Misguided loyalty program benefits and iPads in restaurants – some observations during recent travels

Having come back from a trip to the US over Chinese New Year there were a few things that I noted during my stay in (and around) a beachside 5-star chain hotel. 

As a loyalty program member, these days I get free Wifi internet access in most chain hotels which is much appreciated, and I did so in this one. Unfortunately, finding that the connection quality was substandard to outright pathetic certainly didn’t make me want to come back in a hurry. As survey after survey measuring guest expectations confirms, hotel guests consider free Wifi access close to mandatory. Restricting it to loyalty club members is a start in the right direction towards the inevitable free-for-all model that will eventually take root across the industry. But if you position free Wifi as a value add to loyal customers you need to ensure you deliver a quality product. If it is substandard, members will not feel that their loyalty has been rewarded - on the contrary. My guess is that non-loyalty members will appreciate free Wifi, even if the connection is slow, precisely because it’s free. But to offer it as a service for premium customers and deliver a substandard product is counterproductive. 

And if hotels in holiday locations defend their weak connections with the notion that their clientele is mainly concerned with surfing the waves rather than the internet, think again. Aside from just about everyone now having a connected device that demands to be, well, connected, hotels in holiday destinations are increasingly popular for off-site business meetings, conferences and the like, which attracts an even more connected type of traveler with a very different agenda during their stay. 

While we’re on the topic of loyalty club privileges, another thing I found mindboggling during my stay was the so called VIP breakfast room offering free breakfast for the two highest-tier members. It was little more than a feeding station that offered cereal (fruit loops…) pound cake, boiled eggs, cut up fruit, tea, coffee and juice. Cutlery and crockery was plastic (!!) and it finished at a miserly 9.30am, an hour before the ‘regular’ chargeable breakfast, lest you get too comfy and eat too many boiled eggs. If this was supposed to make me feel special and enhance loyalty, it utterly failed.  

Back on the technology front, and outside the hotel, I noticed how iPads have now well and truly found their entrée into the hospitality world. We went to two restaurants that used the iPad, one as a full written menu replacement, the other for the wine list only. While it is a great concept and looked very appealing and was fun to use, the two restaurants let themselves down by poor execution and not utilizing the device’s real possibilities. The restaurant that  tabletised the full menu let you dig down and view a photo of about half of the dishes, which made a great difference to us and we ended up choosing one dish that we wouldn’t have ordered if we hadn’t seen a photo of it. For the other half though, there was nothing, not even an extended description, which was doubly disappointing after having seen photos of the other dishes. 

The wine list-only tablet was even more disappointing. Instead of delivering in-depth information on the grapes, tasting notes, producers and terroir, it provided nothing more than the info you would get on a normal, printed menu. Handled like this, tablets in restaurants and hotels are nothing more than gimmicks that have a very short-lived appeal. To really make the most of the technology, the tablet-based menu needs to be a clear improvement to the printed menu. More descriptive information on the produce and preparation, photos, interactive maps, even videos of the chef at work, the region where the wine comes from or an interview with the wine maker – the possibilities are endless. And all of these value added services will not only ensure that diners are well informed, but they can be a powerful marketing tool that will entice your customers to come back again and again. 

The tablet is first and foremost a visual device and users expect exactly that, so hotels and restaurants offering this type of service should do it properly or not at all. One of our recent hotel customers understood this and made the wise choice not to add in-room dining as a function for their iPad-enabled service until they had the appropriate visuals to go with it and make the service appealing and useful. Smart choice.

To charge or not to charge... hotels’ dilemma over Internet access fees

There’s a lot of discussion out in the cloud about Internet access fees hotels are or aren’t charging and what the potential pitfalls are for those hotels that are seen as overcharging for access to the online world. As with many other issues that touch on the sensitive part of you parting with your money, there’s more than just one side to the story.

One of the points I find missing from the current discussions is behavioural conditioning. Of course, everyone wants a good deal, but the “everything is free” culture that now dominates the Internet has entered many aspects of life and this mindset, once ingrained, is difficult to change. The earliest culprits responsible for this development were the telcos who happily introduced all-you-can-eat broadband data-plans which encouraged people to download anything regardless of its bandwidth. However, regret followed swiftly when video overtook email and surfing as the largest consumer of internet bandwidth. This was amplified by the recent onset of serious gadget-lust triggered by smartphones and tablets. So it’s not surprising that we now see telcos far and wide wanting to withdraw their generosity and shepherd users back into the user-pays model.

These issues have of course serious implications for the hospitality world. Free WiFi has now shot past complimentary breakfast as a “must have” according to a 2010 survey of 53,000 US travelers (although I would argue that in Asia it’s still the other way round), indicating that we now regard basic internet access much like the complimentary water in the room. While free Wifi access has traditionally been the domain of newer and smaller hotels where infrastructure and bandwidth demands are relatively smaller, even luxury hotels, particularly here in Asia, are starting to seriously respond to this trend. In recent months, most of the big luxury chains have added free internet access as part of their loyalty programs, which are usually free to join, such as Marriott’s, while Shangri-La Hotels and Resorts even went one step further and now offers free WIFI and wired internet to all guests regardless of loyalty membership.

While this Free to Guest (FTG) internet trend casts a medium to long term disruption to HSIA hospitality service providers whose business models rely heavily on internet revenue share, hotels have a number of very good reasons to pursue this approach. Some of the hotels we have spoken to confirmed a greatly reduced complaint rate since introducing FTG, implying that people are less likely to complain about even slow or patchy connections if it is offered for free. This of course reduces the need for support resources and thus has an impact on overall costs. Another reason is brand equity. A large luxury chain’s brand essentially represents the overall guest experience, so FTG internet can become an important part of the hotel’s brand equity.  

But it’s at the point where usage patterns accelerate from surfing the net and emailing to streaming movies and doing video conferencing that internet access moves from a marketing tool to a much more complex issue. While using load balancing to move WiFi traffic across access points to even out demand may be a relatively simple way to keep Wifi free within reasonable bandwidth constraints, a tiered ‘freemium’ model where bandwidth usage up to a certain point is ‘free’ before charges kick in, may be a better way to address the problem of bandwidth heavy video clogging your network while still keeping broadband revenues on the balance sheet. This type of user-pays system mimics the one telcos have employed which has become very familiar to consumers and is likely to be readily accepted (I will return to the subject of tiered access in more detail in a later post). But either way, a chargeable service model will be unavoidable once OTT becomes a ubiquitous, mainstream content delivery platform, although this is yet a few years away.

Speaking of telcos though: if hotels are not already thinking about the issues above, they may consider that many mobile operators, particularly in Asia, are now offering prepaid data access packages for a fixed fee per day, even when roaming. During my last visit to Taiwan, I paid NT$700 (US$24) for voice and 5 days worth of 3G data access, which beat the US$15 per day internet access my hotel tried to charge me by several miles.

At the end of the day a hotel is a business and needs to make money for sure, but its raison d’être is to make guests comfortable, which may be a delicate balancing act when it comes to internet access charges, but one that I believe can be addressed with a careful look at the hotel’s strategy, infrastructure issues and brand values.