Deluxe Hotels Enhancing Service While Watching Costs

<B>Deluxe Hotels Enhancing Service While Watching Costs</B>

By Bruce Serlen

With competition remaining fierce and room revenues having declined in 1999, deluxe hotel companies such as Four Seasons and Ritz-Carlton are falling back on one of their core competencies--customer service--to attract and retain the high-end business traveler.

At the same time, providing new and enhanced customer service--from concierges who specialize in technology and 24-hour-a-day room service to in-room fax machines and high-speed Internet access--is pricey, so hotels are keeping an eye on the costs these investments represent.

Not coincidentally, personalized guest service alsois a buzzword today at the hotel tier right below the deluxe brands--hotel chains like Inter-Continental and Loews. Consequently, the deluxe tier is working even harder to stay in the lead.

For the corporate travel buyer, personalized guest service is a given when they negotiate with deluxe properties. In fact, individual amenities are rarely, if ever, negotiated. They're all just part of the upscale experience being provided.

Ironically, much of today's emphasis on customer service is away from the traditional "soft touches," such as bathroom amenities, turndown service, and complimentary shoe shine--add-ons that business and leisure travelers alike valued in the past. Increasingly put in their place is anything with a technology bent.

"It's hard to remember, but amenities that are generally considered standard across the industry today--robes in the guest room, for example, or even remote control television--were brand new one day and they tended to start with us," said Wolf Hengst, president and COO of Four Seasons Hotels and Resorts.

"As a result, we've always been in the forefront on customer service and we intend to remain there. If today, this means providing more innovative technology to the guest room, so be it; the common denominator of personal service is the same."

For Hengst, being number one in service means not only delivering the service, but delivering it consistently across all the company's properties, both U.S. and international, "to the point where the guest feels secure knowing it will be there."

On the most basic level, customer service at the deluxe category comes down to price. "When you charge premium rates, it's fair to assume that customer expectation will be greater, and it's our job to anticipate and exceed that expectation," said Wolfgang Hultner, CEO of Mandarin Oriental Hotels (USA).

"Business travelers today typically are under a lot of pressure to produce, and they want to stay in hotels where they feel they are being well taken care of. If it's about time and efficiency, the hotel that can provide these things in comfortable surroundings--and provide them with a smile--will get the business."

High-end personalized service always has been a point of differentiation in the business traveler's mind, according to Jim Schultenover, vice president of sales and marketing for Ritz-Carlton Hotel Co. "What it comes down to is treating guests as individuals, recognizing that each traveler has his or her own particular needs," he said.

Take the simple, time-honored job of the concierge: "At one time, this would be one very knowledgeable person who would make dinner reservations, book theater tickets and so on," noted W. Douglas McKenzie, vice president of luxury brand management for Starwood Hotels & Resorts Worldwide. "Today's concierge is part of a department that has 13 to 14 people prepared to deal with any customer issue from dinner reservations to servicing a laptop computer."

Working in tandem with the concierge staff are on-staff butlers who are assigned to guests at the St. Regis New York on a floor-by-floor basis. "As the title implies, the butlers see to requests of any kind for all the guests on that floor," said McKenzie. New St. Regis properties in Rome and Beijing have introduced the concept, if not as extensively as New York. As Starwood adds new properties to the brand, the butler concept will be included.

At Ritz-Carlton, meanwhile, the butler concept has been introduced--and given a specific high-tech orientation. "Considering all the technology that business travelers are required to deal with today, it became clear to us that this was an unmet need for our guests that we could fill," said Schultenover.

Thus was the technology butler born. As of year-end 1999, one was in place in every Ritz-Carlton, with the exception of Dubai. "The butlers are obviously computer experts, who also are resourceful with good people skills," he said, "so they can solve guests' technology glitches as expediently as possible."

What's life like as a technology butler? Michael D'Anthony, who has the job at the Ritz-Carlton Atlanta, has taken up to 20 guest calls a day. Not surprisingly, he has an audiovisual--as opposed to concierge--background. "Guests are used to working out of their offices where they have help-desk support. Once they're on the road, they can feel stranded when their system loses power or, worse yet, crashes completely, especially when it contains the presentation they're about to deliver," D'Anthony said.

When Mandarin Oriental's Hultner thinks about customer service, he uses himself as a prototypical business traveler. Traveling more than 70 percent of the time, he is often in a different city day after day. "There are times I'm only in the guest room eight hours, from 11 at night to 7 the next morning, and find there is business I have to conduct with other cities around the world even then," he said. "What kind of personal service am I going to need to be able to do this job?"

In Hultner's case, a 24-hour-a-day business center on site is crucial. To function in a global economy, he believes Mandarin Oriental business guests have to be able to communicate on a 24-hour basis and a fully staffed business center makes that possible.

For deluxe hotel companies based outside the United States, particularly in Asia, customer service is a way to demonstrate a kind of cultural advantage. "Respect, humility and sincerity are typically thought of as Asian values, so we use them as the foundation of our customer service," said Akiko Takahashi, corporate group director of Hong Kong-based Shangri-La Hotels & Resorts.

"Built into this philosophy is the concept of recovery. If we make a mistake, we see it as a wonderful opportunity to recover," she said.

Much of the input hotels have on guest needs comes from satisfaction surveys, focus groups and technology-driven guest history programs. "With the help of an outside consultant, we're in the midst of a major, year-long satisfaction survey right now that will assess the feelings of three tiers of guests: business travelers, meeting planners and leisure guests," said Steve Davino, Fairmont Hotels & Resorts vice president of sales and marketing for the United States and Mexico

Ritz-Carlton began a two-year research project involving futurists and prototype testing in the hotels in an effort to identify what the expected service levels will be for the next decade.

"Certainly, the level of expectation is higher than it was five years ago, no less 10 years ago, and is getting higher," noted Four Seasons' Hengst. "So we try to track how personal preferences evolve over the years." Hengst and his senior staff also make it a point to stay at competitors' properties--at both the deluxe tier and the tier below--to benchmark first-hand how these hoteliers deal with service.

As for the histories deluxe hotels maintain on frequent guests, "they are a blueprint for us as to what kinds of new or improved services guests are looking for," said Mandarin Oriental's Hultner.

Whether the guest prefers a certain newspaper, bowl of fruit or feathered pillow, it's in the guest history. "By focusing on frequent guests, the guest histories encourage more repeat business, which is much sought after," said Starwood's McKenzie.

At the St. Regis New York, a computer sits in the butler's pantry on each floor, so the butler can input additional details to a guest profile on the spot. Approximately 65 percent of St. Regis New York guest stays are repeat business, McKenzie said.

"Right now, we have the technology in place to track guest preferences at each property, but we're working to expand the system to include all our hotels," Hultner said. Mandarin Oriental's research indicated that 20 percent to 30 percent of guests stay at more than one company property.

Down the road, Fairmont's Davino foresees deluxe hotels becoming more involved in the whole travel process "from the moment guests leave their front door to the moment they return."

By extending the idea of the guest history, Davino said there's no reason why the hotel can't call the guest after the reservation has been made, for example, to offer assistance with limousines or in other ways.

For their part, the hotels one notch below the deluxe level hardly are ready to surrender the mantle on customer service. Said a spokeswoman for Loews Hotels, "We're always trying to come up with new and creative ways to enhance the guest experience." Given the stress business travelers often endure, she cited in-room yoga and massage available at one Loews property (sent up by the privately run fitness center in the building) and the in-room bartender service provided at another.

Yet at the end of the day, what do corporate travel buyers feel about the emphasis on customer service? Do they feel personal service is really synonomous with things like technology butlers and 24-hour business centers (no less in-room yoga and bartenders) or is it ultimately about something more fundamental?

"My sense is that service levels have declined overall, regardless of special programs that may be offered, and this is true at deluxe properties as well as others," said Kevin Maguire, who manages corporate travel for Tokyo Electron America, Austin, Texas, and is president of the Austin Business Travel Association.

"There may be nothing wrong with individual initiatives, but what's often missing is the one-on-one courteous service you'd like to be able to expect from hotels' rank-and-file employees," Maguire said. "Maybe it's about recruiting, maybe it's about training. But if the staff doesn't convey that genuine sense of service, all the formal programs don't mean much."

"A helpful, friendly staff wins out every time, from the bellman and front desk clerk on up," said Ronald Sharer, manager of corporate travel for CIBA Vision Corp. in Duluth, Ga., and head of the Georgia BTA. "Service levels across the industry seem to be cyclical. Business travelers tend to be vocal about poor service. When they get enough complaints, hotels seem to make an effort to improve, but then the momentum fades."

One aspect of customer service that hoteliers are wary to talk about, but that consultants address more freely, is cost. According to Bjorn Hanson, global leader of the hospitality and leisure practice at PricewaterhouseCoopers, deluxe hotel companies actually are considering cutting back on once-very-visible amenities like airport limousine pickups and turndown service.

"With the rate of revenue per available room growth in the deluxe segment declining in 1999--and having declined steadily since 1996--as the rate of room supply growth has increased, these hoteliers need to be vigilant about expenses," he said. "Consequently, they've begun looking at scaling back many of the amenities business travelers take for granted. After all, these touches can be hard to justify when you're looking to trim expenses."

Similarly, depending on the market, a customer service available at one property in a hotel company's portfolio may not be available at another. Will the cut-backs include the newly introduced technology perks? Possibly.

Hoteliers would make these adjustments as quietly as possible because so much of their brands' image and reputation is dependent on the mystique of unlimited customer service, Hanson said.

As for the hotels one notch below the deluxe tier, Hanson said they also are wary about incurring extra expenses. "They're watching closely to see how the deluxe brands fare," he said.

"Tiering in the hotel industry works best when the economy is strong," added Robert Mandelbaum, director of research information services at PKF Consulting. "At the deluxe level, this has meant high-end customer service. Should the economy show serious signs of faltering, it would be a different story.