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Cover: Grounded in Service

Grounded in Service Hotels have been successful at making travelers feel good about brand loyalty
| By Bruce Schoenfeld | From Air Sick, Jul/Aug 02

On the weeks following September 11, the management of the Ritz-Carlton hotel chain met to assess the need to cut back services at their properties in the wake of lagging business.

It was no different from what the airlines were doing at the time. But because Ritz-Carlton is a brand name built on service, not price, the judgment was made that the chain couldn't afford to damage its equity merely to offset temporary losses.

"We don't sell a commodity," says Mark Ferland, Ritz-Carlton's vice president for sales. "Airlines are in the transportation business, but we're in the experience business. Our customers can book us sight unseen because of what our name signifies. So we chose to stay the course and continue to provide our customers with what they expect from a Ritz-Carlton."

In effect, they couldn't afford not to.

Neither could the Peninsula Group, which has taken advantage of the increasingly spare nature of air travel by allowing its customers to call or fax a dinner order from the Peninsula limo on the way in from the airport. The dinner will be waiting, in their suite or in the dining room, upon their arrival. Peninsula will also pack a travel-worthy gourmet meal for outbound passengers. "Something civilized to eat on the plane," says Teresa Delaney, Peninsula's North American director of communications.

In addition, the three North American Peninsula properties -- Beverly Hills, Chicago and New York -- have established a wardrobe storage service so that repeat guests can travel without carrying luggage.

"There's long lines at security, fewer in-flight meals -- the airline experience is much more difficult," Delaney says. "We want to be the hotel company that's constantly finding ways to make your life easier and anticipate your needs."

That will cost more than a Marriott or a Doubletree, of course, but to many consumers, it's worth it.

As a result of such service initiatives, hotel brands that cater to upscale business travelers have been able to avoid the consumer backlash that has plagued the airlines. "If anything, it's the opposite: our guests are grateful," Ferland says. He stresses that service features at Ritz-Carltons continue to improve.

Why can hotels pay for such innovations when airlines can't? Hotels aren't stuck with an outmoded price scale that makes travel during the Ford administration seem expensive. A room for $100 a night used to be a substantial psychological barrier. Then $200. Now it's difficult to find a well-appointed room of any size in New York, Los Angeles or other large American cities for less than $300. For Paris and London, make that $500.

But, unlike the airlines, choices in the hotel industry are available. The bargain chains offer a clean room, cable television, a continental breakfast and sometimes much more for a fraction of the cost of more upscale lodgings. The catch is usually that you must be willing to forgo concierge service, a full lobby and a prime location.

In addition, the hotel industry seems to come up with innovative ways to increase revenues every year and pay for such services. It's true that some of those innovations, such as $10 minibar beers, $2.50 local calls and $40 parking fees, are as loathsome to consumers as a crammed overhead bin. Others, such as business centers, spa treatments and gourmet restaurants, are à la carte amenities that a hotel guest can choose to use or not.

But all of them provide a way for a property to gain incremental income from customers, and not always the customers staying in the hotel. "We have day spas in commercial locations that rely heavily on locals," says Tom O'Toole, a Hyatt senior vice president.

Like airlines, hotels are selling a perishable product that vanishes at the end of each day. And hotels can't simply cut flights when travel slackens. Those buildings are there, waiting to be filled even as the loan payments are due.

Yet hotels have done a far better job than airlines of making travelers feel good about giving a brand their business. "Rational management and customer sensitivity don't need to be mutually exclusive," O'Toole said.

As a result, airlines live from hand to mouth while hotels can take a longer view. "We don't retire a hotel after 20 years," says Hyatt chief operating officer Ed Rabin. "It's a fixed asset, around almost forever. You have to look down the road."