At a recent panel discussion at EHL on luxury, panelists spoke about the issue of loyalty. It’s considered to be the ‘holy grail’ of hospitality – how to keep your customers close and make sure they come back to your hotel again and again. Many hotel chains have loyalty programs, but as panelists highlighted, loyalty in hospitality can be fickle.
Here are abridged excerpts from the panel discussion at the Young Hoteliers Summit:
Marco P. Nijhof, Value Retail: I don’t believe in loyalty to be very honest. People change so quickly (from one brand to another). If I stay in one hotel, I pull out one card. If I fly another airline I pull out another card. It doesn’t matter.
Ramsey Mankarious, Cedar Capital Partners: Loyalty is very fickle in our industry. I’ve got cards for every hotel, a card for every airline, it’s very hard to get loyalty. You can be a luxury traveler and stay at the Ritz Carlton, you can be very loyal. It’s hard to maintain that. It’s not the money, it’s just what they give you, how they treat you and you become loyal. But just as quickly if that product changes or they don’t treat you like you think you’re going to be treated, you’re going to go somewhere else. It’s very fickle, very hard to keep loyalty.
Philipp Henle (AEHL, 2008), Dorchester Collection: In the low brands, (guests) accumulate points and then they burn them when they go on holiday with their family. They can ‘uptrade’ in the brand echelon. This is not loyalty. A luxury customer, if he spends 1,000 pounds a night for a room, do you really think he would be happy to receive a 10 pound reduction on his next stay or an upgrade? That doesn’t make a difference. It doesn’t create loyalty. Loyalty is created when you can give this customer an experience. You know who the customer is before he comes into your room. Hence you have to invest as a company and we’re currently doing that, we’re revamping all our big data management. You have to know the customer. What does he like, what are his preferences, how can you surprise the guest?
In the true luxury segment it’s much more on the emotional connection with the guest and that’s where we have to deliver and go back and think about how can we make this experience for the guests in order to have this experience which he can remember and then connect the brand with his experience and make him loyal through this more subtle way.
Jonathan Humphries, EHL: That’s great but we’ve been trying to do that since the industry began. It’s the holy grail of the hotel industry. Perhaps the only way to do it is to charge absolutely exorbitant prices to join an exclusive club?
David Samson (AEHL, 2011), Deloitte UK: You have got to create this emotional connection. The Four Seasons, for example, is a very aspirational brand and they command a price premium.
Marco P. Nijhof: Luxury is luxury on different levels. You can have luxury at 3-star hotels. You can have luxury at 2-star hotels and I always say luxury at a 2-star is a 30 gram or 50 gram bar of soap. That’s already luxury. So there are different levels of luxury within the industry.
Philipp Henle: And that’s why we have to understand our customers to be able to meet their expectations and exceed those expectations on our level.
It’s managing expectations. Whereas a customer coming to the Dorchester Collection, we have to be prepared to fulfill any wish this customer has.
Ramsey Mankarious: What is luxury? I stayed at a Holiday Inn at the airport and expected very little. I came in, had a USB plug right next to my bed for my iPhone. I thought that’s brilliant. Nice shower. Great bed, clean, simple. I was by myself and slept there for four hours. It ticked every box I wanted. If it was the Four Seasons, I’d have thought how much am I paying for four hours of sleep? It’s not worth it. For that, it was perfect luxury for me, it was great. Ironically you get great value for money. Historically, even today, the lower down you go in the food chain, everything’s free. At your Holiday Inn Express, the phones are free, the internet is free. You stay at the Four Seasons, the internet is 45 dollars a day. A faxed page is 10 pounds. And you don’t think about it because you’re staying at a luxury hotel, whereas at all the budget ones, everything is included.
Jonathan Humphries: So what about individual hotels? We’ve spoken about chains or brands, what can individual hotels do in today’s environment to make sure they get that loyalty?
Marco P. Nijhof: Everything. They have no constraints. A Marriott, a Hilton, a Hyatt, they all have constraints called policies and procedures, and then corporate communications methods and there are huge constraints. The individual hotel in today’s environment, with a smart person behind the internet, the sky’s the limit. You can do whatever you want, create a product, whatever you want. With amenities, beds, TVs, experience. There are no restrictions. It’s just you have to have an owner who cares about his guests and that, in individual hotels I’ve found a lot of times, is a problem because the owner cares only about making money and not necessarily about taking care of guests that actually make money for him.
The panel discussion on ‘Reinventing Luxury Hospitality’ was staged as part of the Young Hoteliers Summit at Ecole hôteliere de Lausanne on March 13, 2017 - #YHSconnects