Different place, same problems – How do we engage with the guest and keep them loyal?

I recently attended the Cornell Hospitality Summit in Mumbai India at the Taj Palace.  This was an event co-sponsored by Taj Hotels Resorts and Palaces and The Cornell Center for Hospitality Research.  I also attended the invitation-only roundtable on Customer Value that the Cornell Center for Hospitality Research organized in advance of the Summit.

This was my first trip to India and I was excited not only to experience India (and the world-class service at the Taj Palace), but also to hear directly from the Indian Hoteliers about the issues they face in that part of the world.  First, let me acknowledge the hosts of the event, Taj Hotels, Resorts and Palaces.  The service and the facilities were top-notch!  I thoroughly enjoyed my stay (in Mumbai and in Delhi) and I am now completely spoiled by the incredibly attentive service I received!

Rohit Verma, Executive Director of the CHR, and his team did a great job pulling together the invite list for the roundtable and the summit.  They attracted top executives from Starwood, Peppermint Hotels, Caesars Entertainment, The Taj Group, Leading Hotels, The Leela Hotels, Palaces and Resorts, Oberoi Hotels, The Lemon Tree Hotel Co., Golden Tulip Hotels & Resorts, Apeejay Surrendra Park Hotels, and Jebel Ali Hotels International.  There were also a number of executives from software vendors, OTAs, consulting companies and GDSs.  The CHR will publish proceedings from the Roundtable and the Summit, and I’ll link to it here when it’s available.  In the meantime, here are my thoughts about what we talked about at the event.

What struck me the most about the conversations during the roundtable session is that hoteliers around the world face the same basic issues when it comes to building valuable guest relationships.  The hoteliers at the roundtable spoke about the need to avoid the commoditization effect resulting from competing simply on price.  The challenge they face in an increasingly transparent world is to identify and foster those components of the brand promise that encourage loyalty. This is a universal challenge in the hotel industry, but there were nuances in the Indian market that I found interesting.  First, the majority of the branded properties in India fall into the luxury or upper-upscale segments.  This means that for them, competing on service is not a differentiator – they all have excellent service.  Therefore, they must find something else about the brand that engages their guests and keeps them coming back.

Vikram Oberoi, from Oberoi (who, I should also thank for hosting a fantastic dinner for us the night of the event at the Oberoi Mumbai!), mentioned that when they ask guests how they heard about Oberoi Hotels in post-stay surveys, the number one response is either through friends or business associates.  This holds for both business and leisure travelers, showing that word of mouth is still king. However, the hoteliers at the roundtable all mentioned that a significant, and growing, portion of their guests are turning to social media for recommendations.  Rahul Pandit from the Lemon Tree Hotel Company said that he has put Trip Advisor reviews on his brand website, and he sees a 20% conversion rate there (which is high compared to other channels).  Vivek Bhalla from Starwood said that the real opportunity is to use all of the available technology to your advantage – as tools to engage with consumers and provide that unique personalized experience that drives loyalty (Any of this sound familiar to US hoteliers reading this blog??).  Understanding how, where and when guests prefer to engage with you is an important factor in maintaining these long term relationships.

Secondly, the luxury market is over-penetrated in India.  The clearly identified opportunity for these chains is to develop brands that can compete in the mid-market.  Not only is there international demand for a mid-scale option, but Indian tourism officials have recognized that they are losing domestic tourists to other locations in South East Asia because it is actually cheaper to go abroad for a leisure break than to domestic locations.  However, translating the western mid-scale concept to the Indian market will be a challenge.  There is a definite gap in expectations from a mid-scale brand between international and domestic travelers, meaning that the traditional service offering at a mid-scale property may need to be altered.  The rising middle class in India is not accustomed to self-service or limited service, even though they may not be willing or able to pay luxury prices.  All of this gets back to understanding consumer preferences and the value they place on key aspects of your service offering – a problem all hoteliers struggle with.

In response to the growing levels of both domestic and international tourism in India, both domestic and international brands have development underway across the major and secondary markets in India.  This will create a challenge for the domestic brands.  Raymond Bickson from the Taj Group mentioned that he is concerned about maintaining market share against the major global players while being forced to compete against their robust loyalty program structures.  In addition to feeling almost forced to open hotels in source markets to build awareness of the Taj brand among global travelers, I noticed that Taj has also started to focus on building their own loyalty program.

The conference in India uncovered the root of the question we are trying to answer in this month’s series of blogs.  How do we know who our best customers are?  Identifying and profiling these customers would help companies identify the differentiating elements of their brand or service and to target new customers with similar profiles.  Uncovering needs and preferences of the “best customers” can inform service design, so companies who are adjusting service offerings for a mid-market brand know which elements are essential and which can be scaled back.   All of these analyses require that hotels collect detailed guest profile data from all interactions with their guests across the enterprise.  Many hotel companies use loyalty programs to encourage guests to share the kind of information that allow hotels to glean valuable insight about their customer base.  However, loyalty programs themselves have become commoditized, and are turning into a “me too”, rather than a competitive advantage.

In the blog series this month we’ll debate the pros and cons of loyalty programs, and provide suggestions about how to leverage these programs to collect the data that will help you to build that 360 degree view of your customer.  I’m sure Mike McCall from Cornell will have some good advice for Taj and the other Indian companies on the best way to structure their loyalty programs if they want to compete with other global brands.  Natalie spoke with him, and will be re-capping their conversation in next week’s blog.  Until then, we look forward to your comments and questions.

Additional discussion on how to strike a balance between improving the customer experience and controlling costs can be found in the Loyalty, Rewards and Value: What Do We Want from Our Customers? webcast sponsored by SAS and the Center for Hospitality Research at Cornell University’s School of Hotel Administration.

tags: Customer Intelligence, Customer Loyalty, Hospitality Analytics

2 Comments

  1. Posted February 9, 2012 at 9:25 pm | Permalink

    Thanks for the information on how do we engage with the guest and keep them loyal? I agree that giving rewards and promo to make your guest more loyal. They will appreciate more because they will feel that they are pampered.

    • Kelly McGuire Kelly McGuire
      Posted February 10, 2012 at 9:32 am | Permalink

      I agree with what you are saying, but I also think that if you are not careful about the kinds of rewards you give, you run the risk of making the guest loyal to the program, but not loyal to the brand. I've heard Rom Hendler, CMO of Las Vegas Sands describe how they fight this issue by not offering points that can be redeemed, but rather as you increase your loyalty, you receive better experiences (for example, a special expedited check in or a limo ride from the airport). These experiences reflect the brand promise of a luxury resort. We interviewed Mike McCall of Cornell who has done a lot of research into designing loyalty programs, and he has a bunch of tips like this. Natalie will recap that interview next week.

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  1. [...] time this past January, and was intrigued by the challenges the hospitality industry faces there (see my blog post from earlier in the year for more details).  The domestic brands are growing quickly, and they are facing challenges with finding and [...]

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