Anchors of the New Hospitality Economy: Branding Technology - By Lalia Rach, Ed.D. (HSMAI Marketing Review)
Last year HSMAI launched an exciting series of one-day dialogues between executives who are interested in exploring in-depth those issues and subjects that impact today's hospitality sales and marketing professional. Here the author, who facilitated the first three "Executive THINK" programs, provides highlights from each of these fascinating sessions.
Modern professional life is marked by decidedly limited opportunities for executives to think about crucial industry issues without outside intrusions and distractions. The technology-enabled 24/7 work environment permits little time to gather with peers to focus on industry topics of concern and to generate alternative ideas and solutions. Executives laboring under these restrictions are still expected to keep up with consumer trends, identify innovations in the marketplace, and promote change that will ensure success in the long run.
Aware of the critical nature of the demands and expectations at the executive levels of the profession, the Hospitality Sales and Marketing Association International (HSMAI) developed "The Executive THINK" (Travel & Hospitality Innovation, Network, Knowledge), a program organized as a series of one-day dialogues. Seeking issues relevant to the broad spectrum of hospitality and travel executives, HSMAI reviewed the 1998 study, "The Current and Future Hospitality Sales and Marketing Professionals"1 that identified professional areas of interest and concern. Based on the findings of the study three topics for the 2000 Executive Think series were identified — Branding, E-Commerce, and Technology.
The Executive THINKs are intensive, targeted learning opportunities that bring together the dynamics of experienced and knowledgeable professionals to further understanding of a particular topic and to expand current industry thinking on the subject.
Process
The Executive THINK series has three purposes: first to address and further major issues facing the global hospitality sales and marketing industry; second to expand the participants' knowledge base, and third to create new networking opportunities for the participants. Each Executive THINK is organized around interactive learning activities designed to stimulate participants to reach beyond the normal boundaries of their thinking. Moreover, the topic, location and venue are chosen to interrelate and enhance the principles of innovation, networking and knowledge. The sessions are held in locations recognized as hotbeds of e-commerce (Microsoft campus in Redmond, Washington), technology (MIT Media Labs in Cambridge, Massachusetts), and branding (Bloomberg building in New York City) and featured thought leaders from other businesses, including Jupiter Research, Nike, Priceline, Ad Age Magazine, Expedia, MIT, Darwin Magazine, IBM, Lobby-7, and E-Ink.
The THINKs all have similar agendas — one to three recognized experts present research or product innovations, describe cases from other industries, or discuss trends and issues. Following each presentation participants engage in a questions and answer session with the experts. Interspersed throughout the day are two or three interactive discussions on specific areas. A variety of techniques—brainstorming, consensus building, and visioning exercises—are used to generate involvement in the discussion. Throughout the day, "data bytes," brief statements or statistics are presented as catalysts to encourage original and nontraditional ideas. The traditional think tank model Is modified slightly to ensure a highly efficient and effective means of overcoming both time constraints and varied levels of knowledge on a specific topic. To meet the established criteria for the series, speakers from other industries are invited to present information or to introduce an innovative product. The decision to expand beyond the traditional configuration of the think tank and incorporate the perspectives of individuals not related to the hospitality or tourism industry into the structure of the day was made to make certain that participants gain a greater understanding of each topic.
First Executive THINK:
The Future of Brands in the Global Hospitality and Travel Industry
In the American West of the 1800s the concept of brands developed to indicate ownership of cattle that grazed on open ranges. As any American kid of the 1950s and 60s can tell you from watching cowboy television shows, cattle were rounded up to be branded once a year,. The process involved burning a heated metal brand, usually a combination of letters, numbers or symbols, into the hide of the steer. Once branded the animal belonged to that ranch. The lesson while a bit over the top was firmly established—a mark on a steer was sacred. It defined ownership and if the ranch was prosperous the brand was an indication of quality. Brands were worth fighting for and the loss of even a few head of cattle to rustlers was not to be tolerated as owners realized there had to be meaning behind the mark. The brand was an image of strength signifying a sense of protection, stability, and value. Today, brands in the hotel industry have similar meaning as they project an image, create equity, and nurture loyalty.
The development of recognizable and trusted hotel brands has become the backbone of the strategic planning process of every corporation engaged in the hospitality business. The growth of a brand from regional to national to global recognition requires not only a deep commitment by the leadership of the company but also requires an organizational structure that values responsiveness to consumer segments. Based on this reality the first Executive THINK explored brand management in the travel marketplace. Among the areas of discussion were the changing market environment, the impact of new channels of distribution, the importance of loyalty programs, and the revolution of global brands.
Changing Marketing EnvironmentThree elements were identified as features of the changing market environment: demanding consumers, fragmented channels of distribution, and a complex technological landscape. The most important element of change in the market environment is the demands of the consumer armed with knowledge based on actual experience. A brand promise of value, consistency, and community takes on even greater importance given consumer cynicism and an ever-expanding set of needs. Technology has complicated many aspects of the hotel industry's relationship with the consumer, rather than simplifying and promoting greater interaction. Instead of creating closeness and convenience and enabling increased two-way communication, technology often places artificial barriers between the brand and the consumer. Brands must now use their technology infrastructure to assist consumers and to develop relationships that support particular lifestyles.
Impact of New Channels of DistributionChannels of distribution have become more complex and varied, requiring greater understanding of the vagaries of market segments. New channels of distribution demand efficiency in reach, based on relationship building, consistent contact, and targeted messages. Each brand must establish a means of differentiating consumers, based on their short- and long-term value. Brand value is determined by the degree of consumer understanding of the meaning, the placement in the minds of consumers, and the strength of the relationship, which is quantified by growth and profitability.
Importance of Loyalty ProgramsThe debate over frequent stay and loyalty programs dominates discussions about consumers and will continue as a major aspect of the hospitality product well into the first decade of the new century. At the present time loyalty programs give business greater control, but as technology influences consumer choice the programs will be forced to become more targeted, providing greater value and meaning while working harder for the customer.
Benefits will be manifested as increased involvement and delivery (pop-up suggestions based on profile, interests, travel patterns) and will allow consumers to demand a greater return for their loyalty. In return for the customer's investment (i.e., loyalty) companies will be expected to provide early rewards based on the lifetime value of the customer. Today, rewards are not offered until guests demonstrate their purchasing power; but because the Internet is a platform that enables incremental return on relationships, companies are able to ascertain early on which guest will most likely provide a return on an initial investment. The good news is that this change indicates a return to the past when the emphasis was on the guest, not on statistics.
Revolution of Global BrandsWhile many hotel companies identify their brands as global, the adage "saying it doesn't make it so" is often the case. In a discussion of the common features of top global brands, the group identified a number of intrinsic elements—consistent identification of customer benefits, clear values statement, a well-established national presence, commitment to uncustomary partnerships, and awareness of different cultures. In order to cut through the clutter of messages, the similarities in offerings, and the proliferation of products, hotel brands must identify and maintain a strategy that promotes value. When the participants of THINK 1 were asked to name top global brands with a majority of these features, the only travel and hospitality name that was mentioned was Disney. The list was dominated by consumer goods such as Coca Cola, Microsoft, Kodak, and Sony.
Second Executive THINK:
E-commerce in the Hospitality and Travel Industry
The second Executive THINK explored the rapidly expanding area of e-commerce in the hospitality and travel industry. E-commerce represents a new frontier and an area of great promise, but one that is laden with potential landmines for many hospitality companies. Among the hidden problems confronting the industry are the absence of a universally accepted explanation of the concept, an inadequate transparent user interface, and a lack of protocols and standards to minimize consumer concerns. While most can agree that e-commerce is an electronic method of buying and selling products and services, it is not merely an extension of fax and phone orders. That would be like saying that airplane travel is simply an advance over travel by stagecoach. Rather the Internet and World Wide Web provide a means for revolutionizing all ranges of transactions whether business to business (B2B), business to consumer (B2C) or consumer to business (C2B). It was on this foundation that THINK 2 began.
The first speaker was Fiona Stadtler Swerdlow, director of digital commerce for Jupiter Research. She immediately challenged the way the industry approaches e-commerce by declaring that regardless of the letter that is attached—e, I, or whatever—it's all about BUSINESS. She identified three challenges (see accompanying box below) all businesses must address:
- Creating loyalty to build profitable relationships.
- Integrating channels for maximization or developing a multiple channel strategy.
- Improving customer service.
She suggested companies should take a macro view of what is happening online. The key questions to be considered when developing a Web strategy are:
- How are online consumers evolving, both in the U.S. and globally?
- What is the outlook for online travel?
- How should e-commerce firms prioritize acquisition versus retention investments?
In answer to these questions, Swerdlow highlighted the current online travel climate, which is dominated by companies whose sole focus is on customer acquisition and users who are sophisticated techies. This behavior defines companies that inaccurately measure their success based on bookings and overlooks the impact of reactive customer service, a fundamental disincentive to loyalty.
With a view to the future, Swerdlow forecasts a user population that is increasingly mainstream (both online and offline) and is more risk adverse. Companies must determine customer loyalty by measuring channels in an integrated fashion rather than in isolation.
Sounding as if the opening and closing speakers had coordinated their comments, Rich Barton, CEO of Expedia, invited participants to remember that prior to the Web, no company had been able to assemble in one location all the components needed by travelers. It was, he reminded, the development of the Web that made the concept of one-stop shopping a possibility—a travel supermarket that is only feasible because of an inherently global interface. While in the physical realm individuals attempted to create such a place, it is only in the virtual domain that all the different components can be assembled with 24/7 availability. Slowly, businesses are realizing the virtual world must function as well or better than the physical world to fulfill the needs of customers.
According to Barton, until the possibility becomes reality, consumers still have to gather information from a variety of clicks and mortar sources. He believes this is further complicated by a cluttered sales and marketing channel involving travel publications and guidebooks, travel agents, corporate travel managers, reservation systems, wholesalers, TV advertising, brochures, and Web sites. In the continuing development of online commerce, an indication of maturity will be the installation of integrated planning and purchasing processes. Consumers will be truly empowered when the tools provide the contact and control to make informed decisions.
As described by Barton, the current travel planning and purchasing processes are cumbersome and frustrating activities for customers and in the end there is great uncertainty whether they have received suitable value for their efforts and dollars. While the Internet is inherently global it remains to be seen whether companies can sell globally. Most online consumers are not buying but are using information on the Web to help them make current and future purchases. Therefore, hospitality companies should create an online experience based on richness and reach, resulting in a one-stop shopping experience that unifies information, integrates activities, and creates a dynamic interchange.
The element of a successful e-commerce site is 24/7 customer care that incorporates an 800 number, instant messaging to sales and technical support staff, a clear satisfaction guaranteed statement, timely and complete response to e-mails, and security and privacy assurance. Fortifying the customer care philosophy should be a dynamic Web site organized for the consumer that contains specialized, high quality content in the form of newsletters and columns, information and statistics, hot tips and local favorites, valuable links, multilingual information, and audiovisual clips. Further enhancements include a variety of customized freebies that enhance and reward customer loyalty — story/picture swaps, forums, virtual festivals/events, downloadable wallpaper, postcards, and email notification of events.
Slippery sites (no stickiness) are awash in dead links, reprints of materials, out-of-date information, and too many ads. There is no thought of community or consumer needs at such sites; the company has built a location rather than an experience. So consumers rarely bookmark, revisit, or recommend the site.
Currently there are few steadfast rules that guide the new hospitality economy; fluidity and change are the norm. Longevity is no longer defined and measured in terms of permanence. Instead the requisite gauge is durability as determined by movement, pace, speed. Consider how quickly pure online companies (known as clicks, virtual, and pure-play) and pure physical companies (tradition, mortar, terrestrial) have moved into each other's realms. It is expected that a traditional company will have a Web site while virtual companies are developing demonstration retail space, catalogs and magazines.
Third Executive THINK
Touching the Future: New Technologies Will Change Our Lives
Just as the invention of the printing press in the 15th century changed society, professions, and individuals so the advance of technology today influences every aspect of life. After just a few short years most sales and marketing professionals would be at a loss without e-mail, laptops, cell phones or personal digital assistants. Companies have established departments, vice presidents and chief executives of technology or information. Budgets and plans are now heavily influenced by technology strategies. Given this reality THINK 3 was developed.
The opening speaker of THINK 3, Sandy Pentland, director of the Media Lab at the Massachusetts Institute of Technology, immediately introduced new concepts with a brief overview of Moore's Technology Adoption Curve2 which identifies five levels of acceptance of technology, classified as innovators (techies), early adopters (visionaries), early majority (pragmatists), late majority (conservatives), and laggards (skeptics).
Over the course of an hour, Pentland shared his view of a world shaped by technology where society and business operate in a global network of communications that has accelerated every type of interaction. He indicated the next generation of technology (the fourth) will focus on the personal services needs of the user. Current technology does not "sense" the needs of the user but the expanded application of cameras, mikes, and sensors in our daily lives will change this. Featuring greater transparency and automaticity, fourth generation technology advances will just happen, according to Pentland. For example, a visitor on a tour will use a wireless device to learn about the destination, track the movements of fellow travelers, and translate written and spoken information. The end result of employing the wireless device will be a richer, fuller experience for the traveler.
Although beneficial in many ways advances in technology will raise issues of personal privacy versus increased convenience. To allay fears technology applications must interface, not dominate, daily life, while users must be able to maintain control and determine how much information is exchanged.
Over the next decade as digital devices expand the information horizon beyond what we can imagine, service will most likely "go where [it] has never gone before" to paraphrase Captain James T. Kirk. Voice recognition capability in many digital devices is one of the most widely expected changes. The expansion and refinement of voice recognition will become commonplace at numerous service touch points (booking, check-in, ordering, payment) enabling an interconnectivity of information. Accordingly, expanding information horizons should also redefine the standard for requesting and receiving a guarantee of quality service and of value added products.
Following Pentland's speech, participants were asked to identify where they fit along Moore's Curve (see accompanying box below). Most participants identified themselves as part of the Early Majority segment with a few acknowledging their penchant for technology by aligning themselves as Early Adopters (see accompanying text box for definitions). While it is positive to understand where the leaders and decision-makers stand relative to technology, it is of equal or greater importance to know where customers and employees place themselves along the curve. Too often executives fail to recognize that in hospitality and tourism it is far more important to understand the technology needs of their guests and employees. Decisions can be made based on the level of sophistication of internal and external customers that will improve service systems and keep pace with the needs and expectations of the workforce and visitors.
One of the easiest and fastest ways to measure the sophistication of customers and employees is to conduct a "digital check-up" periodically. The check-up can be used to position various constituents along Moore's curve and will alert companies to trends and changes that are occurring. The digital check-up should be constructed so that it is easily and quickly administered on a regular basis. The key to successfully employing the check-up is the creation of a targeted group of questions. Rather than trying to determine every nuance or understand every aspect of technology used by customers or employees, over the course of time, companies can create a detailed profile based on periodic diagnostics. A sample check-up is provided on page 37. Although the digital check-up will reveal how customers and employees are personally wired into the technology innovations, it remains to be seen how the changes will affect consistency.
THINK 3 included presentations by three companies whose innovative products and services have yet to be embraced by the travel and hospitality industry. The first presentation was by E Ink () of Cambridge, Massachusetts. The company, founded in 1997, demonstrated an interactive message system designed to change the way we communicate visually. Described as an intelligent display medium that enables companies to communicate better with customers, the product is a live advertising and information platform. It can be used to actively promote products, control inventory, and enhance the consumer experience. Utilizing an invention called electronic ink, the company has redefined the concept of mobile ads, as it can be used on appliances that have a display screen such as watches, wrist band or credit card, providing mobility, flexibility and programmability.
The second company to present was Lobby 7 (), a wireless applications consultancy named after an area in the MIT Media Lab. Its primary services include the development of strategy for the employment and integration of creative and innovative wireless applications. The key to successfully using wireless technology is a strategic plan that details how to send the right information to the right consumer at the right time. If the goal is to exploit impulse buying and provide value-added services then companies must target messages that make sense to the specific customer. Lobby 7 believes in a proactive strategy that determines what is needed, rather than waiting for consumers to indicate their desires.
The last demonstration was given by IBM of their new micro drive (), a device that responds to the demands for mobility, speed and convenience, all characteristics that define the future of technology. The development of the smallest and lightest disk drive highlights IBM's forecasts, which include advances in computing power that will equal human capacity to think and include memory that will remember where the user left off with no need to launch (or relaunch) applications.
By 2002 there will be more mobile phones and personal digital assistants in use than computers. To support the need for universal connectivity personal information kiosks (PIKS) will be located in a variety of public spaces so users can interface mobile devices to download data, buy gifts, find individuals, and perform other tasks that once were restricted to a desktop. This will allow users to send information and to access it from anywhere without having to carry multiple devices.
After the series of technology demonstrations participants were asked to consider:
- How the product or services could be adapted for use in the hospitality industry;
- Whether the product or service would improve the quality of the guest experience;
- How the invention could be used by employees; and
- If the technology could be utilized in place of an employee.
Collectively, participants of THINK 3 recognized that future technology could solve a current issue — the repetitive request for and the gathering of guest information. Currently the responsibility for gathering, maintaining, and analyzing consumer data lies solely with service companies. Most customer profiles are static; rarely changing after the first data are entered. Considering the technology presented and forecasted it was an easy transition to imaging technology that would use detailed consumer information as the connection between the companies and their guests. Eventually, profile databases will become active, integrated, complex, and managed by the individuals who own the information, not by the businesses that provide the products and services. It was envisioned that a universal form of payment, a card or device that does it all, would carry an individual's profile with detailed information on entertainment, food and beverage, and amenity and product interests.
Summary
The 2000 Executive THINK series attracted executives from all sectors of hospitality and travel sales and marketing, providing an unusual opportunity to reflect, learn and exchange ideas with peers. In determining the success of the venture one could point to the enthusiasm of the participants, the quality of the information or the timeliness of the subjects. But most importantly, the THINK series fulfilled a need within the profession—it established a venue for exploration and dialogue among executives that will assist in transforming the industry.
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 while operating as a leading voice for both hospitality and sales and marketing management disciplines. Founded in 1927, HSMAI is an individual membership organization comprised of over 5,000 members from 35 countries and 60 chapters worldwide.