Hsmai Conference Draws Consensus: ‘Know Your Customer’As Marketing Executives Tout Cooperative Efforts

NEW YORK, NY (Jan. 30, 2002) – “Know your customer” was the consensus advice from the various experts speaking at the “Moving the Industry Forward” strategic conference sponsored by the Hospitality Sales & Marketing Association International (HSMAI) at the Marriott Marquis in New York.
The conference, a second in a series of new Executive THINKs since the events of Sept. 11 put the travel industry into a tail spin, was created to help hospitality, travel and tourism industry executives focus on solutions to the dilemma that faces many companies as a result of the economic downturn and resulting drop in both business and leisure travel.
Dr. Lalia Rach, Associate Dean, Tisch Center for Hospitality, Tourism and Travel Administration, New York University, moderated the conference and urged delegates to “move beyond a season of enormous challenges to see the good in the future.”
She noted that “the consumer is shifting emphasis to regional vacations and that many theme parks, casinos and hotels are benefiting.” However, she also said, “brand loyalty now has competition from channel loyalty with consumers looking for deals” as they surf the web.

GETTING BACK TO BASICS:
Bonnie Reitz, senior vice president sales and marketing for Continental Airlines, keynoted the conference by urging delegates to “get back to basics.”
Echoing the consensus focus on “knowing your customer,” she said we “must ask where do people want to go and what will they pay?”
Reitz detailed Continental’s four-part Go Forward plan explaining, “we focused on our market strength and stopped doing things that didn’t make money.
“We cut non-value expenses and ensured we were putting money back into the things that mattered to customers, like new airplanes.
“We empowered our people, set goals and measurements, and rewarded ourselves when we did what we said we were going to do for our customers.
“And probably the most important of all was creating a culture based on dignity and respect strengthened with open and frequent communications. Consistent, even persistent communications is our mantra.”
One of the key factors in Continental’s turnaround success is its revitalized corporate culture in which the employees recognize that “customers are people, too, and want the same recognition,” Reitz said. “The good news is the combination of focusing on employee and customer expectations has made Continental the number one airline in the New York area,” she added.
Reitz said that despite the fact that Continental is exploring alternative distribution channels, the airline strongly supports travel agents. “We believe in the travel agency distribution channel, especially in the corporate arena, and they are truly our partners and we’ll reward them. We believe that 66% of our business will go through the travel agent channel and the agents will combine electronic capabilities with their bricks and mortar operations.”
DISCOUNTING IS NOT THE ANSWER:
Ray George, engagement manager with Prophet, Inc., warned delegates, “discounts are no longer a point of difference” and “if all you do is compete on price you cannot win.”
“Discounts decrease the perception of quality and alienates loyal customers,” George said. The new distribution channels have fostered discounting and “consumers are shopping for the deal,” he added.
George provided several recent examples of success stories without discounting including:
“Nokia, which is gaining marketshare in a declining market through customer relevance and innovation…Dell has demonstrated value with customization and service…E-Bay is leveraging its intense 37 million customer focus…Fidelity is building brand capabilities, technology capabilities and service.”
He reiterated repeatedly that “discounting does not hold customers, and it is 7% to 10% more costly to get customers through discounts as compared to holding on to loyal customers.”
George said, “Creating strong brands is not just a marketing pursuit but a corporate culture…it’s also based on finding the relevant need of the consumer.”
However, he was not completely against discounting. “When you can discount to a specific market segment for a specific product and time it makes sense; it’s focused need-based discounting.”
He also said we need to “talk to customers and find out what they want.”
TODAY’S NEW CONSUMER:
Rick Sandler, president of the Insight Group, has been doing just that with his research into today’s new consumer. Research results have indicated that “there has been a lifestyle change in recent months and 38.7% of the people interviewed want to live in a small town to get back to the community,” Sandler said.
“We have a new value structure saying that family is more important than work and people want to live a more authentic life,” Sandler reported.
He added that “attitudes toward family will prevail, and people will accept less privacy as part of a new way of living.”
At the same time, “coping strategies have evolved in which people are saying I’ll travel but here’s where I draw the line,” Sandler said. “People are also incorporating adapting techniques,” he added, such as wearing loafers while traveling because they are easier to remove for security checks and wearing large coats with big pockets to carry more on the airplane since they are limited to one carry-on bag.
Sandler reported some optimistic trends in that “Americans will invest in things that provide lasting value and travel experiences, especially with family, fitting into that mode.”
As for business travel, he said, “meetings by teleconference can’t replace the human connection. I need to sit in a room and see people, there has to be a humanity.” He predicted that meeting planners will be fine, but companies will be downsized.
IN UNITY THERE IS STRENGTH:
Betsy O’Rourke, senior vice president, marketing for the Travel Industry Association of America (TIA), urged delegates to participate in as many TIA programs as possible because “in unity there is strength.”
“We recognized an opportunity to provide the industry with one voice, one message and the tools to deliver that message,” she said, adding: “We gathered more than 50 of the top communications professionals in the travel industry via conference call and presented a common message and strategy, with all the tools to implement a unified industry PR campaign.”
The message that TIA used was that travel is a fundamental American freedom and that Americans should See America. “We are urging the industry to continue airing the See America ads,” O’Rourke said, adding: “We are continuing to promote the See America brand in all three of our target markets, the U.K., Japan and Brazil, where we have offices, and at key trade shows including ITB in Berlin where the U.S.A. Pavilion has been renamed and rebranded the See America Pavilion.”
O’Rourke encouraged delegates to go to the tia.org website to learn more about various opportunities for participation.
TIA will be hosting the International Pow Wow in New Orleans May 24-29 and she said, “We believe the importance of the International Pow Wow has never been greater, and we expect record attendance. We will be bringing Broadway to Pow Wow, and NYC & Co. is creating a special Playbill for all attendees.”
TIA announced that the U.S. Postal Service is releasing a set of stamps for each of the 50 states themed “Greetings from America,” and TIA will offer a See America sweepstakes with 50 prize vacations, one to every state.
TIA will also launch National Travelers Appreciation Day on May 4 during National Tourism Week and is urging all companies to utilize a specially created bookmark to get across their message or special deals to the consumer. Furthermore, TIA is working on a special fall promotion with the National Park Service and U.S. Forest Service tying into their existing pass program.
O’Rourke expressed optimism in that its recent poll had the following results:
· 86% of Americans said it’s important to be able to travel whenever and wherever they want
· 75% said it’s important that Americans travel as they did before the Sept. 11 attacks
· 83% said that travel and tourism are important to the health of the U.S. economy
· 66% said that travel in the U.S. is safe
· 28% said that travel outside the U.S. is safe
A SHIFT TO REGIONAL TRAVEL:
Doug McCorkle, executive director, marketing for Fairmont Hotels and Resorts, Gil Langley, vice president, marketing for Long Beach Convention & Visitors Bureau, and Cathy Ritter, executive director, Illinois Tourism, served on a panel of experts to discuss how they are handling the crisis.
“We’ve observed a significant shift to lower value spending and a fall-off of business travelers in Illinois,” said Ritter, adding that the state is focusing inward on generating local travelers. Special values at downtown hotels and other discounts have helped spur the market.
Fairmont’s McCorkle said, “discounting opens up to a different type of traveler,” and noted that they, too, “have seen a shift to more local travelers.”
Langley said he has created a very aggressive sales focus for his staff: “If it moves kill it.” He noted that while many CVBs have had layoffs, he has kept everyone, and works hard at motivating them to sell Long Beach.
Ritter, Langley and McCorkle all agreed that partnerships in this time of crisis were crucial to success. Langley has emphasized putting co-ops together with a buyer’s cooperative. Ritter said, “a lot of new players have come to the table in Illinois and we expect they will stay with us.” McCorkle said, “we’ve seen unusual acts of solidarity.”
NYC & CO. BLUEPRINT FOR SUCCESS:
The best example of solidarity came from the next speaker as Cristyne Lategano-Nicholas, president and CEO of NYC & Co., diagrammed New York City’s success story after Sept. 11.
It began with a meeting called within hours of the attacks. “We responded in emergency mode. We had a close working relationship with the city government and we began pulling everyone together to work together.
“The sales and convention staff got on the telephone looking to hold business and get replacement business. Keeping Broadway open was a priority and making sure that our Visitor Center was open to take care of visitors’ needs was another priority that was maintained with both staff and volunteers. We were operating 24 hours a day.”
Nicholas and her staff got the restaurant industry, the hotel industry and the theater industry together. “We became the crisis communications directory for everyone,” she added.
NYC & Co. got sponsors for the ads to get people back in stride. “We wanted to remind people how important it was to get back to normal as fast as we could,” she said. Humor was used in the ads “to get people laughing again.” The result was a slow, but steady climb back up with more and more people dining out, and more and more visitors coming to New York.
The success had an unusual by-product. “We were conscious that some meetings were coming to New York City from other cities, and we were sensitive that many other cities were suffering, too,” Nicholas said. “We wanted to help the rest of the county, especially after the strong support we received from everywhere,” she added.
So, NYC & Co. hosted 75 convention and visitor bureaus to discuss issues and is also working closely with Washington, DC. NYC & Co is putting together a Heritage Package between Washington DC and Boston and is launching a “Get Back to Traveling” campaign which it will be taking the road in conjunction with the Conference of Mayors and New York City Firefighters to say “Thank you in person,” and remind people to See America.
NYC & Co. is also promoting the expansion of its successful Restaurant Week in New York City in which dining out goes on sale across the city. “We want to market the U.S. as a dining destination with a single dining card,” she added.
Nicholas also said, “the one lesson that I have learned is to communicate what you are doing with as many people as possible. The key is to communicate what is happening. We used e-mail on a regular basis.”
THE FUTURE REMAINS A CLOUDY VISION:
Peter Yesawich, president and CEO of Yesawich, Pepperdine & Brown, released the latest results of his Leisure Travel Trends Survey noting:
Almost one in five (18%) travelers still say their future plans for leisure travel continue to be affected by the tragic events of Sept. 11, according to the results of a new national survey of travel intentions.
The overall percentage of leisure travelers who agreed that the terrorist attacks were likely to influence their future travel plans showed only a slight decline from the level recorded in November (18% versus 22%). “Travel intentions are clearly improving, but many Americans remain anxious about hitting the road again,” said Yesawich.
Among leisure travelers who indicated their travel plans have been influenced by the terrorist events and said they would cancel or take fewer trips, nearly twice as many stated they would not travel because they believed it was “not safe to fly.” The percentage of respondents citing air safety concerns nearly doubled, from 23% to 45%, from a similar survey conducted by Yesawich, Pepperdine & Brown in November 2001.
Travelers’ concerns about the safety of air travel exceeded concerns about personal safety (19%) as well as concerns about the current condition of the United States economy (13%).
Paralleling their concern about the safety of air travel, leisure travelers who said the terrorist incidents were likely to influence their future travel plans also indicated a preference for vacationing closer to home (59%), visiting friends and relatives (45%), vacationing at home (39%) and vacationing with children (35%).
Leisure travelers, who, prior to Sept. 11, had planned to take a trip also stated that special offers and discounts from airlines, hotels and other travel suppliers would encourage them to take a future leisure trip.
Nearly six in ten (57%) of these travelers stated that airline discounts would influence their decision to fly on a pleasure trip during the next year. Forty-five percent agreed they would be influenced by discounts offered by hotels, while about one-third of respondents said they would be influenced by special promotional values offered by a cruise line (33%) or tour package company (31%).
The survey also revealed that many leisure travelers expect big discounts in exchange for their patronage. Almost four in ten (39%) said it would take a discount of 50% or more to motivate them to take a trip they otherwise would not have taken, while three in ten indicated the discount would have to exceed 50%.
The nationally representative poll was taken with 800 qualified U.S. adult travelers during the week of Jan. 14, 2002. All estimates are accurate to within +/-3.5% at 95% confidence.
HSMAI is an organization of sales and marketing professionals representing all segments of the hospitality industry. With a strong focus on education, HSMAI has become the industry champion in identifying and communicating trends in the hospitality industry while operating as a leading voice for both hospitality and sales and marketing management disciplines. Founded in 1927, HSMAI is an individual membership organization comprised of over 5,000 members from 35 countries and 60 chapters worldwide.
For more information on HSMAI, contact the Hospitality Sales & Marketing Association International, 1300 L Street, NW, Suite 1020, Washington, DC 20005, or call (202) 789-0089. You can also visit the web site at www.hsmai.org.