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When an Australian resort wanted to attract more business travelers, it found that its employees can be excellent marketing researchers
by David H. Sogar and H. Michael Jones CORPORATE CLIENTS ARE essential to maintaining the revenue stream in hospitality properties. A hotel in Perth, Western Australia, was determined to boost its corporate business. To do so, it examined the corporate travelers' attitudes toward the hotel and its suburban location. In an unusual approach to market research, the hotel sent its employees into the field to collect data on its target market of business travelers. © 1993, Cornell University.
OCTOBER 1993
The Observation City Resort Hotel opened its doors in November 1986 with an initial marketing concept of serving the leisure market. Facing the Indian Ocean on Scarborough Beach, one of the most beautiful beaches in the world, and just 15 minutes from downtown Perth, the 335-room hotel was in a good position to attract vacationers.1 After the hotel reached what is usually termed stabilized opera1Observation City Resort Hotel was originally owned by Bond Corporation and Kumagai Gumi Limited-Tokyo. Since May 1993 it has been operated under a management contract with Radisson Hotels International, with Kumagai Gumi being owner of the property.
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tions, the hotel's managers started to analyze its situation. First, they collected research data from government statistical abstracts to establish the profile of visitors to the region. The information gave managers the indication that the hotel was on the right track, but it also made them realize that the
David H. Sogar, Ph.D., is head of the department of tourism (faculty of business) at Edith Cowan University, Western Australia. H. Michael Jones is general manager of Gold Coast International and former general manager of Observation City Resort Hotel.
hotel could not survive solely on the leisure trade. 2 It became clear that they had to investigate alternatives, such as business travelers and local business groups. As a second step, the hotel's managers analyzed competitors in the Perth market. It was evident from the trade information that the large chain properties in the central business district had a vastly different occupancy pattern from that of Observation City Hotel. The downtown hotels experienced high occupancy on weekdays. Their practice of offering weekend discounts indicated that their corporate customers headed home on weekends. Moreover, the downtown properties typically experienced an occupancy slump during Australia's summer months (December through March). In contrast, Observation City enjoyed a near-capacity business on all weekends and every day during the summer holiday period (i.e., summer vacation months). However, Monday to Friday for nine months of the year, the hotel had lots of empty rooms. An obvious solution for improving occupancy was to acquire a piece of the weekday corporate market that typically stayed at the downtown hotels.
Business Benefits The value to any hotel of corporate clients and business travelers is well known, but it is useful to review the benefits here as they apply to Observation City's situation. R a t e . Corporate clients on an expense account are in the enviable position of not being respon2Statistical Profile of Tourism in Western Australia (Perth, Australia: Western Australian Tourism Commission, Research Division, 1990); and Western Australian Tourism Profile (Perth, Australia: Western Australian Tourism Commission, Research Division, 1989).
sible personally for paying the hotel bill, although they may be responsible for sundry expenses. It's easy, therefore, for a traveler to justify an expenditure on the road when the money is ultimately coming out of someone else's pocket. Moreover, with regard to accommodations and activities, most companies allow their employees to uphold at least a minimum corporate image. The relatively high room-rate structure attained with the corporate market is essential for balancing the market mix and counteracting the relatively low rate and high yield commonly found in the resort's two main existing market segments: air crews and groups (i.e., packaged tours). F&B. Corporate clients are critical to the hotel's food and beverage department, not only for boosting revenue from such highyield, low-cost meals as buffet breakfasts but also for their heavy use of fine dining, accompanied by purchases of high-quality wines and liquors and even the traditional Davidoff cigar. T e l e p h o n e . The telephone department loves business travelers. With the advent of the facsimile, telephone use has gone up further, as guests often precede a fax with a call advising of its transmission (and may call yet again to ensure its delivery to the proper individual). L a u n d r y . No one pays more attention to clothing than the corporate guest. Suits, shirts, socks, and undergarments are laundered or pressed daily. Express service is often used, yielding 50 to 100 percent more revenue. H o u s e k e e p i n g . Corporate clients' predictable schedules and habits, such as using exactly two towels and sleeping on one side of the bed, make them attractive to 44
executive housekeepers. They create less work, and it takes up to 15 minutes less time to remake the bed and clean their rooms than those of vacationers. M i n i h a r s . Minibar supervisors also love corporate clients, with their almost compulsory late-night consumption of liquor and snacks and their unfailing desire to quench their thirst at other times of the day. Bell service. Corporate clients are clear and concise about their needs. Unlike holiday guests, they do not spend half an hour asking questions about each brochure in the information rack. Consequently, upon rendering a service to the business traveler, the concierge or bell captain is free to get on with the job of reconfirming airline tickets, booking limousines, acquiring theater tickets, and the like for the hotel's more-demanding guests.
Filling the Gap Observation City's managers had identified the gap in their market, determined the client base best suited to filling that gap, and identified the reasons those clients would be desirable. The real challenge was to convince business travelers that they needed the resort as much as the resort needed them. Any operation that has dealt with the corporate market would realize the difficult road that lay ahead for Observation City's managers. For instance, in trying to attract the corporate traveler, sales representatives often deal with a third party, typically the traveler's administrative assistant, who doesn't want to risk offending the boss by changing the established itinerary pattern, particularly if the boss has been satisfied with past arrangements. Consequently Observation City's managers considered it essential to THE CORNELL H.R.A. Q U A R T E R L Y
establish and monitor direct communication between the hotel's agents and the corporate clients. That communication involved setting up surveys to define and analyze three aspects of the corporate market: (1) the behavioral patterns of existing corporate clients, (2) their needs and desires, and (3) their dissatisfactions with past travel experiences. The hotel used its own staff members as market researchers, thereby providing an unusual approach to market research, inasmuch as the industry norm is to rely on information from government agencies or to commission a private research organization to collect the data. The use of staff members provided for two advantages: (1) the efficient employment of available resources (existing staff members), and (2) the first-hand education of those employees in corporateconsumers' expectations, needs, and desires. The study identified deficiencies that Observation City was able to remedy. In the remainder of this article, we will discuss first the study and then the results.
Human-Resource Approaches When the hotel decided to pursue corporate travelers, its management knew that it had to offer far more than the necessary services, facilities, and environment. The only way to implement such a comprehensive approach was to make certain the staff members understood the travelers and to involve the staff at the outset. Management summarized the necessary change in mindset with the slogan "Think briefcase, not just beach." To determine the full spectrum of what corporate clients would
OCTOBER 1993
like to see offered, the managers gathered data through three streams: (1) a business-consumer survey taken at the central business district and at the airport terminals, (2) questionnaires given to travel managers and executives in charge of travel, and (3) observation of high-profile properties renowned for their corporate-client care. In conjunction with the survey, the hotel's human-resource department trained staff members to collect data. They were released from work and shuttled to the locations chosen for surveying business travelers. Virtually every staff member was involved in determining the factors necessary for a successful marketing plan for corporate clients. To administer the questionnaire, teams comprising a sales executive, a supervisor, and a section manager called on corporate travel managers in Perth and surrounding suburbs. The teams made appointments in advance and were clear about the purpose of the visit. The questionnaire was concise and was designed to be answered quickly. Department heads called on corporate travelers in other Australian cities with potential client bases. They also observed the operations of high-profile properties, particularly looking into the services provided for the corporate market. The hotel's managers were aware that the department heads, supervisors, and section managers were not experts on the corporate market. But they w e r e experts on their own departments, and they were instructed to augment the questionnaires with questions pertaining to their own field of expertise. Housekeepers, for instance, asked about cleaning
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When a hotel's management decides to pursue corporate travelers, it has to offer far more than just basic hotel services and facilities.
Photos courtesy of Observation City Resort Hotel and Radisson Hotels International
service, turndown service, what kinds of "good-night goodies" to leave on the pillow, whether to tidy desks, and what types of toiletries to offer. Thus each department obtained a detailed picture of the likes and dislikes of corporate clients. To encourage staff members to participate, the hotel offered an incentive of a dinner for two at one of the hotel's restaurants. The supervisors compilin~ the profile for each area were awarded a free night's stay in the hotel. When the research was concluded, the hotel set up training sessions to pass the information on to all employees.
Corporate Needs The primary data from the business-consumer survey, the corporate travel-manager survey, and the property observations revealed the necessary course of action for the Observation City Resort. In response to identified needs and wants, the hotel instituted a
business center, using the secretaries already on staff, under the coordination of the general manager's secretary. Equipment required by clients is rented from outside suppliers, thereby avoiding the maintenance and replacement costs of using hotel-owned equipment while still ensuring the privacy and security of in-room office devices such as personal computers and fax machines. Interpreters and additional secretaries are available from local companies dedicated to supplying such expertise. In most instances the hotel can provide those services within 30 minutes of a request (i.e., fax machine, translator, computer, and personal secretary), although certain requests for translators may require additional lead time. Expeditious handling of mail and messages should be high on the list of priorities for any fivestar hotel. Time is important to a busy executive and delays in message delivery are not tolerated. 46
The time involved in getting messages to guests was shortened, and a three-way notification plan was put in place that comprised a message light on the guest-room telephone, a computerJ"~ printed message in a sealed envelope slid under the door, and a duplicate message in the key-rack pigeonhole. Meeting and entertainment facilities were improved. Three guest rooms were converted to space for small meetings. The conversion was achieved without major expense or basic structural alterations, so that the hotel could easily retrieve the space for transient use if the meeting market did not materialize. Problems of transporting guests to downtown destinations in a timely fashion were overcome by rescheduling and upgrading the hotel's shuttle bus and promoting its "city to surf' slogan. The hotel began a combined marketing program with a car-rental firm. For a limited time the hotel offered a room and a car for the same price as most downtown corporate rooms alone. Changes were made in the existing Observation Club, an exclusive facility for guests on the top three executive floors. The breakfast period was moved to an earlier time, and the cocktail hour was scheduled later. Guests were permitted to invite two associates for complimentary cocktails. More international publications, specifically those relating to finance, were offered in the library, and a continuous, free refreshment THE CORNELL H.R.A. QUARTERLY
service of tea, coffee, and cakes was instituted.
Referral Network Not having the referral advantages of large-chain properties (e.g., Hilton, Hyatt, Marriott, Sheraton), the hotel had to seek another vehicle for networking. The key was to connect with similar independent properties in Australia's major cities. The selected properties had to be hungry for a piece of the corporate market and be already viewed by the corporate market as successful. As a result, Observation City joined Select Hotels and Resorts International. That referral group encourages like properties to work together in target marketing. Membership is by invitation only after inspection of the property by a committee of leading hoteliers. Also, the hotel joined the Utell reservation service.
Marketing Observation City's sales force had been set up primarily to serve travel agents in the local market. After the survey two account executives were hired specifically to serve the corporate market, and the hotel also retained sales representatives in Sydney and Melbourne. Corporate-client lists were established and priorities set in accordance with the research O C T O B E R 1993
information. The hotel undertook a direct-marketing campaign to major travel agents worldwide by sending out information on the hotel once a month for three months. Corporate Australia was not overlooked. The hotel offered a three-night package rate with the first night free for corporate travelers to sample the product. Corporate travel managers who participated in the research received two free nights if they paid for a third night. Management considered it important to demonstrate confidence in the product before expecting the market to have confidence in it. The hotel developed incentive programs to offer corporate secretaries or travel agents a reason for choosing Observation City over other properties. Corporate clients from other Australian states who make reservations are eligible to win a case of champagne and are entered in a drawing for a $5,000 diamond. People who make the reservations for the clients are likewise entered in the drawing, with no limit on the number of entries. The hotel selected high-profile business publications in which to discuss the implications of the research, and in advertisements in Australia's business magazines 47
and newspapers the property's name was listed as the Observation City Resort and Business Hotel. Instead of mentioning the distance from downtown Perth (18 kilometers), all brochures were changed to say that the property was only 15 minutes from downtown. For guests coming from Melbourne and Sydney, the change was significant, since it takes more than 15 minutes to travel 18 kilometers in those cities' heavy traffic.
Off the Beach In the past the resort's beachfront image had predominated in all publicity. Management now wanted to emphasize the hotel's proximity to downtown Perth and therefore commissioned aerial photographs that would convey that idea. The resort also worked on the growing perception among business travelers that vacations are essential to effective functioning on the job--regenerating mind and soul--and that business can be conducted even during a vacation? The results of the marketing program for the Observation City Resort and Business Hotel were conclusive. The effort garnered nearly a tenfold increase in corporate room-nights from 198788 to 1990-91, and that number increased by more than 50 percent in 1991-92 (see Exhibit 1). Moreover, the percentage of corporate room-nights went from 8 before the marketing survey to more than 40 four years later. By getting close to the customer, the property was able to fill its empty rooms and then some. CO 3"Are You a Power Player or a F u n Worshiper?," P A T A Travel News (Asia/Pacific edition), N o v e m b e r 1991.