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HSMAI 2016 HOTEL CHIEF MARKETING OFFICER ROUNDTABLE:Managing Disruption In Technology, Globalization, Branding and Loyalty

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HSMAI 2016 HOTEL CHIEF MARKETING OFFICER ROUNDTABLE:Managing Disruption In Technology, Globalization, Branding & Loyalty

HSMAI’s annual CMO Roundtable for 2016 included a dozen marketing executives from a variety of hotel companies ranging from small collections to mega-brands. HSMAI Executive Roundtables provide senior executives access to experts and an opportunity to interact with their peers. The association brings together Chief Marketing Officers, Chief Digital Marketing Officers, Chief Sales Officers, Chief Revenue Officers, and Hotel Management Company Sales & Marketing Executives through the year. This all-day session was broken down into four themes, as follows:

` THEME 1: 2016: A Year of Great Opportunity and Grave Risks – a presentation by Bernard Baumohl, chief global economist for the Economic Outlook Group.

` THEME 2: Insights & Ideas – An Exec-utive Interview – discussion with Noah Tratt, Global Senior Vice President for Expedia.

` THEME 3: The Happiness Halo – an interactive exercise that applied behavioral science to the design of travel experiences.

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Serving as facilitator for the roundtable, Lalia Rach, founder of Rach Enterprises, said that largely due to technology, mar-keters and other executives are “struggling with focus” because “the more multi-task-ing we do the less we can focus. We have to talk a little differently about how to use all of our technology devices and more about how to spend time thinking.”

Recalling that marketing as we know it today may have started with radio in the 1920’s, Rach said the discipline stayed fairly constant for 75 years but for the last 10-15 years it’s been “change change change.”

“There was something we called market-ing but that has broadened,” said Rach.

“Thanks to technology the customer ex-perience is changing dramatically.” She said that because of all the changes in the world that affect marketers, an HSMAI-led group of marketing executives visited the CES (Consumer Electronics Show) togeth-

er last year to see what was happening in the world of technology and that similar events are being planned for the future. She continued, “There has never been a better time to be a marketer because of all

` THEME 4: Gathering Around the Wa-ter Cooler: What’s on YOUR Mind – an open forum on current and emerging issues.

Tratt, whose company co-sponsored the roundtable, encouraged participants to participate actively because the roundta-ble would only work if everyone engaged,

listened, thought and asked questions. Participants spent much of the day exchang-ing views on where the field is going in an environment that is undergoing explosive change, driven by technology but also by geopolitics and other outside influences. The agenda was developed by a peer group of marketers who were asked to take a macro global view of the issues that face them.

Introduction

“There was something we called marketing but that has

broadened,”


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the available tools but it is also the worst because of the expectations of corporate leaders and Wall Street. We have to be data-driven to meet those challenges.”

Consumer expectations have also shifted, especially those of younger people, said Rach, because of their life experiences. “University residence halls are now of

high quality with amenities like infinity pools and full-blown luxury apartments. And look at new apartment buildings and how they use public spaces. While there are great apartments with great views, younger residents will spend a great deal of time in the club room because of the very different way they use their public and private spaces.”

In a broad-ranging overview of the domes-tic and global economies, Baumohl was generally positive about the outlook for the U.S. economy, with a number of caveats. He also saw continuing good times for lodging and hospitality, although not at the current rate of growth.

What The Economic Outlook Means for Travel and Tourism

` Travel and tourism is a strong engine for the economy. There are more than 700,000 job vacancies, evidence of the sector’s strength. Spending on travel and tourism grows as fast as the rest of the economy but falls more sharply with a

downturn. The industry represents 10% of the U.S. Gross Domestic Product.

` If there is a continued stabilization in employment there should be more leisure travel. As the fear of a recession that businesses have recede, there will be more corporate travel. Better fundamentals will continue to support pricing power for the lodging industry.

` Spending on lodging was up almost 30% in 2015; that will slow slightly this year.

` The hospitality industry may see less supply growth in the next 3-4 years, in part because some of the major sovereign wealth funds in the oil

THEME 1: 2016: A Year of Great Opportunity and Grave Risks


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countries have taken a real hit and are cutting back on investment.

` The U.S. is lagging in investments in technology and other assets. This has resulted in the oldest capital stock in many years. In lodging, hotels are an average of 18 years old, the oldest since 1962.

Those conclusions were based on Bauhmol’s outlook on the domestic and global econom, as follows.

1. STRENGTHS AND WEAKNESSES:

` There are sure to be big geopolitical shocks in the near future so anybody trying to put together a budget, market-ing plan or sales promotion has to real-ize they are in a challenging environment because of all the confusion.

` Some see a recession, perhaps because of a slowdown in China. Others believe fundamentals are strong so there will be no recession.

` It’s important to make a distinction between what’s going on in financial markets and the “real economy” – the actual purchases of goods and services.

` The U.S. is now more integrated than ever into the global financial network so that any bad news in the world will reverberate here instantly.

` The odds of a recession are under 25% for the next year or two.

` The U.S. is well insulated from what is happening in China.

` This is the seventh year of growth in the U.S., the third longest in post-war history and could become the longest expansion in history. There is a lot of room to grow. Expansions don’t die of old age. There has to be something to prevent it from continuing.

` The main driver of the economy will be the consumer and they are in pretty good shape. Car sales in 2015 were the best ever and in 2015 consumers finally started taking on more credit debt after years of not doing so. Consumers looked to the terrible start for Wall Street this year and still continued to spend. Wages are an issue with average hourly earnings up minimally. But inflation is less than 1% so that means real increases in purchasing power.

` The government has taken some positive steps. In December, the Omnibus Budget Act cracked the long-time sequestration that has put a hold on federal funds. Also some tax breaks were made permanent. The government will be spending more on infrastructure and that would have a positive impact on the economy and add to GDP.


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2. DIRECTION OF THE DOLLAR AND

INTEREST RATES:

` The Fed won’t be as active as feared; they are not really tightening. Interest rate increases will be less than inflation. The Fed will lay low because they don’t want a spotlight on them in the middle of a presidential election where many candidates are vocal critics.

` We are awash in oil; in the past, crises in the Middle East meant shortages of oil; that is no longer the case. Oil producers will at some point cut down on production and that should help stabilize the oil market. We won’t ever see $100 a barrel oil again.

3. GLOBAL LEADERS AND LAGGARDS:

Laggards:

` China: The epicenter of so much concern, but a slowdown is the right thing for China. There will not be a hard landing; the government will do what it has to do and rely more on consumers rather than exports and heavy industry. The government will aim to distract citizens by rousing nationalist fervor.

` Europe: There has been a streak of bad luck for Europe – the Greece crisis, refugees, the VW scandal, terrorism, and the UK discussing leaving the

European community. The Continent will muddle through this year. The Euro has dropped in value so products are competitive. Banks are committed to low inflation. Spending on refugees might stimulate the economy.

` Japan: Still has lot of problems with stagnation.

` Brazil: A mess. No country on earth has so many positive attributes and it should be growing like crazy but can’t get its act together. And now they are going through corruption, the zika virus and other issues.

Winners:

` Growth will be strongest in U.S. and India.

` Mexico is a real standout among emerg-ing countries because of a liberalized economy.

` Panama is growing at a rate of 67% annually, benefiting from investments on expanding the canal.

4. SUB-SAHARAN AFRICA IS GROWING FROM A SMALL BASE.

` South America may be the most in-teresting region, particularly Argentina where the end of the Peronist era and pro-business government could mean faster growth.


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Potential Drags On The Economy

` In the final year of a presidential term our enemies take bigger risks.

` Terrorism on soft targets. A greater frequency of terrorism on soft targets like hotels and shopping malls could bring a shock.

` Management in every industry has to be proactive and have a plan in place so that if there is disruption somewhere in the world losses can be mitigated.

` The geopolitical pot is boiling furiously with potential trouble from places like Russia and Iran.

Wrap-up: How It Looks

` Odds are against an imminent reces-sion; the economy will grow 2-2 1/2 %.

` Oil prices will stabilize.

` The U.S. dollar will stabilize, but may decline by year end as there is more growth out of Europe

` Interest rates will remain low.

` Low oil prices will help promote leisure and business travel.

` The Wild Card in the White House. There are some bizarre ideas being espoused by presidential candidates including high tariffs like the ones that triggered the Depression.

` For hospitality, what if hotels start to have to check luggage or look under every car that pulls up? How far can you go without making it too uncomfortable for guests? There has to be a balance. Guests want to know they are safe but don’t want to be overly inconvenienced.

` Certain regions may do better than others. The northeast, southeast and west seem in a better position to withstand a down-turn or an excess of hotel construction.


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In a discussion with Rach, Tratt made these points:

` Through advertising partnerships, Ex-pedia gains insights into what is work-ing and what isn’t. A frequent question is what has been working in social media, television and other media. Answers can be found through testing and learning from previous campaigns.

` Hoteliers are focused on global markets, asking questions like: There are so many Brazilians coming to New York – how do I get my share of that market? Or: How can we attract the Chinese middle class?

` Native advertising is growing. It is a form of paid media where the ad experience follows the natural form and function of the user experience in which it is placed.

` The goal for Expedia is to be more col-laborative with partners. That is espe-cially true because of historical tension with the hotel industry over fees and the value that the company brought in the

past. Expedia still needs to improve on customer service so that it can bring more value; as a result there is a massive investment in technology going on de-signed to make Expedia a better listener.

` Expedia’s goal is to be a thought leader in marketing. In addition to its advertising, it is doing a lot of customer research around travel booking behavior because it keeps changing. There are always new tools, more sophisticated sites and changing content, and the growth of mobile. Geography plays a part as travelers in other countries may behave differently.

` Hoteliers need to look at other indus-tries. Has a product like Amazon Prime changed consumer behavior about everything? Companies like Amazon raise expectations: if they can do it, why can’t you? It’s not just Amazon but companies that deliver almost anything to customers instantaneously. That can be translated to booking behav-ior. Consumers have no patience and expectations are enormous. There are frustrations with the booking process.

THEME 2: Insights & Ideas --- An Executive Interview


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This session was led by Rick Wise and Alissa Tribelli of Lippincott, a branding firm that aims to create emotional experiences because, they said, companies that make customers happy drive twice the revenue of brands that are simply satisfying customers with their products and services. Recent advances in brain science have enhanced the ability of marketers to create emotional connections and experiences, which have three dimensions:

` 1ST DIMENSION: Anticipation. Anticipation trumps the actual experience of the event. There are biological reasons behind that as human “wanting systems” are stronger than “liking systems” because wanting systems are powered by biological chemicals, as well as the primal desire to hunt and search.

` 2ND DIMENSION: Interaction, the actual experience. Despite all the antic-ipation, the reality might not live up to it; e.g. the beach has gritty sand, and there are issues like sunburn and crowds.

` 3RD DIMENSION: Afterglow – the memories of the entire experience. This can be reinforced by a strong ending

like one tour operator which provides a post-trip dinner reservation or coupon for laundry.

There are three ways to create an emotional connection, including:

1. Tease: Dangle an appealing idea or emotion of what the experience might be like to build excitement.

2. Tempt: Immerse customers in the experience. Here’s what you will find when you get here; this releases positive physical reactions.

3. Treat: Provide in advance something fun and appealing like the sleep menu that offers a choice of pillow, music and lighting. It takes a mundane interaction and makes it special by fueling fantasies.

The afterglow is actually more important than the trip. Again this is based on brain science. That post-stay emotion can be enhanced by creating surprises like at one high-end New York restaurant that has a staff member called a Dreamweaver who listens to diners and then delivers on what they are talking about. Example: a

THEME 3: The Happiness Halo


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conversation about snow sledding for kids seeing snow for the first time resulted in two sleds for the kids and hand-drawn maps of sledding hills in Central Park.

It’s important to rewire and reinforce the ex-perience so that people will remember.

An Exercise in Creating an Emotion Connection

The Lippincott executives set up an inter-active exercise where four teams of CMO’s were formed. Each team was asked to come up with how an Amazon-branded hotel might market to travelers. Two teams had to create “anticipation experiences” and two “afterglow experiences.”

ANTICIPATION TEAMS CAME UP WITH:

` Finding friends from social media who have been to the hotel to suggest what potential customers might do on their trips.

` Creating a tool like Amazon Prime (fee-based plan that offers benefits like free shipping) to allow travelers to breeze through security and find their luggage in their room.

` A shipped suitcase of items in the room appropriate to the stay – favorite sun-screen, maps, guides, etc.

` A video from hotel staff members or, at a family-oriented resort, different characters extending a pre-stay welcome.

` A menu planner.

AFTERGLOW TEAMS CAME UP WITH:

` Customized checkouts by having a car available just in time to get to the airport and through TSA.

` A poncho or umbrella in case of bad weather.

` A physical or electronic record of the stay – photo albums, etc.

` A subscription to a Pandora or Spotify streaming channel that reminds guests of their trip through music.

` A guide to planning the next trip.

` Memorable items from, say, a luau in Hawaii.

` Ability to purchase the entire experience – furniture, etc. ”Retail the experience.”

` Deliver the experience on Kindle – everything about the vacation uploaded to a Kindle.

` Have clothes laundered and sent to the guest’s home. Similarly, have a surprise grocery delivery.


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1. “Call center volume continues to grow. It is linked to ecommerce efforts but people still want to talk to someone.”

2. “I’m surprised there is still room for more brands. You have to wonder what the implications are for marketers and consumers.”

3. “There is a move to mindfulness in the boardroom. A lot of meetings start with a meditative process. People are meeting not just to meet but with a purpose.”

4. “I’m surprised at the sophistication of people in our organization who are interested in the data that we are col-lecting.”

5. “I am surprised at how a lot of people are cautious about the future of the in-dustry despite so many forward-look-ing developments.”

6. “Personal privacy is still so important despite all the digital changes. The question is how to balance all the data with the need for privacy.”

7. “Owners have become much more interested in their properties. Their involvement is frequently refreshing but sometimes frustrating.”

8. “We are not doing digital marketing anymore. We are marketing in a digital world where content is ubiquitous.”

9. “What surprises me is the continuing emergence of new marketing chan-nels. How does a marketer find the time and energy to decide which ones are worth an investment in time and money?”

10. “It’s phenomenal to me to see how people are looking at their getaways as a way to connect with each other. That’s thrilling to me.”

11. “The midscale segment is seeing real growth, partly because of the desire of younger people to travel.”

12. Rach herself said that what surprises her is: “We still operate with such 20th century processes and yet we’re suc-cessful. We recently walked 6 miles at the Consumer Electronics Show and saw things that blew our minds and I wonder how hoteliers were going to adjust to their customers having such a different world in front of them.”

Following are the CMOs’ answers to the question: “What’s surprising you in 2016?”

SURPRISES in 2016

In a time of tremendous change for hospitality marketers, there are still developments that come

as a surprise to marketing leaders and they range from meeting meditation to call center surges.

“What is surprising you currently?” was the first question asked by Rach.


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Conclusions:

The Lippincott speakers wrapped up with the guiding principles of putting happiness to work:

1. ELEGANT SIMPLICITY: continually bridge gaps and create opportunities for delight.

2. SURPRISING GENEROSITY: deliver more than expected and express sincere gratitude.

3. ON-DEMAND: tailor to the individual but open the door to limitless possibilities.


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Rach threw the session open to the CMO’s and the resultant discussion quickly and predominantly revolved around loyalty programs. Among the points made were:

` The success of a program depends on what is being offered. There are still a lot of “points junkies” but many travelers are looking for experiences so that points and recognition must be balanced with that.

` These should be looked at not as “frequency programs” but as “relationship programs.”

` The average household has 29 memberships in loyalty programs of all kinds so the next big disrupter might be a simplified loyalty program

` Consumer behavior is changing so simpler is better – like a free night after ten nights.

` How can suppliers move the needle to make loyalty programs more appealing but still profitable?

` There is not a one-size-fits all approach. Marketers have to figure out what’s right for the customer and for the industry.

` Following the airlines might not be the best idea as they are in a different category of not having to have the same kind of relationship with customers as hotels do.

THEME 4: Gathering Around the Water Cooler

The session was sponsored by Expedia Media Solutions. Hotel companies represented at the Roundtable included Best Western International; Denihan Hospitality Group; Destination Hotels; IHG; Interstate Hotels Corporation; Kerzner International; Marriott International; Omni; Outrigger Hotel Group; Red Lion Hotels; Value Place; and Wyndham Hotel Group.

HSMAI Executive Roundtables provide senior executives access to experts

and an opportunity to interact with their peers. HSMAI brings together Chief Marketing Officers, Chief Digital Marketing Officers, Chief Sales Officers, Chief Revenue Officers, and Hotel Management Company Sales & Marketing Executives through the year.

This HSMAI Foundation Special Leadership Insights was produced for the Foundation by Freelance Writer Harvey Chipkin.

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