ISM 158 Announcements

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ISM 158 Announcements

• Today Wyndham Case
• Project Team and Topic Due
• Stay behind at end if still dont have group
• I may ask groups to consider other companies if
  there are conflicts
• Quiz return

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Case Wyndham InternationalFostering High-Touch
with High-Tech
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Wyndham History

• High-end hotel company
• Business travel
• REIT Real Estate Investment Trust
• Changed to C-corporation (different tax
  structure)
• Founded 1981
• First one opened 1982 in Texas under Tramel Crowe
  Corp
• 1985 had 14 properties
• IPO 1996
• Already substantial total of 66 hotels
• Acquired 1997 by Patriot American Hospitality
• Real Estate Investment Trust

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Overview

• Wyndham attempting to establish itself as
  recognized lodging brand
• Restructured from real estate to hotel company
• Core strategy of new guest program called Wyndham
  ByRequest

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ByRequest Program

• Came about after govt scrutiny
• Slowing company down
• Needed to differentiate themselves to regain
  market
• 80 drop in stock value 1999
• Market change happening
• Customer access channels changing
• Internet-based services used to book lodging
• Many chains lumped into similar category
• Commoditization of lodging
• Rewards Program

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Program Details

• Customization to very fine detail
• Preferences
• Loyalty Points?
• Free amenities, snacks on arrival, local calls,
  internet access
• Training staff to look for customers
• Start with survey customer particulars,
  preferences
• Send preferences on to next hotel they stay
• Store all information in shared computer network
• First to allow cellphone reservations and
  internet access
• Used frequent flier programs already existing
• Other hotels
• Flier miles
• Points based system

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Differences

• Qualitative vs. Quantitative
• W strategy hard to quantify
• Soft experience advantage
• Other programs direct incentive scheme
• Liability vs. expense
• Financial difference in accounting
• Hotel managers more flexibility to make customer
  happy
• First to have many services hair driers,
  internet, cellphone reservation,
• Challenge of managing rewards
• Cash in free nights different location to earning
• Management difficult to give right incentives
  between locations

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Wyndham ByRequest

• Not points based
• Customized guest profiles
• Built on centralized IT infrastructure
• Integrate data from different sources, and
  disseminate to geographically dispersed
  properties
• Dedicated property-level personnel
• Integrated organizational structure
• Operate at majority of Wyndham properties

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Competitive Advantage

• Positive and Negative Aspects of program

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Branding

• What is the value of a brand in the lodging
  industry?
• Associate hotel with experience at previous hotel
  of same chain
• Cheaper hotel much more important for low-price
  customers
• We dont typically associate brand immediately
• More interested in amenities etc.
• Opportunity for brand to establish itself
• Very difficult to sustain advantage

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Franchising

• Different owners in different areas
• Rapid expansion, more capital through franchising
• Separate managers have different interests
• Individual profit to company without direct
  service
• Need system of standardization
• Used IT for this system
• Compatibility issues
• Conformity issues
• Each hotel built by different groups perhaps
  different name or previous owner
• IT infrastructure needs to be built together
• Increased business, marketing benefits for
  individual hotel owners reputation
• No freeloaders in this system
• Economy of scale
• Loyalty to Brand name

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Sustainable Competitive Advantage

• What barriers have been created?
• What others could be?

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The Analysis of SustainabilityThe Logic of
Barriers to Erosion and Response Lag Drivers
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Group Exercise

• Take the role of central management overviewing
  this program
• What additions/adjustments would you recommend
• What data would you like to see?
• How will you maintain any advantage?

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Our recommendations

• More amenities
• Business relationships
• Car rentals
• Other hotels
• Testing customer loyalty
• Does it work?
• Do customers come back?
• Add recommendation abilities in addition to
  survey responses
• Restaurants in area
• Increase advertising in tourist areas
• Tracking analysis
• Over and above service
• Increased flexibility for local managers
• High quality employees benefits, training