Hotel CEOs talk free Wi-Fi, Twitter, room service

The hotel industry is thriving once again as more Americans hit the road for business and for pleasure. But today's travelers are ever-more demanding and tech-savvy, and they're expecting hotels to adapt.

USA TODAY assembled five of the industry's top executives last month at the Americas Lodging Investment Summit in Los Angeles in the L.A. Live JW Marriott hotel for a discussion of the industry's latest developments and challenges. Participating in our third annual roundtable were: Marriott International CEO Arne Sorenson; Kimpton Hotels & Restaurants CEO Michael A. Depatie; Choice Hotels International CEO Stephen Joyce; InterContinental Hotels Group President of the Americas Kirk Kinsell; and Best Western CEO David Kong. USA TODAY's Nancy Trejos moderated the discussion. The text has been edited for clarity and length.

Q: The hotel industry is rebounding from the recession. Average daily rates are up, occupancy levels are up. This is good for you. How is this good for the guest?

Marriott's Sorenson: What the guest really gets is the ability to travel, which they love to do. And the guest gets choice. Choice is very important — choice in terms of where they stay. The capability is there for hotel companies to continue to develop and grow in their product. And the guest continues to be demanding, which they should, and wants to have things like technology and advanced opportunities to use the tools that they have at home in the hotel room. We in the hotel business are able to deliver that.

Marriott CEO Arne Sorenson.(Photo: Robert Hanashiro, USA TODAY)

 

Q: And they want free Wi-Fi. But a lot of hotels, especially upscale facilities, charge for Wi-Fi. We're seeing some hotels start to reverse that trend, such as IHG providing free Internet to Rewards Club members. Will others follow their lead?

IHG's Kinsell: What we believe in first and foremost is listening to your guest, listening to potential customers. The biggest complaint was availability of Wi-Fi and the cost of Wi-Fi, and we wanted to solve that. We've offered free Wi-Fi for all of our loyal customers throughout the IHG Rewards Club. The challenge to delivering that, though, is you're working through an infrastructure. There is invested cost that needed to be consumed. There was also just finding solutions that would work, and we had to work through those to make sure that we could deliver on our promises.

Choice's Joyce: You have a large expansion in the number of people traveling, but they have not forgotten their 401(k)s, and their houses shrunk enormously in value. You still have this continuing value orientation, whether it's at the luxury end or whether it's at the budget end, for "What am I getting for what I'm paying?" That is more prevalent than I think I've ever seen in the business. And I don't think it's even a midterm phenomenon. I think it's long-term. The consumer is resisting price.

Kimpton's Depatie: You can get free Wi-Fi at your local Starbucks or burger joint, so I think you'd expect it at your hotel. We offer free Wi-Fi for all our Kimpton loyalty members. What's interesting about the business is lower-priced hotels have been giving Wi-Fi away for a while, but higher-priced hotels have been charging for it. Why, I don't know, but I think it's going away.

Q: Walk into a hotel now and you have digital screens that tell you where to go, where to eat, what to do. Does all this technology make the hotel experience too impersonal?

Best Western's Kong: Technology, to a large extent, desensitizes people, and it has the potential of rendering our industry into a commodity. If the hotel is nothing but self-check-in and kiosks and you don't have interaction with anyone, then that type of experience can be easily copied. We all read comment cards and letters that come to us. They almost never write about the product experience. It's always about people, whether it's a compliment or a complaint. It's always the front desk people, how they were received, or the housekeeper. This industry is called the hospitality industry for a reason. If we, for the sake of technology and efficiency, give that up, then we'll be like the airlines. We'll be a commodity.

David Kong, Best Western CEO.(Photo: Robert Hanashiro, USA TODAY)

 

Q: Starwood is now piloting a program in which guests can check in with their smartphones and use them as keys. Do you see the industry embracing this?

Depatie: Millennial customers in particular are going to want to book with their mobile or online. They're going to want to check in on the way from the airport to the hotel. While they're there, they may want to have an app to order room service or theater tickets. On the way down in the elevator, they're going to want to check out on their phone. On the way to the front door, they're going to want to list a review on social media, maybe stop in the lobby and do a selfie, post it on Instagram. On the way to the airport, they're going to want the manager of the hotel to respond to their comment on Trip Advisor.

Q: You've brought up Millennials. How important are they to the industry, and how do you please them without alienating customers from other generations?

Sorenson: They're the future. It depends on the chart you look at, but if you look at within five to seven years, they cross over Boomers in global travelers. … But I don't think the demands that we generalize as being something that the Gen Y wants are are antithetical to boomers or even the generation before the Boomers.

Depatie: There's a growing group of travelers who want something that feels more personalized, more localized and more authentic: This one-size-fits-all chain approach is getting more and more rejected. We certainly pay attention to it at Kimpton. We really differentiate on experience. So the hotel is designed differently, the hotel has got a kind of different restaurant theme. Everything is localized. The Millennials, in particular, like that experience, but I think it's more psychographics than demographics. There's a group of people who want something different.

Q: A Deloitte study last year said that people are not loyal to airlines and hotels. Do your loyalty programs actually make people loyal?

Kinsell: Loyalty programs are, in fact, a way for us to know more about how we can better serve our guests and have a relationship, have a communication. The guests will tell you exactly how they want to be communicated with. Some will basically say, "Leave me alone." Others, they want to understand what you're doing as a company, where you're going with your business, what new hotels might be opening. It's a great way for people to engage.

Joyce: That's the question we ask ourselves every year: Is it worth what we're spending to obtain those customers on a regular basis? In each case, we can see that when we sign a customer up for that, they give us more of their share, which is the whole point of a loyalty program. We've been adding 2 million or 3 million members a year for the last four or five years, and we watch them very carefully, because it's expensive to do.

Q: Airbnb and similar websites, which allow you to rent a room from a peer, are getting more popular. How big of a threat are such websites to traditional hotel companies?

Kinsell: The rest of us are held by a set of rules or regulations or expectations or just a level of care, and we want to provide for people's safety and security when they travel. We want to engage with the community and be a part of that community and pay our dues, and sometimes those dues are represented in taxes. We want to make sure that guests have a consistent experience from the place in which they stay, from place to place to place, and a level of trust. Frankly, what I'm seeing in things like Airbnb and others, the same rules are not applying. So level the playing field, essentially. We love competition, and we recognize that guests want to have choices.

Q: Hilton caused a stir last summer when it got rid of traditional room service at its Midtown Manhattan property. What do you see as the future of room service?

Joyce: Room service has been bad for 35 years. It's slow, it's cold, it's typically more of a consumer upsetter than actually helpful, and none of the hotel companies have figured it out. At Cambria Suites, we do offer it, but we're offering it differently. We're going to let people call. It will be ready for them quickly, and they can come get it. If you order room service, you should get it in 15 minutes. Well, that doesn't happen anywhere. Jimmy John's sub shop can get a sub quicker to the hotel than we can get it in room service. So the idea is it's never worked, and it's got to be a different model. And it's got to be at least not a profit loss to the hotel, and it's got to be satisfying to the customer.

Sorenson: At the upper end of the business, room service is not going to disappear, particularly for breakfast and maybe late at night. The length of the options may shrink a little bit. The food may become a little bit simpler, but that's partly because people's eating tastes are simpler, anyway. You don't need to send me all sorts of fancy sauces in room service. And there's going to be other innovations, because I don't think you can sell rooms for $500 or $600 or more in some of these markets and say, "You've got to go to Jimmy John's sub shop to get your sandwich."

Source: USA today 28 February 2014