Welcome loyal listeners, to The Accommodation Show! This week, we explore the world of loyalty programs.
The best customer is a loyal customer…
But far too often, we choose to focus on attracting new customers, whilst not looking after previous ones.
Understandably, you want to grow your customer base. But how do you keep hold of the people who are more likely to buy from you again? One solution is to create a customer loyalty program that rewards those guests who return and encourage them to spend even more.
But how do you create loyalty?
Customer loyalty isn’t just about offering discounts, or offering points – you are aiming to make your guest feel appreciated, and understood all whilst improving their experience. The answer lies in understanding your customer, which doesn’t happen by chance.
No matter the size of your business you can engage your guests in better ways, but the path to loyalty doesn’t happen by chance; it happens with great design and execution.
In today’s show, we have the special honour of welcoming Richard Crawford, Senior Director of Hotel Development at Marriott International. Richard joins us to discuss how you can leverage some of the best bits of Marriott Bonboy. He provides real-world examples of some of their loyalty programs and explains how they leverage their data to create powerful and personalized customer service experiences that reward their customers in ways beyond basic discounts. We also discuss the challenges faced by brands and how they can optimize their loyalty programs to become engines of customer engagement.
Transitioning from a successful career in private enterprise in Tasmania to international corporate life at the age of 40, today Richard heads up hotel expansion in the Australia Pacific region for the world’s largest hotel group, Marriott International.
Previously, Richard Crawford co-founded Tasmania’s internationally acclaimed Henry Jones Art Hotel, which under his ownership was Australia’s most awarded hotel, known for its mantra “black-tie service, with a blue jeans attitude”. Richard’s other former business interests include Thrifty Car Rental Tasmania, operating up to 600 vehicles, and wholesale travel company, Tas Vacations. Outside his private business interests, Richard has served as a Board member of The Skills Institute, Waterfront Business Community, Fahan School for girls, Tourism Industry Council Tasmania, and Tennis Tasmania.
Marriott International (NASDAQ: MAR) has more than 800,000 people and operates 8,000 hotels across 139 countries. The group has 30 leading brands, including Marriott, Sheraton, Ritz-Carlton, Westin, W, St Regis and Le Meridien. Illustrating Marriott’s rapid rate of global expansion, the company will open a new hotel – somewhere in the world – every 14 hours for the next three years.
In his approach to helping Marriott International achieve its growth mandate, Richard draws on his family business roots, and the tough lessons learnt in private enterprise, to contest the status quo with a pragmatic, outcome-focused attitude.
Creating successful loyalty programs can be difficult, but asking for the right information, creating simple and consistent offers and offering exclusive deals to targeted consumer groups will put you ahead of the competition and give you great results. Whether you’re looking to launch a new loyalty program for your brand or rethink your existing one, then this episode is for you.
Top things that we cover in this episode:
How to set up a loyalty program.
How you can ensure your discounts, offers and promotions are being delivered to the right audience.
How you can incorporate non-transactional rewards into your loyalty program.
How tech can help you get to know your loyal customers better.
How loyalty schemes can help you build a more sustainable and successful business.
Understanding what customers look for in a loyalty program.
Great customer loyalty program examples from Marriott.
Transcription:
Hello and welcome back to The Accommodation Show, we help accommodation owners like you get the knowledge and skills that you need to grow your business, improve your guests experience and increase your profitability.
Bart: Okay, everybody, welcome back to the accommodation show. I’m pumped for today’s episode because we got someone joining us from Marriott International. We’ve got Richard Craford on the line. Welcome.
Richard: Hi Bart. Good to be with you.
Bart: We’ve been in touch and we’ve been talking all things hotel development, franchising loyalty programmes and all the wonderful things you guys do over at Marriott. I’m excited today because we’re going to add some questions about loyalty programmes and why they’re incredibly important for hotel businesses right now. And it’s the future and sort of a bit of their evolution and that sort of thing. And you’re someone that’s going to impart a lot of knowledge, so excited for that. But before we get going, I love you to introduce yourself. Let everybody know who you are, where you are, where you’re from, and what you get up to in your day to day.
Richard: Well, thank you, art, for the introduction. Good to be with you. Well, I won’t start at the very beginning, but I’ll give you a quick synopsis. So I head up hotel development for Marriott International, which is the world’s largest hotel company. My remit is about 12 countries. So I’m based in Australia and I look after Australia and New Zealand and Pacific as far east as Tahiti. So I happily look after Bora Bora and islands like that. It is it’s a big job. Because our growth mandate is is probably the highest strategic priority for our business.
We’re a Wall Street company. We’ve been around 95 years, Mr. Marriott has just stepped down as chairman. He’s the second chairman in the 95 years and his son David has just stepped up to be the third chairman. So I’ve been with the company six years. It’s it’s just a wonderful place to be it is right now sort of the eye of the storm in many ways. We we have experienced some tough times because of COVID. But hotel development is just rapid right now. So we’re growing at a rapid rate.
We’re opening hotels still every 14 hours somewhere in the world, which is a remarkable run rate. My work before I joined Mariette was very much in private enterprise. So I had my own businesses in Tasmania, where I’m from, I owned what was Australia’s most awarded hotel, and that’s how I got into hotels. I knew nothing about them, by the way, but the HENRY JONES art Hotel, which I developed as one of Australia’s first boutique hotels and a trading Art Gallery, and I coined the phrase Black Tie service with a blue jeans attitude. And the whole ethos of that was to keep it real because I was kind of anti James ironically, I felt that hotels needed to be to be shaken up a little bit. We did that. I was only 28 or 30 at the time and then the owners of the casinos knocked on my door and made me a compelling offer and said we want to buy your hotel. My heart said no, my accountant said yes. And so I sold took a couple years off and it was actually about to go into politics at a safe state in the state election. And my dad said stop.
You’ve never lived outside of Tasmania. You’ve never had a job. There’s a big world out there. You should probably go and see if corporate world is for you because that might be something you regret. You didn’t try it and so I did that. And I’ve loved every moment of it. And as I said, working for Wall Street company gives me I feel a greater sense of achievement in many ways, doing that than I did when I owned six companies at one point in time with hundreds of staff and different interests across Tasmania. So it’s been a change a life for me but and a really exciting one for me and i’m excited.
Bart: It’s beautiful. I love that story. I love that you have the hotel history right and kind of building it from the ground up and understanding exactly how a business works before we get into working for such a huge company such as Marriott, so you’ve kind of lived and breathed it and you can understand and empathise with what it actually takes to run a hotel. All the way through now to actually how to I guess make money out of out of out of running hotels, which is which is crucial. I didn’t know that you you were on the verge of politics. That’s something that’s the key news today.
Richard: I might have dodged a bullet there but you know that at the time. You know, in Tasmania, they say, when you’ve made it in business, you do one of two things. You either go into politics or you buy a vineyard, and I wasn’t really into wine and politics was just something I was interested in. But I couldn’t have predicted that making that decision. And leaving the islands would take me to where I am today. And yeah, so sometimes you just never know but I was actually scared my private enterprise background. I felt would hold me back because I thought I was a one trick pony. I thought that I was good at doing stuff for myself and my family business and keeping dad happy in retirement. How would that translate to a corporate environment?
And I think a lot of your listeners and viewers who are small business people and owner operators are in the grind of their business and that’s where you feel comfortable but also it’s familiar, right? Because that’s what you do you get up early, you go to bed late and you work on your business. Does that translate to a company with 800,000 people? It can and I promised myself I would stay true to those entrepreneurial roots. And when I do deals, that’s what I call on every single day. And there’s only 100 of me around the world. Interestingly, those though we have 800,000 people, there’s only 100 of me and Marriott dotted around the world with a remit to grow our 30 brands. And most of those guys, they all come from different backgrounds. A lot of them are lawyers because it’s very transactional what we do a lot comes from not many from hotel space, actually but sort of more financial or legal background. And I just come from this sort of down and dirty small business background and I didn’t know whether it would fit .
Bart: I imagined that the the entrepreneurial spirit is incredibly important and that’s what’s got you to I guess hang around and to provide value to Marriot.
Richard: Yeah, I think they took a punt on me but to be honest, I didn’t expect that flew out from Hong Kong. It happened when your hotel people will remember a company called Starwood which was Sheraton W. St. Regis well Marriott International bought Starwood in 2016, the biggest hotel transaction in the history of the world $14 billion transaction. And Marriott realised that they needed someone all of a sudden in this part of the world. The guy that was previously looking after this was doing it from Hong Kong. And as we all know, Australians are very parochial. So a guy flying in from Hong Kong to try and do a hotel deal and disappearing for three months, six months, I don’t think was the right structure and the company to their credit, identified that and then sought me out flew out from Hong Kong. So if you’d like to talk to you, we’ve heard a little bit about you. And I thought that my lack of experience in corporate world will work against me, but my boss said, no, no, we need that entrepreneurial spirit if we’re going to grow at the rate that that our shareholders expect us to. When you’re a Wall Street company, you’re heavily scrutinised and that the price is a cracker. They saw that as an advantage. So I think I was lucky that they had that out. Look at the TOC own
Bart: I imagine that we’re going to cooperate it’s a lot harder to break rules, because you need a structure in place so that everything works and then functions in a certain way. But then the entrepreneur and you will be fighting against that and trying to make changes and be a little bit more scrappy, as you mentioned before, and to get things done right to get things over the line where if you’re used to sort of that rigidity, then you can’t make that progression or that development within the business and make the the real strides forward and break things basically.
Richard: Yeah, merriiots credit, they have put a lot of thought into the structure of the organisation and we’re a matrix organisation when you have so many people in it you have to be so the disciplines are very well defined. Is there is overlap of course, we’ve developed and legal and our design guys and of course, our operations guys, but development is is almost quarantined and said to one side by design, to make sure that we are nimble enough to get out there and do deals with hotel owners and developers to hopefully put our brands on those buildings. And I think, to Marriot’s credit, when you’ve been around 95 years, you’ve had time to finesse the structure of the organisation appropriately. And we learn all the time, because one thing I’ve learned through our success in recent years is acting local and behaving local is so important even though you might be a global organisation, you have to be very in tune with the local macro environment but also the people on the ground. So it’s difficult to do that if you’re based in another country. And I think the structure we’ve got here is is proving to be successful.
Bart: For everyone listening, one of the things I was very conscious of before I started talking to Richard was that when you’re opening a hotel every 14 hours, when you have as many brands as Marriott does, there’s just so many topics that we could potentially talk about today. And and saying oh where can we get the most value instead of provide a back and without becoming a sales pitchy? That because I don’t think that that’s much value to anyone at this particular moment. But there’s so much to be learned and when we talked before you it you’d started teaching me at different things about how things are arranged and how things are done. Now. There’s is a 30 brands how many brands are there at Marriott right now?
Richard: Yeah for our sins 30 brands so when Marriott bought Starwood effectively 17 brands bolted on 13 brands to become 30 Sounds like a lot, right? A lot of people would question whether you need 30. The reality is you absolutely do need 30 brands, when you have 8000 hotels. Of course they’re defined and you know, I hate to use an American ism, but it’s American company. swimlanes are really important for 30 brands and it’s not it’s not curious or unusual that you would need 30 brands to cover 8000 hotels, because we’re in the luxury space, the upper upscale space, the upscale space and the upper midscale space so you need that and of course, at the end of the day, we’re a brand organisation.
Customers go to hotels often because of the name that’s on the door. We have rusted on, you know, Ritz Carlton, loyal guests or St. Regis or Sheraton or W for the for the people that are perhaps fun seekers and want to be more energy. So each one of those brands allows us to offer something different in different locations. But the other thing is when you have such a large footprint. When we do deals with hotel owners and developers, we give an area of protection. So you know if we give a five kilometre or 10 kilometre radius around a Sheraton or Marriott Hotel, it means we can’t do another one of those brands in that same area. So we need another brand. In order to grow our footprint and the ultimate measure of success. There would be a couple of cities New York for example, in New York City, we have 100 plus hotels, in a 10k radius of Times Square. And in Shanghai, we just opened our 50th Hotel, and that that is for us the success because with 30 brands, we’re able to plan different hotels that behave differently and appeal to different demographics operating together alongside each other in one city.
Bart: So there are quite a few operators that have massive branding issues where they’ve got their portfolio of properties or that they manage it’s kind of desperate. Joining them by one brand that kind of doesn’t make sense. And what I always kind of tend to lean towards is to say hey, you need to focus on the avatar and the customer and who you’re targeting and what that journey is for them. And then that will help dictate what brand you want on the other side of it. But then what you can do and this is what Marriot does as Marriot married is the pillar in the middle of it all with the Marriott brand promise so no matter which of the brands you stay with, you’re still protected by Marriott’s core values, the mothership on there. Is that how Marriott sees itself?
Richard: Yeah, it does. But so the mothership is Marriott International, which is in Bethesda in America. That’s where Mr. Marriott offices and 3000 people in our headquarters. The company culture starts from there. It was born 95 years ago, it’s developed there but as you grow and spread your footprint around the world, the core fabric of the organisation very much is embedded in that headquarters scenario. We then make a promise of course as you say to our guests, and we have a million guests every night in our care. That’s a big responsibility which we take very, very seriously everything from, you know, fire life, safety to guest amenities, all those things for a million people every single night. Now, we think that there’s a huge cut. We know there’s a huge cohort of people that are attracted to the security assurances, particularly in today’s world.
The safety and the hygiene factors are really important and they associate that not just with our company, but of course with with a lot of international brands that have put a lot of resources, time, energy and thought into taking care of our guests. And when you go to one of our hotels with with that promise attached that gives people a lot of a lot of comfort. corporate organisations that are responsible for putting their guests in hotels know that we have very strong mandates on all those fronts so So yes, there is a promise and and I think our guests value that. The antithesis of that, of course, is the person that might be attracted to, you know, I’m gonna say generation one, Airbnb, who said, well, actually, I don’t need all those assurances.
I don’t need a brand. I’m happy just to rock up and grab a bed and there’s everything in between now now to Airbnbs credit, a lot more sophisticated than they were when they first started and they’re their market cap tells you that they are a behemoth. They are the biggest hotel company in the world by some measure, measures, not all measures. So so the guest not every guest values the the promise that we understand that. But by and large we know that most of our guests keep coming back again and again. The glue that holds it all together is Marriott bonvoy loyalty programme which has delivered on 160 million members globally.
Bart: What a great segue, Richard, if you can see where I was going with. Right so one of the things I think that I just want to just kind of close off that that that brand that kind of sits in the middle and those promises and I think that that’s something that I’m constantly rattling on about it to say hey, don’t be afraid to have multiple brands within your business, you might it kind of goes against what marketing sort of what marketers sort of say is you know it all you have to be one thing represent all this to everybody and doesn’t really work in accommodation because different groups of people have different needs, but you can bind it all together with a promise of some sort which is which is Mariott has done and there’s other organisations that are doing very well, but it is a fair amount of work to get to that particular point. But I guess what I’m saying is don’t be afraid to look at your portfolio and whatever you’re doing and say I need to split this up a bit. I need to have separate brands. You don’t have to lose there doesn’t have to be so much additional cost by building out extra brands. That’s what I’m saying. You can do it manner.
Bart: Yeah, I agree. I think I think you need both. But when I say both, I’m talking about this overarching set of values, culture, all the things that people in business understand and that for us is narrowed internationals, sort of footprint if you like what we’re known for, but beneath that, there’s got to be brands that take us into different places. One brand only will limit your growth. And I’m not suggesting for a moment that everyone has the capacity or even the desire to be the biggest in the world or but but I do know that every time I look at an opportunity, even though I have 30 brands, there might only be one or two brands.
That matches that opportunity. If I didn’t have that at my disposal, it would go to one of our competitors because airport hotels are different to Island resorts are different to CBD beatbox hotels, they are all different beasts that need to have a market response that’s intelligent. And that suits the building the location to market demographic one brands can never do that. For 1000 hotels, you might get away with it with 100 hotels, say or even the Sheraton brand which now has 414 hotels. That’s a lot of hotels for one brand. But we can’t take sherraton and everywhere because it does not belong everywhere. And where it doesn’t belong. We’ll put another brand it might be a Ritz Carlton reserve on an exotic island in my pet shop Bora Bora for example.
So without that breadth of brands we are limiting ourselves at a smaller scale. You know, a hotel company might have three brands only, but even three would give you a lot of variation to get into self contained accommodation or boutique or lifestyle. I hate that word, but it’s commonplace in our industry. So even adding one more string to your bow No, I’m not saying you have to have 30 Like us, but it does open up a whole new world of opportunity and growth if growth is part of your strategic mandate.
Bart: And then you would say that it’s imperative to have the mothership at the top that kind of the links it all together. So from a branding and marketing perspective, and so that guests understand that they’re getting extra value by also being having that sort of protection from the top.
Richard: Yeah, I think so. And for us the manifestation of that is Marriott bonvoy. Because even if you stay at a Ritz Carlton at the Sheraton Moxie a Western any of our brands, all roads lead to your Marriott bonvoy profile, where you get points for your loyalty, that that to us is the piece that really brings it all together to make sure that our customers with the travelling or business or for pleasure, know that they whichever one of those brands they’re staying with, they get the full benefits of the assurances we talked about but also those points and the loyalty and the recognition is not just about racking up points. It’s about whichever hotel you walk into of ours, saying Mr. Crawford, nice to see you again. Welcome back. We know that your status of your Marriott bonvoy Is this and for that you you get certain benefits on your stay and that recognition. Right particularly when you’re away from home on the road. is something we know people really value and that’s why Marriott we say we’re obsessed with loyalty. I’m quoting the boss, Mr. Marriott. We are obsessed with loyalty because we know that it works. And that that is really the foundation of of our recent growth and about about probably our next 10 years of growth for the for the business.
Bart: And there’s more and more companies that are moving into their space and getting very aggressive in terms of the way that they roll out their loyalty programmes and what they’re actually offering within their loyalty programmes that will you’re staying at a hotel and all of a sudden you’re ordering food and that’s part of the loyalty programme new buying credit cards and petrol and whatever else. So that’s a really fascinating space, which is kind of growing there. But let’s just can you give us a bit of a breakdown. For those that don’t know you started mentioning some numbers around how big this loyalty programme actually is? Can you give us a bit more about it and then what I love you to do or where I’d like to move towards is, is those key benefits to Marriott of having the loyalty programme because you say we can talk about our loyalties, grey people, Reebok and that sort of thing. But what does it mean to the brand to Marriott as a whole?
Richard: Yeah, it’s one of our most valuable core pieces of IP, but it’s more than that. It’s the central pillar now of our business and the reason for this is that every time we open a hotel, we know that within probably months 50% of room occupancy on any given night will come from our loyalty members, which is amazing statistic it what it does is it gives it underpins and safeguards the business in its early ramp up time to know that we’ve got this ready made cohort of customers that will follow our brands.
So it’s important to remember that Marriott is essentially a brand new company so we manage hotels, and we franchise hotels, somebody owns the building somebody else owns the building and the enterprise so when I’m pitching to win ahead of our competitors, Marriott bonvoy is central to that because I use that 50% statistic and say to the hotel owner, we know that we will have 50% of the room occupancy coming from 160 million loyal members and that is a very powerful statement to say that plugging in, we talk about plugging into the merit system delivers immense benefit in terms of sales, marketing, distribution, but I think increasingly, loyalty is the number one so the numbers mean something it’s not necessarily the fact that we have 160 million of them is how engaged they are.
They actually spend more money then than non members. They stay longer than non members because they value the experience with us. And all the while they’re being recognised the recognition and the reward that they get isn’t just room upgrades and maybe a free cocktail or whatever it might be. You know, recently I know, say recently, it’s probably a couple of years ago now, a very regular corporate guest of ours saved up all of his Marriott bonvoy points, not to use on upgrades, but to have a special moment and that was to have a game of tennis with Andy Roddick of Flushing Meadows on centre court. Now what an experience and that’s a money can’t buy loyalty experience that we can give to our guests that perpetuates their attachment to our brands, and our association with Formula One.
With man united with the Australian Open here in Australia. You know we have a corporate box where how tier one members will meet ash party and touch the trophy. I mean, it’s amazing is amazing stuff. This is well beyond a room upgrade on check in. This is where the ultimate loyalty experience takes you. And we’re just getting better at it all the time. We get excited about it because we see how excited Our guests are. Now that’s a global world tea system, right which is, which is really big and I don’t want it to sound like it’s out of reach. Because there are learnings from this for every single person in business.
If you own one hotel with 20 rooms, you can do a version of that. It might not be offering up and erotic forgotten tennis but but there are things you can do in house at the desk and his follow up to make sure that that guest wants to come back to your establishment because of that recognition and perhaps it’s something you do by touching them later on with something in the mail or an email. You know, I’m a bit old school starting to realise it 50 this year so I feel like I’m straddling old school and trying to keep up with what’s coming next. But I you know, a note in the mail a note in the mail from someone just had a really great, thanks for staying with us. I can’t wait to see you next time when you do come back. You know, there’s a drink on me or something like that. And I’m getting really granular but my point is, it doesn’t have to be this giant sophisticated Marriott bonvoy machine to deliver the same feel feeling an emotion because that’s that’s where the magic happens when somebody has an emotive response to your product and to your hotel, in this case, that is success. Beautiful. So
Bart: I think that’s a really important point. The being out of reach, right? So if we build a hotel if we get sort of within the Marriott system and grey, if our listeners there will only be dozens of people that listen to the show that will potentially ever be in that position to own a hotel right but that but then we’ve got you know, 1000s of people that are listening that that do have accommodation that are in the space and then they’ll they’ll be listening to this going. loyalty programme. Let’s do something. And in my experience, it’s very hard to the perception of what it needs to be is I needed to have points that needs to work like cuantas or marathon boy, I need to have all these points and then different tiers.
And then I need to offer all these things but then you find that getting that engagement with the person just falls over because they don’t see often enough or there’s sort of issues so loyalty doesn’t have to be driven by points as such. You can do it by doing exactly what you said by sending a letter recognising someone that stayed with you, over a certain number of times, recognising when someone’s booked a longer stay and saying Hey, okay, you’ve done this for your loyalty, I am prepared to do that. So getting customer data is I think, crucial if you are going to have some sort of loyalty type system so that you know who your customers are because you’re not going to remember it all you need the data so you can see them coming back and then encourage them to come back and to stay loyal to you. Are there any other tips that you would have that Mike, it’s kind of going against what you do but but that might fit in that you guys have learned say hey, how else can we sort of start some sort of loyalty system with with our guests and let’s say it is two or three hosts more hotels or or or 30 keys or something like that?
Richard: Yeah, I mean, you’re talking about you said the word recognition and that that’s that’s got to be the essence of what a loyalty programme is about. Reward is definitely part of it. You know, the points thing, but we all remember, you know, in the 90s when everyone was wallet was full of meaningless loyalty cards, everyone was handing them out whichever shop you went said we’re gonna give you a loyalty card. And people it just became ridiculous because most of these programmes were not personal.
People didn’t feel engaged or that emotion that I mentioned before. So I think first of all, it’s got to be meaningful, capturing data is the starting point. You have to know you have to have a system that recognises who your most profitable prospects are your most regular guests. So that the system tells you this is their 10th day. This is their 10th night. Well, this is 100 Tonight, and we have many, many of our loyalty members who are with us 100 nights a year. It’s a long time to be away from home. Those people need we need to know that our system needs to be telling people to check in. This is that person.
So any system can do it. You can use an Excel spreadsheet if you have to or a piece of paper but you’ve got to start with this premise that knowing who the person is when they walk in the door. And we all have experiences in retail, we go back to the same place time and time again, or hospitality venues even. And we’re not recognised after the fourth fifth 10th time. You want to be recognised, but they don’t have systems in place because retail is that this so transactional, that they’re probably not focusing on the number of times the same person comes back because in a shopping centre that focused on the million people that are in the centre. I think the answer lies in the intimacy of it. And if you are a small hotel there is you’re probably in a better position than than a busy retail or in the middle of a shopping centre to capture and understand that guests because you’re the one eyeballing them. And you should have systems that are that can be basic, but definitely understand who that person is. Then the journey stops.
What will you do once you’ve got the information? Of course there are some technical issues you have to have authority to communicate with them by privacy law says that we have to do that. That’s easy to do. That’s a ticking of the box. And then you can engage with them in a way that can be as simple as free Wi Fi if you’re not already doing it for for a member or for someone that’s recognised as being one of your most regular guests. And I think that free Wi Fi is actually a good example. That’s where most loyalty programmes started. It’s like, hey, sign up, and you’ll get free Wi Fi on your on your first day. Now that’s kind of a given now, right? But that was one way people people captured information and made people engage with the hotel or the company.
So they were attached once you’ve got them attached. The opportunities are endless. And as I said, whether it’s a note in the mail from a bed and breakfast, had to say thanks for your 10th Stay, or whether it’s that huge reward of the game of tennis with Andy Roddick or a box of the Australian Open hospitality then everything in between is up for grabs. Use your imagination, but allow us say think of yourself as the customer.
How do you feel what what really satisfies you when you say that was a great purchasing experience? And more often than not, it’s people using your name. It’s people recognising that your return guests, it’s nice to see you back again. Mr. Craford. Last time we had you sitting over here tonight. We’ve got you this seat in the window. Wow. And we’re all human beings. And we’d like to be touched in that way. I’ll go back to that restaurant next week. If I’ve had that service.
Bart: So the research says that we that experiences what people respond to more and they’re willing to spend a lot more money on so if you’re buying a new iPhone or a pair of sneakers, or you know, some sort of a product, your response to purchasing that experience and that engagement is just so so much stronger than getting a whatever So, from what you were saying as well something to take note of is getting giving away a free bottle of wine. The personal touch with somebody, the one that I’ve seen recently done more and more is the free happy hour for an hour right? So it’s probably worth the same as a bottle of wine, but now you’re actually interacting with the guest and you’re seeing them and you’re giving them some sort of an experience and done the same thing. You’ve just took them out of their room into a common area, right? And then they excited and then it might be even more direct so so you do well anyway out of it. So that’s something that’s really important with loyalty programmes is that we think of it like creating the experience, not just freebies or 10% offs and things like that. I don’t think that they’re as effective is to maintain that loyalty. Would you Would you agree with that thinking?
Richard: Yeah, I do. I think you have to be careful that you’re not seem to be just giving stuff away to woo the customer because that kind of cheapens the entire platform. So one of the technical things we do we the app, the mobile phone app, the Marriott Bonvoy app is the most user friendly. I’m not a technical person, but I love it. It’s got like a fuel gauge at the top that shows you how many nights you’ve stayed and, you know, it’s easy to use. It’s easy to book Shoji history, technically, it’s great for receipts and making sure you pas on top of all the stage you’ve had. It’s just great.
So I think giving someone a tool that that is is wrapped up and connected to that loyalty programme is sort of a tangible way that you make it happen because next time they go to book, it’s only a fine, they know how to use it. They’re watching that gauge go up of how many nights they’ve stayed. And that’s that’s well beyond this idea of just giving them something on check in. And I think hotels are pretty good at this. You know, we will check into our room and there’s a note in our room from the general manager. I hate to see those notes that are just template typed things that that to me is a fail, because it is not genuine. It’s it actually works against the whole concept. So you’ve taken the time to put a note in my room, but you haven’t used my name and it’s not him. It’s not him sign.
This is the old fashioned part of me coming out right. But imagine that note, handwritten that mentioned is that we know that it’s your birthday next week, Mr. Crawford little whatever. But we know that you’re travelling on leisure for this weekend as opposed to previous corporate stay. We hope you have time to enjoy this bottle of wine that you mentioned, the bottle of wine is still a good thing. And people still want it. People still like those things, but it’s how you deliver it. And it’s that recognition of the personalization that I think is the magic.
Bart: And I think time is moving very quickly. So I’m only gonna ask a couple more questions to try to tie things off. When we’ve got the staffing, right so we’ve got obviously we’re building a loyalty programme and we think we’re building loyalty and, and I think that the one nice thing that’s come out of this episode is we we’ve talked about loyalty programmes and Marriott bonvoy. And our say, Well, yeah, there’s that but it’s all on the foundation of loyalty. You said that comes from Mr. Marriott right away. That’s one of our core values, and it’s important to us. Then, so you’ve got all the technical stuff and then you’ve got your staff that you need to train and kind of have them inducted in that philosophy, right. So that goes beyond all the technical stuff. That’s all also the way that you actually train people.
Richard: It is and that’s where the whole thing can fall over. Let’s be honest, you know, we can talk, we can have a business plan that says this is how it works. I can talk to you today about the value of loyalty and how it all works. But if it doesn’t flow through the guest experience every single time then you put the entire structure at risk. And when I had my little hotel, which was the the black size, black tie service with a blue jeans attitude story, I made sure that I did an induction that I didn’t work at the hotel I had a fantastic general manager who lived and breathed
my vision. But I would absolutely every month, go and make sure that I sat down with all the new staff and talked about the things that were important to me. And what made the hotel different. Why the prime minister would stay with us one night, and the GM would dine with him but the GM would go surfing with another guest who was on there.
Who some of the most expensive holiday ever the next morning, and this flexibility and this this idea and understanding that we’re in the hospitality business and every guest is in our hotel for a different reason. That to me is where I think empathy comes from understanding comes from genuine authentic customer service comes from because it’s customer focused. Each one of those people I just described needs something different from us. And if we don’t recognise that, then then we fail and if we don’t look someone in the eye and check in and use their name and smile, everything I’ve just said this entire global investment that we’re putting into a loyalty programme is at risk of people saying, well, why am I a card carrying member? When that’s the service I get? And that’s the risk to all companies. When you go out on a limb and say stick with us because we’ve got you one file can undermine that entire promise.
Bart: I would be remiss not to go into the final part of what I wanted to ask you about and that’s just around sort of return on investment, the money side of things that the duty part I think a lot of people want to know about and hear about. You mentioned that you get 50% of clients being bonvoy clients or guests. Does that mean if they’re Bomboy guests does that mean they’re not using an OTA to book is that is that that kind of metric? Or is it they use the OT as well as?
Richard: It’s a great question, but because this is the real magic. At the moment, something like 74% of marriage international bookings globally. Come to rip through on channels. Right. That might be the app that I spoke about the website, our call centres, and that is that is an enormous number because it means our reliance on third party aggregators, and OTAs is less prolific than if you were a standalone Hotel. Trying to take your single hotel to the world. Often 50% of your business will come from those online travel agents. Now they have an important role to play and we have an excellent relationship with those third parties because they are very important part of our business mix. But we’ve recognised we don’t want it to be 50% of our business. We want it to be a certain percentage of our business.
At good hotel has a sound waggon wheel of business mix. online travel agents represents a part of it, but the bulk of it should be direct channels to be to be successful because the cost of sale is what matters. I often say anyone can fill a hotel anyone? I didn’t I had no idea about hotels, it was called the Internet. You put the rooms online and you sell one. The art form and the skill and science to all of hotel success is the average room rate you can command for that room. So for selling it’s easy, but getting a premium is the hard bit. Then there’s the cost of sale. But where do you get your business from? If it’s costing you 25% Every time or 30% Every time you sell a room? That’s That’s an enormous, enormous part of your business. If the mix is out of whack, imagine a publican at a hotel if he was losing 30% On every beer that he poured. That’s the profit gone. So you need to monitor that loyalty is the Trojan horse if you like of getting people to connect with you directly, and if it’s 74% of your business coming direct to your website, or your phone setup, or your app. That’s a very, very good financial outcome.
But I won’t touch on the cost, right because this this multi thing does not come for free. Yeah. Our model is quite simple every time a hotel guest a bonvoy gift stays and what about hotels, three or 4% depending on the brand, three or 4% of the room charge goes into a pot of money. And if you’ve got a million guests every night, and we know that say half a million of those are loyalty members, three or 4% of that is going into a pot of money.
And it’s not a profit centre. But what it does is that huge pot of money that’s building up over time is what’s used to fund the redemption nights when that loyalty member goes to stay at the Ritz Carlton Bora Bora, St. Regis Bora Bora, I should say. There isn’t a Ritz Carlton yet but we try St. Regis Bora Bora, then that’s not a free room night because we don’t own that room. Our hotel owner owns that room. So out of that pot of money. We pay the hotel owner out of those three and four percents that we collected to pay an amount for that room for the guest who’s paying nothing. And that’s the circular beauty of of how it works.
Of course a component of that pot of money, then goes to do things like sponsor Manchester United football club, to sponsor the Australian Open and then the the logos get put on the avoiding around the stadium and all these things happen and it perpetuates interest in the brand and our hotel owners benefit from that, because people see the brand up in light. Everyone wants to be a part of it. And the cycle continues.
Bart: Fascinating. fascinating to hear about that pool of money going back in like a percentage cost or percentage amount that it’s gonna go back to reinvest. And it’s kind of like a marketing tool for you guys to run that programme for a small business two to 3%. Is that the right number or do they do we need to go a little bit harder because we’re small and we’re not going to have that leverage of volume?
Richard: Yeah, it might it might be 5% Bart, I don’t know. But if you were to start with a blank piece of paper and a 20 room hotel, and you want to create a loyalty programme, I’d be putting a little bit call it 5% into that loyalty fund if you like, and then over time, because you’re not you’re not going back to give everyone that stayed something right. You every one one in every 100 people perhaps he’s going to get something from you whether you use that fund to to give them a reward pay for the dinner give them a free room night.
So I think it’s it can be notional as well. It’s almost it’s not necessarily a cash in cash out or keeping exercise. It can be a notional, but in your mind if you if you’re setting it up, I think that’s that’s sort of the amount 3% number in the old days people see, contribute 3% to marketing, but now I’m sure that was 30 years ago. I’m sure it’s not 3% But maybe a loyalty programme. You know, it’s 5% and it’s notional. And you know, somehow you need to re re engage with your customer base to that extent, and how you do it, as I said before, use your imagination. Sky’s the limit. Beautiful look.
Bart: I think that brings us to to the end of the episode. So is there any other points or anything else you wanted to raise before we close this one out, or are we we get to go?
Richard: I think I hope we’ve covered things that are of interest to your audience, but hotel worlds. It’s been a challenging time, I think it would be remiss of us not to acknowledge that but well travels back. It’s so exciting, you know, a year before COVID I had 110 flights, I think and you know I will never travel to that extent again, and I think a lot of the worldwide a lot of corporates will won’t travel to that extent. But it’s enjoyable to be back on planes again. It’s great scene for restaurants and for the airports we’re having we will have a record year at some of our properties in Australia in 35 years of operation this year will be their biggest year. How remarkable. And when you consider how tough it was so you know a shout out to everyone who operations land, because I’m not in that world.
And I know you guys did a really really tough at the coalface every time I walked into one of our hotels and sometimes I got a feeling I was more in the hospital than I was a hotel. None of us signed up to that and it was really tough. We were the only international operator not to close any hotels in Australia. We had although quarantine hotels. Our resorts actually did well because between lock downs people just flock to them and wanted to sit by the pool or get room service. So if we saw we learned a lot through COVID There’s a couple of themes happening. People do Renee songs of domestic travel is genuine is a real thing in Australia. I was in Northern Territory last week, and gosh, it was good to be there. And I remember in the 90s When the Germans came and Kakadu was a brand and everything was amazing up there that’s kind of come back, but it’s got Canada for sure, because people are holidaying at home that they’re not yet ready to really explore the world perhaps like they did before. Australia will be first and they’re spending more money than ever. And then I’m just I feel I feel really excited because we’re out of what was a really difficult time.
Really particular time when you’ve got 800,000 staff in our business. You know, we had, sadly we had staff many staff who passed away because of COVID many guests who passed away because of COVID. And those conversations mean so much more than the financial impact, and it’s not lost on our business. You know, we now see though, that dark times honest, and we’re seeing some really really exciting things happening in our industry and personally it’s kind of in a really odd way rejuvenated and I’m excited to do more deals bring more brands across Australia and elsewhere. I’d like to today’s be of some benefit to your audience.
Bart: I look 100% has been in benefit. There’s just so many tidbits so many takeaways, so much experience that you have and what I love about this show is we can put a lens on from different angles and everyone’s got their own experience in life. And they can genuinely if they’ve got passion about whatever they’re doing, they’ll generally have something really clever and interesting to say and pass pass along and from the position where you said it’s incredibly valuable.
So thanks a lot for taking the time for joining us and for getting on the accommodation should we really do appreciate it. For anyone that’s listening make sure that you give us a like give us a follow. It means a lot it lets us bring awesome guests like Richard on to the show. Make sure that if you have not stayed at a Marriott Hotel, check it out, download the app, getting get engaged, get involved, and see what they’re doing because it’s really purpose done. Thank you once again for joining us. I do really appreciate it.
Richard: My pleasure, Bob. Take care
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