and expertise.

What do you think? Safe travels - Madigan Pratt

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Excuse Me While I Scream!

Madigan Pratt — Thu, 13 Aug 2009 14:51:17 +0000

When I started www.HospitalityMarketingBlog.com two years ago it was intended to be just that - a blog about hospitality marketing. While it was never intended to be a political forum, I hope you’ll excuse me this one time.

A couple of weeks ago I posted an article The Media Are Killing Us! talking about how ABC News skewered the Social Security Administration for holding a conference for 700 employees at “a resort” in Phoenix. Turns our the SSA got a great deal spending only $85 a night at The Arizona Biltmore ($11 below the government daily rate for Phoenix) with a total spend of about $1,000 per person for travel, food and lodging for three days. But instead of receiving praise for astute meeting planning SSA Comissioner Michael Astrue was ridiculed publicly by the media.

If that weren’t enough, the media hogs in Congress felt compelled to get involved. According to The Federal Times,

“leading member of two House and Ways Committee panels are accusing the agency leadership of being tone-deaf in holding the retreat at such a posh resort at a time of high unemployment and record government deficits.”

You can’t make this stuff up. Reps. John Tanner, D-Tenn., Sam Johnson, R-Texas and John Linder, R-Ga. wrote:

“At a time when millions of Americans are out of work and having to do more with less, and when the SSA has received significant new funding to address near record backlogs after longstanding funding requests made before our subcommittees, it is essential that great care be taken to use administrative funding wisely, in a way that brings the most value to the American people SSA serves,”

Now I thought I was done reporting on this and in fact I am. But here’s my beef.

Last Saturday I picked up the Wall Street Journal to read an article entitled, “Lawmakers’ Global-Warming Trip Hit Tourist Hot Spots“. It details an 11-day trip taken by 10 Congressmen (and six spouses) to study climate change. Along the way, they went diving and snorkeling at the Great Barrier Reefs, rode a cable car through the Australian rain forest and visited a penguin rookery and flew to the South Pole!

Based on what the lawmakers reported and the estimated cost for flight time provided by the Air Force, the Wall Street Journal estimates the cost to be in excess of $500,000. What are they thinking? Don’t they know that millions of Americans are out of work?

On that same Saturday, in the same paper I read, “Pentagon Takes Aim at Jets for Congressional Travel“. It seems Congress added over half a BILLION dollars to the Defense Department’s budget to buy eight business-class passenger Gulfstream jets to ferry senior government and military officials around the globe - jets the Defense Department said were unnecessary! What are they thinking? Don’t they know that millions of Americans are out of work?

Luckily an article in yesterday’s WSJ reports the Gulfstream jet scandal is over. The reason - an intense public outcry convinced a spendthrift Congress they don’t need to spend a half billion on new jets. Looks like they are getting the message - millions of Americans are out of work. Hopefully it sticks, however I doubt it will.

So, here’s the point. If you want to make a difference you have to speak up. If you want to convince the media and Congress that Meetings Mean Business you have to speak up. If you want the media and Congress to stop demonizing meetings and conventions you have to speak up and tell them to shut up.

If everyone does, the message will get through. Start today. “Remember the Gulfstream!”

Thank you for indulging me on this rant. Next week it’s back to hospitality marketing. I promise.

Safe travels. Madigan Pratt.

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Good News: Travel Loyalty Program Membership is Shrinking

Madigan Pratt — Wed, 05 Aug 2009 14:39:45 +0000

It’s a fact - companies with the most loyal customers (we call them Brand Advocates) are the most profitable by a wide margin. So the recent research on travel industry loyalty marketing programs conducted by Colloquy research spells bad news for larger hotel brands and good news for smaller luxury properties.

According to Colloquy, travel programs have seen a 31.2% decline in active participation since 2007! So large hotel companies are scouring data bases in an effort to consolidate best customers and prospects in their programs.

The Small Luxury Hotel Advantage

As the research shows, these “loyalty programs” aren’t loyalty programs at all. They are points based programs that primarily reward frequent travelers and are better adept at reading behavioral patterns, but not necessarily creating real loyalty. They focus on transactions while smaller hotels focus on the guest experience.

They are a far cry from the service and attention consumers can receive before, during and after a stay at a small luxury property. While the hotel manages the actual stay experience it does need a well planned customer relationship management program (CRM) in place to manage the experience before and after the stay.

Instead of expensive points-based programs smaller hotels need to be focusing on surprise & delight - offering a guest an unexpected upgrade, late check out, special amenity on the fifth stay or personal invitation to a repeater’s cocktail party. A personal thank you letter or call to ensure the guest made it home safely while getting feedback on their stay are the personal touches guests see as genuine.

This genuine and personal touch from the GM and staff allows smaller properties to offer a truly unique personalized experience that builds loyalty. And the hotel’s CRM program should be designed to efficiently keep the memory of a great vacation alive for years if necessary. It is the key to long-term profitability through multiple repeat visits and referrals to friends and relatives - a hotel’s most effective marketing tool

The fact that transaction based loyalty programs are waning should be good news for progressive hospitality marketing professionals with a well thought out CRM strategy in place.

What do you think? Safe travels - Madigan Pratt.

For more information on the Colloquy research - click here.

To learn why creating loyal customers is so important - click here.

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The Human Side of Media Attacks on Conferences

Madigan Pratt — Thu, 23 Jul 2009 15:13:20 +0000

Last week’s post, “The Media Are Killing Us,” talked about how biased and sensationalized news reports on organizations conducting conferences hurts resorts and hotels. This week I would like to focus on the human suffering it is causing.

Do you think reporters, so eager to create (even fabricate) “news,” ever think about the damage and human suffering their stories cause? Probably not.

It seems appropriate to focus on it now that The St. Regis Monarch Beach Resort (scene of the infamous AIG Conference) has been turned over to Citigroup and ABC News’ story about the Social Security Administration’s recent Phoenix conference which now has Congress questioning whether it was prudent to hold the conference.

As a result of last week’s post, I received numerous emails from hospitality marketing professionals thanking me for speaking out. One email stood out from all the rest.

It was from a meeting manager in Phoenix and started out -

“As an Independent On Site Meeting Manager for over 12 years I wanted to say thank you for your comment [on the ABC News story]. I have also been very active in signing petitions, writing Senators and informing others through every means possible.

I am currently in search of a permanent position as I can no longer support myself as a freelancer in this industry.”

Over the course of several email correspondences I learned she was very willing to relocate and in fact, recently had a telephone interview with a company in Charlotte, NC. She was one of 650 applicants for the position and one of only 16 to be interviewed. She wrote:

“I was not selected for a face-to-face interview but have been told they will be hiring more people for the position in the beginning of the year and they will consider me then. I don’t think I can hold out. Getting a job is like winning the lottery.”

Meetings Mean Business - they are directly responsible for more than 1 million jobs! They benefit the companies conducting them, the hotels and resorts where they are held, and every individual involved in the planning and execution. With unemployment expected to rise to over 10% this year, jobs are critically important. Someone should tell Congress!

So get involved. Speak out. Express your outrage at how media is demonizing legitimate business meetings and events, and making it difficult if not impossible to find good paying jobs.

And by the way - if you have a job opening for a senior meeting planner, please send me an email at Madigan@MadiganPratt.com and I will forward it on to a real pro looking to hit the lottery. Hopefully I can do one more story on this topic - one with a happy ending.

What do you think? Leave a comment. Safe travels - Madigan Pratt

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The Media Are Killing Us!

Madigan Pratt — Thu, 16 Jul 2009 13:22:21 +0000

The Social Security Administration recently held its first conference since 2001 which included 700 attendees at the Arizona Biltmore in Phoenix. Perhaps you heard about it because of the brouhaha raised by ABC News when they offered a totally unflattering report. If not, you can read and see it here.

Just in case you think the media is unbiased, let it be known the ABC Report was filled with a full array of half truths intended to sensationalize the conference and embarrass the SSA. In the process it is perpetuating the AIG effect that is devastating the meetings and conventions business, slashing revenues at resort hotels and causing lay offs of thousands of dedicated workers. Shame on you ABC!

Here’s a few examples of what ABC reported and the truth of what went on:

ABC Reported - The SSA spent $700,000 for 700 people to attend a three day conference. What they didn’t say was the SSA shopped around for the best price and was able to secure a room rate of $85 per night. What would you expect for Phoenix in the summer? They got a great deal!
ABC Reported - Some of the government managers brought along relatives. Imagine that! Husbands and wives going to a conference with their spouses. Now that’s real news.
ABC reported - There was a night excursion to a local casino. What they didn’t say was SSA employees (and not the government) have to pick up their own entertainment expenses including trips to casinos.
ABC reported - The conference included a performance by a motivational dance company. Isn’t increasing employee motivation and thus performance one reasons to have a conference? What ABC didn’t say was most attendees sit in windowless conference rooms from 8m to 6pm.
ABC interviewed someone from the watchdog Citizens Against Government Waste group who scoffed at SSA claims the conference was put on as inexpensively as possible. They claimed if the SSA wanted to do that it would have held a video conference! I like what Steve Moore, president of the Greater Phoenix CVB had to say about that - “What’s next? Thanksgiving online?”

Phoenix is a city with many resort hotels that have been hard hit by the current recession and huge drop off in meeting and convention business. Several hotels have gone bankrupt and others are on the verge.

Biased and sensationalized reports like this are hurting every hotel and resort that receives even a tiny portion of their revenue from meetings and conventions. In some cases reports like this are killing resorts and increasing unemployment.

If you are as incensed as I am about the way the media is piling on and demonizing meetings and conventions I encourage you to speak out. Let the media know “Meetings Mean Business.” They also mean jobs to a lot of low income individuals who really do need a job right now.

Leave a comment. Let others know what you think. Forward this link to others in the industry. If you’re a blogger speak out!

Safe travels - Madigan Pratt

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Are All Hotel Marketers Liars?

Madigan Pratt — Tue, 07 Jul 2009 15:55:18 +0000

As a hospitality marketing professional you and I both know we’re not. But even Seth Godin would be hard pressed to think otherwise after reading the press releases for the new, over-hyped online hotel review site Oyster.com.

Essentially, Oyster.com is a hotel review site that sends professionals to stay at and review individual hotels. Purported to have been in stealth mode for the past year or so, the site has gone public with a limited number of reviews covering hotels in New York, Miami, Jamaica, Aruba and the Dominican Republic.

To generate publicity CEO and founder Elie Seidman is taking on the 800 pound gorilla - TripAdvisor and the people who market the hotels his web site reviews.

Seidman is quoted as saying -

“There are tremendous differences between what our reporters bring back and the marketing distortions of the hotel industry.”

Did he just call us liars?

But wait, it gets better. Mr. Seidman goes on to say, “The vast majority of hotel descriptions and photos circulating on the Internet originates in the hotel’s own marketing departments and gets reproduced over and over as legitimate truth–but it’s often misleading.”

Armed with 10 professional reviewers who travel essentially full time and go to 60 to 70 hotels a year it looks like Oyster.com will post 600 to 700 new reviews a year. Based on those numbers it’s hard to imagine this new site will “fundamentally change the way people make hotel decisions” as he claims.

Let’s face it - it’s not going to happen. Simply put Oyster.com is just another traditional travel guide like AAA or Mobil that will soon carry outdated information based on one person’s opinion of one encounter with a hotel. But if Mr. Seidman was being truthful and said as much in his press releases he wouldn’t be getting nearly as much press coverage now would he? Could this be a case of the pot calling the kettle black?

If content is king then Oyster.com is not going to replace TripAdvisor or fundamentally change the way people make hotel decisions. While some like to complain about TripAdvisor, let’s face it - people use it, believe it and book millions of room nights based on its reviews.

Give your guests credit. They check a variety of sources and read multiple reviews (not just one) to formulate their opinions. And I’ll bet they would write a pretty accurate and truthful review of your hotel if you asked them to.

In the meantime, after reviewing the Oyster.com site I came away underwhelmed. A flash-in-the-pan perhaps?

Check it out and let me know what you think. Safe travels - Madigan Pratt

For other comments on Oyster.com check out:

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Thinking Beyond Hospitality

Madigan Pratt — Wed, 17 Jun 2009 18:31:10 +0000

Seismic upheavals are leading to a paradigm shift in hospitality. Companies have clamped down on travel and the AIG effect has battered the meeting and convention business. Leisure travel is exhibiting anemic and last minute booking patterns. The Internet keeps bubbling along serving up what seems to be the social media flavor of the month. It’s no surprise hospitality marketing professionals are thinking beyond hospitality.

It’s times like these - when old ways of solving problems no longer apply - that spawn completely new and creative ways of thinking. You have a choice:

Keep pounding your head against the wall and expecting different results (the definition of insanity), or
Look at the market the way it is today, throw out yesterday’s strategies that no longer apply and think different.

And nowhere have I seen this “think different” approach expressed more clearly and succinctly than in a recent Advertising Age interview with John Wallis, Head of Marketing and Brand Strategy for Global Hyatt Corporation.

In the article John talks about how Hyatt has shifted more of its marketing online and how analytics are becoming increasingly important. Nothing new here, loads of hotels are doing the same thing.

But here’s the catch - and what makes John’s way of thinking so interesting and refreshing. He says,

“Our goal is to become a database driven company that’s in the hotel business.”

Brilliant! Hyatt is thinking beyond hospitality, and certainly shifting its strategic approach to the business.

Today business is all about relationships and the most profitable companies have the strongest relationships and the most loyal customers. And the only way to get there is through integrated 1to1 marketing launched from a marketing database. You’ll also need highly skilled direct marketing professionals to design and manage your program.

It doesn’t matter if you are selling rooms, widgets or cell phones. It’s the database and using it to better understand and serve customers and prospects that spells success.

In the meantime John Wallis is my nominee for our First Annual MP&A Think Different Award. Congratulations John!

What do you think? Safe Travels - Madigan Pratt

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Why I Hate TripAdvisor - sometimes

Madigan Pratt — Thu, 04 Jun 2009 12:59:23 +0000

If you are a regular reader of HospitalityMarketingBlog.com you know I’m a raving fan of TripAdvisor. With over 20 million reviews there’s hardly any guest who enters the door of a luxury hotel who hasn’t first read about the property on TripAdvisor.

The TripAdvisor Home Page proudly boasts, “more than 15,000,000 travelers from 190 countries planned trips here this week.” An astonishing statement. Adding weight to this is word-of-mouth impact. Research shows consumers believe reviews read online almost as much as they do personal recommendations from friends and relatives.

While many hospitality marketing professionals and travel agents don’t care for TripAdvisor (how’s that for PC?), our clients embrace it. Through a series of proactive, custom-tailored strategies each hotel actively manages TripAdvisor and encourages guests to post reviews. We treasure every TripAdvisor review - especially those with 5-Stars (or 5-Owls as TA refers to them).

But here’s what gets my goat. And the only reason I’m bringing it up is it’s happened a couple of times now.

A guest writes an absolutely glowing review of a property and rates everything 5-Stars - Service, Value, Location, etc. But in posting the review at the end they make an obvious mistake and rate the hotel as 1-Star. The first time this happened customer support was contacted and asked to simply correct the guest’s mistake and change it to 5-Stars which was obviously what the guest intended.

Instead of making the change, a few days later the review disappeared!

This happened again recently for another hotel. Instead of contacting customer support an email was sent to management. It explained the situation as well as what had happened previously and asked them to please make the correction to 5-Stars. A couple of days later the review disappeared!

When I post a golf score that’s well outside my normal range (usually higher) the computer informs me it looks like a mistake and asks me if I want to change it. With all their technological prowess, you’d think a similar fix would be simple for TripAdvisor.

Then I could rave about TripAdvisor all the time.

What do you think? Safe travels - Madigan Pratt

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