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ISM 158 Announcements. Today: Wyndham Case Project Team and Topic Due Stay behind at end if still don’t have group I may ask groups to consider other companies if there are conflicts Quiz return. Case: Wyndham International Fostering High-Touch with High-Tech. Wyndham History.

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ISM 158 Announcements

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ISM 158 Announcements

  • Today: Wyndham Case

  • Project Team and Topic Due

    • Stay behind at end if still don’t have group

    • I may ask groups to consider other companies if there are conflicts

  • Quiz return


Case: Wyndham InternationalFostering High-Touch with High-Tech


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


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


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


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


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


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


Competitive Advantage

  • Positive and Negative Aspects of program


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 don’t typically associate brand immediately

    • More interested in amenities etc.

    • Opportunity for brand to establish itself

    • Very difficult to sustain advantage


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


Sustainable Competitive Advantage

  • What barriers have been created?

  • What others could be?


The Analysis of Sustainability:The Logic of Barriers to Erosion and Response Lag Drivers


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?


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


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