Wyndham hotel company case study

Wyndham Case Study

What is the value of a brand in the lodging industry?

As hotels specifically and hospitality chains in general have competed with each other on features and services that were inexpensive to implement, a lack of differentiation has permeated the industry. As a result, there is significant brand erosion of hotel chains and hospitality services, many of which have resorted to price as their primary differentiator. When pricing becomes the only differentiator however there is a corresponding drop in gross contribution margin (GCM) and profitability. Investing in a highly differentiated brand is critical for the long-term viability of hotels and hospitality businesses. The value of a brand in the lodging and hospitality industry is long-term differentiation and inherent in its value there is the consistent delivery of a unique customer experience that is specifically managed so their expectations can be consistently exceeded. According to Baker & Cameron (2008) the five phases of destination brand marketing include market investigation including analysis and strategic recommendations followed by brand identity development. The third phase is the brand launch and introduction including the communication of the vision of the brand and its unique differentiating values. The fourth phase is the brand implementation, and this involves infusing ownership of the brand's execution on a daily basis to customers staying at each property. The fifth stage of branding strategies involve the development of metrics and key performance indicators (KPIs) that provide real-time updates on how the services and customer experience are contributing or detracting of the brand over the short-term and the ability of the brand to foster greater customer loyalty over the long-term. As the focus of the Wyndham ByRequest program is to foster the development of greater lifetime customer loyalty, tracking the impact of branding efforts on the preferences of customers over the long-term through metrics and KPIs is critical. What these metrics must do is provide those delivering the services - in effect the essence of the brand - with quick and accurate feedback of their efforts to make the brand come alive (Denton & White, 2000). This aspect of branding value has been pioneered by Marriott Corporation. Just as much as the relentless pursuit of customer service is an integral part of the Marriott culture, so too is a strong reliance on analytics including Key Performance Indicators (KPIs) (Denton & White, 2000). The reliance on the balanced dashboard system developed within Marriott is now being used throughout the industry, and includes a set of assumptions of how customer lifetime value can drive up financial performance of Marriott over time (Denton, & White, 2000). The development and refinement of the balanced scorecard is useful for defining profitability goals by brand and also by property within brand and needs to be expanded to include more measures of customer lifetime value, including the success in migrating them to specific brands as their needs and incomes change. Taken together, all these factors contribute to providing an accurate assessment of the value of branding in the hotel and hospitality industry (Watkins, 2002). Baker & Cameron (2002) have defined the critical success factors for location marketing and they are presented in Table 1 of the Appendix.

The case mentions friction between hotel owners, management companies and the brand owner for the ownership of the customer data. What is your opinion on the issues?

In the current situation as defined in the case no one is winning and the wealth of data is not being effectively analyzed through data mining techniques. As Wyndham has relied on the Application Service Provider (ASP) model for the delivery of their applications, the hotel owners, management companies and brand owners need to consider creating a centralized data warehouse accessible for shared marketing campaigns, coordinated from the brand owners' company. The next generation of the ASP model is the Software-as-a-Service (SaaS) model, and is the foundation of salesforce.com. One of the greatest benefits of using applications based on the SaaS model is their accessibly through a Web browser interface. What the brand owner needs to do is initiate the development of a salesforce.com series of applications and load the data onto this software vendors' servers, then set permissions for creating marketing campaigns and strategies to allow for a high level of collaborative planning and development across all the members of the value chain (hotel owners, management companies and brand owners). This way the data and the results of strategies based on it are shared. The brand owner needs to initiate this as they must stay consistent with the messaging for all other members of the value chain to benefit.

Does the Wyndham ByRequest initiative create competitive advantage? If so, is the advantage significant? Is it sustainable? How easy or hard would it be to imitate the Wyndham ByRequest program? In what sense is Wyndham ByRequest different from loyalty programs offered by others?

The Wyndham ByRequest program is highly differentiated in that it is the only loyalty program that focuses on personalized vs. The attaining of points earned during a stay. The differentiation as a result of this program is significant, because Wyndham has made the decision to initiate a high level of operational coordination to the hotel level, including the defining of a Wyndham ByRequest Program Manager to coordinate its execution at each location. The program itself is not that highly differentiated in its definition, yet the commitment required to change and augment processes inside each hotel is what makes this entire program not easily imitated. Infusing ownership to the hotel level and providing necessary metrics of performance (Baker, Cameron, 2008) further drives change management and gives employees and associates the necessary feedback to internalize a high level of performance in making the program exceptionally successful (Gregersen & Black 2002), a lesson learned from Marriott's ability to execute consistently high levels of service performance. This ability to gain employees' and associates' buy-in and internalized ownership is the catalyst of the most potent form of differentiation for a customer loyalty program, as execution is the critical link to customers.

What is your evaluation of the Wyndham ByRequest program? If you were put in charge of the program, would you do anything different? Are there any new features you would like to incorporate in the program?

The Wyndham ByRequest program is highly successful because it combines the necessary elements of a highly personalized customer loyalty program with operational excellence at the hotel level, ensuring the expectations created with customers are met or exceeded. Wyndham correctly placed the emphasis on execution not on the over-communication of the program but on the fulfillment of the promises this program made to customers. What is inherently difficult with a customer loyalty program that centers on personalization of a hotel room and a stay at a hotel is the often erratic fulfillment of these performance promises in the form of expectations. In effect the culture of a hotel or hospitality firm needs to change to make this type of customer loyalty program successful.

In evaluating the role of running the Wyndham ByRequest program I would first look to the exceptionally performing hotels and immediately visit them and interview the program managers to see what extra steps they were taking over and above the existing program to see what their thoughts were in augmenting the by Request with additional features. I would be careful to study what customers at these top performing locations were asking for and not necessarily getting. I'd want to know how the top-performing locations were managing around the unmet needs of business travelers, and then I would integrate these solutions into the broader program. Second, I'd go and visit the bottom ten performers and see why they were failing. I would do a process analysis of what is breaking down and why and also take these lessons learned to increase overall performance of the program. Third, I'd look to expand the program to include rewards for the top traveling customers to bring their families free with them after spending over twenty nights a year on the road. This is in essence giving those top traveling and most loyal customers a free vacation on the company, enlisting them to be recommenders of the program to their associates and friends. At twenty nights a year this is close to the top 5% of all business travelers, so the opportunity to win five nights free in any Wyndham would be of great value to them. Lastly I would create a ByRequest Champions Program and the Project Managers who went above and beyond their normal roles for customers would get a $100 American Express Gift Certificate from their managers on the spot for exceptional performance. This would fuel very high levels of responsiveness and performance throughout Wyndham as well.