Loyalty Programs in Travel and Hospitality Sector and Key Role of E-CRM

The travel sector offers quite a few loyalty programs – some of which are quite well-known, and successful as well. Within this sector, the sub-vertical that definitively takes the lead in loyalty program adoption and innovation is the Airlines sector.

Airlines were among the first businesses to introduce loyalty programs to their customers. Frequent-flyer programs date back to early 1980s when American Airlines started the now iconic American Advantage (AAdvantage) program. Through the Sabre computer reservations system, American Airlines had amassed a database of around 150,000 of its best customers.

SOME THE INDUSTRY’S BEST CONTEMPORARY LOYALTY PROGRAMS

The Star Alliance Network is a partnership where frequent flyers can accumulate and redeem miles on the following airlines: United Airlines; Lufthansa; Air Canada; SAS; British Midland; Varig; ANA; Singapore Airlines; Austrian Airlines; Thai Airways; Air New Zealand; and Mexicana.

VARIG’s Smiles Program is the most popular frequent flyer loyalty program in Latin America. With Smiles, passengers can earn miles on every VARIG flight, as well as regional, domestic and international flights on Rio Sul, Nordeste, Pluna, South African Airways, Spanair, Alitalia and participating airlines of the Star Alliance. Miles earned can be exchanged for free tickets, upgrades and other benefits.

US Airways offers its members greater privileges through additional offers by its Dividend Miles program on travel on US Airways and its partners. The features differ for its three membership types – Silver Preferred, Gold Preferred and Chairman’s Preferred.

SECTION TWO: HOSPITALITY LOYALTY
INTRODUCTION

In the days of inception, the hospitality industry offered loyalty programs together with the travel industry. With time, as the airlines stated their own Frequent Flier Programs, the hospitality industry launched independent frequent guest programs as well. Holiday Inn was amongst the first to launch its own loyalty program, in January 1983 followed by Marriott with its Honored Guest Awards program in the same year.

SOME THE INDUSTRY’S BEST CONTEMPORARY LOYALTY PROGRAMS

The recent launch of “Any hotel, Any where” card by the InterContinental Hotels Group (IHG), the world’s largest and most global hotel company, is one of the best initiatives in the context of new age loyalty programs in the hospitality industry. IHG has recently added a new feature to its customer loyalty program: Priority Club Rewards.

Starwood Preferred Guest is another of the best loyalty programs in the Industry. The program made headlines when it launched in 1999 with a breakthrough policy of no blackout dates and no capacity controls, meaning members can redeem free nights anytime, anywhere.

Park Hospitality, part of Minneapolis-based Carlson Hospitality Worldwide, consists of Park Plaza and Park Inn hotels in North America. The hospitality group primarily offers services to a range of guests in suburban and leisure destinations. Park Rewards, part of the Gold Points Rewards guest loyalty program, is based on a point system awarding 10 points for each U.S. dollar spent on accommodations at Park Plaza and Park Inn hotels in North America.

Radisson Hotels and Resorts’ channel-based Relationship Building Loyalty Program, called ‘Look To Book’, has been very successful as well. Radisson is the only hotel company to offer a patented on-line loyalty program for travel agents, which allows them to automatically earn points towards valuable merchandise and incentive awards in return for booking Radisson hotels.

Hyatt offers a global loyalty program – Hyatt Gold Passport. Hyatt Gold passport offers features like earning points towards free nights with no blackout dates, selecting in-hotel services and special offers, beginning with the very first stay. The benefits offered are based on the type of membership the guest holds. The three memberships offered by Hyatt Gold Passport are Gold, Platinum and Silver, based on the frequency/ number of visits.

Hospitality industry in developing economies such as in India are not left behind either The Welcom Award program recognises the needs of a business traveller and through its strategic alliances with travel partners, endeavors to build rewarding relationships.

SECTION THREE: COMMON PROBLEMS WITH LOYALTY PROGRAMS, AND THEIR MITIGATION BEST-PRACTICES

While the consumer awareness of loyalty programs as well as the business priority accorded to them are both growing in tandem, the effectiveness of such programs, and the consequent ROI that a business generates out of them continue to be significant challenges. Here below are a few key areas that deserve focused attention of enterprises that are implementing or running such programs:

“7 out of 10 loyalty card owners own more than one loyalty card,” avers a recent Frost & Sullivan research. The problem out of this rampant loyalty card and loyalty program proliferation, researchers say, is that surprisingly few consumers know which hotels are covered by their frequent-stay cards, thereby missing out on earning hundreds, even thousands, of points. Blame it on poor communication by the companies or the sheer numbers of brands, say the experts.

Traditionally, customer relationship management focus in hospitality has always began and ended in one phrase: “customer satisfaction.” The presumption is very simple: Customers will appreciate good service so much that they would not go to your competitor. In other words: Customer satisfaction plus quality of services equals customer loyalty.

The truth is that customer satisfaction does not always equal customer loyalty.

Research shows:
• 40% of satisfied customers switch hotels without hesitation (Forum Corp.)
• 65% to 85% of customers who choose a new hotel claim to be satisfied and very satisfied with the
former one (Harvard Business Review)
• 85% of customers claim to be satisfied, yet willing to switch to other hotels (University of Texas).

These are compelling numbers, clearly indicating that even for the best-of-class service provider hotels there is a crying need for focused and ongoing relationship building and relationship deepening exercises with their key clientele.

Electronic customer relationship management (e-CRM), in the context of the exploding Internet distribution and marketing in hospitality, is a business strategy supported by Web technologies allowing hoteliers to engage customers in strong, personalized and mutually beneficial interactive relationships, increase conversions and sell more efficiently.

This means that almost every time an Internet user lands on a hotel Web site a branding interaction occurs, thereby creating either an opportunity, or a threat, for the hotel. This branding interaction can be positive (brandbuilding) or negative (brand-eroding).

A. Customer Knowledge

Knowing your Web site visitors is an extremely important consideration when conceptualizing and designing your hotel Web site and your e-CRM strategy.

The 2004 RUSH Report shows:

• 56% of all visitors on hotel branded Web sites are leisure travelers and 32% are business travelers. Approximately 3% of hotel Web site visitors are involved in meeting or event planning.
• 34% of all visitors on hotel branded Web sites seek information about the hotel, while 30% of the visitors come to make or change a reservation.
• Business travelers look for directions and high speed Internet.
• Meeting planners look for function room floor plans and capacity charts.

The benefits:
• Identifies your most valuable customers with best lifetime value perspective (20:80 principle)
• Allows guest-centric data mining: Guest history, guest profiles, past bookings, preferences, etc.
• Enables informed decisions in real time
• Allows fast response times
• Offers real-time guest lifetime value
• Delivers business insight to executives, marketers, sales

B. Personalization
Personalizing the customer experience on the hotel Web site is a powerful conversion and retention tool. Customizing your interaction with your most valuable customers (those 20% who generate 80% of your business) will provide significant long-term rewards.
Personalization at the property level should start by:
• Identifying all “electronic touch points” with your customers (hotel guests, meeting planners, travel professionals, etc.) and creating an action plan.
• Personalize all electronic communications with your customers. Adopt a policy on how to address your guests via e-mail (first name only, Mr./Mrs. plus last name, etc.).

C. Customer Support

It is important to understand that customer service is only one aspect of e-CRM and is primarily a reactive function aiming to improve performance and efficiency, while e-CRM as a whole is a proactive long-term strategy.

Customer support in the Internet age relies on a wide range of tools and techniques. Here are some to consider:
• Web Self-Service Tools: Intelligent service channel management and natural language search engines; directing customer requests to most appropriate support information and services; FAQs; “Ask the experts” self-service chat rooms; interactive maps, directions and business locators.
• Live Service Tools: Push-to-talk functionality and real-time interaction with live agent; instant messaging and chat-room type assistance; Voice-over-Internet Protocols applications; and automation to pre-screen live support (selective approach).
• E-Mail Service Tools: Inbound e-mail management; and automated e-mail response systems capable of automating 80%-90% of e-mail volume with 98% accuracy, dramatically improving service and reducing support staff by up to 40%.

Save Big On Your London Trip By Proper Planning And Research

If you are a true adventurer at heart, you will want to plan and organize yourself the family trip to London you are thinking of. If you do not have time or do not know how to use the mouse and go online, then you will have to rely on your travel agent. Unfortunately, in such case your choices will be limited to what the agent will arrange for you. He or she may give you some brochures or can give you some London travel tips, especially if they went to London themselves.

But you and your family members will have much more fun if you try to prepare DIY vacations in London. In most cases it will cost you less and you will have double the fun – both during the preparations for the trip and when you actually get there.

It is important that you involve in planning and preparations all members of the family that will go with you – especially the teenagers! They will feel important, they may provide you with interesting input and the whole planning task will be a very useful educational job for them.

Most importantly, you will know what the expectations are learning about them will help avoid future disappointments and quarrels when you come to London. Such as about where to go and how to get there – e.g., going to one more museum or to do window shopping at Stella McCartney’s store, or whether to have a family meal at a pub or an ethnic eatery. Or other strategic issues, such as when to wake up, when leave the hotel and when to go to bed. It’s good to agree on that ahead of time and even put that in writing.

You should start the trip planning process by having a family meeting. Do brain storming to find out what the expectations about the trip are. Put in writing all of the ideas for the best London trip you would like to have. Start a London trip planning binder or folder and bring it to that meeting. You may already have some pictures and articles downloaded from the Internet and brochures from local travel agents.

By the way, I guarantee you that in the future you will appreciate having your stuff neatly gathered in that binder. It will be convenient and time saving and you will have quick and easy access to everything related to your London trip. You may even take the whole folder or at least part of it with you – to London.

Now, another smart move is to split the planning and research between family members – e.g., somebody works on finding the best airfare and accommodation, the other person plans the sightseeing itinerary and another one (if applicable) works on moving around the city and finding best shopping and dining. By doing that you will get everybody involved and excited during much longer period than the week you will be spending in London.

What is the best way to conduct your online research to prepare your London trip? Most of the people would go to Google and rely on that most popular search engine. It is true that you can be just fine by using it and its other popular products – like Google Earth. Some people say they do not have to travel to the UK; they can visit every corner of London with the powerful Google Earth program! Another excellent Google product you will find useful is Google pictures – it will help you easily recognize the London landmarks when you land there.

But I would like to suggest that you also use another search engine for your London trip research and planning. It is called Clusty – [http://clusty.com] – and it uses clusters – a bit different technology and presentation of search results. I found it very useful and convenient and use it a lot.

While doing your online research, use a methodical approach – create a folder in your Favorites, you can call it “London Trip” or something like that. Divide it into a number of sub-folders (e.g., Flights, Hotels, Museums, Castles, Entertainment, Dining, etc.) and save your most interesting findings accordingly.

The other good idea is to print the most important things and keep them in the trip folder for easy access.

Those are some of the most important planning tips that will make planning of your family trip much easier. If you use them, you will be well organized and as a result, you will save time and possibly money too – it will be easier for you to find great flight and hotel deals. Moreover, by making your preparations in such a methodical way, you will have all the bases covered and instead of unpleasant surprises, you will have a lot of fun when you finally get to London.

How to Profit from the Oil Price Forecast

Moors says the most prudent way to benefit from rising oil prices is to invest in a basket of oil services stocks via an exchange-traded fund (ETF). With an ETF, investors don’t have to worry about futures contracts. ETFs can be purchased and sold as easily as individual stocks.

His top pick to benefit from the forecast ranges is the VanEck Vectors Oil Services ETF (NYSE Arca: OIH). OIH holds 25 oil stocks. The top two alone are expected to post impressive returns over the next year. Those two are Schlumberger (NYSE: SLB) and Halliburton (NYSE: HAL). In the next 12 months, SLB is estimated to reach $90.29 per share and HAL is forecast to reach $50.61. From today’s prices, those targets translate to share price increases of 14% and 18%, respectively.

OIH closely follows the MVIS U.S. Listed Oil Services 25 Index, which tracks the largest 25 U.S. oil field services companies. Some of these, like SLB and HAL, are the largest oil services companies globally as well, with market capitalization of more than $100 billion each.

The exposure to the 25 biggest oil services firms means that investors don’t bear the risk of investing in small oil services companies in a range-bound oil price climate. Larger firms will make it through the oil company debt crisis in all likelihood. Smaller companies are more at risk of being acquired or succumbing to bankruptcy. Those small companies should be avoided now.

Investors can also benefit from the climbing price of oil long term through two other funds. One is the United States Oil Fund LP (NYSE: USO). The second is the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE: XOP), which allows investors to gain exposure in a group of oil exploration and production companies.

Investors who want a stock to play the oil price increase are advised to buy one of Moors’ picks to benefit from its position in the pipeline, Genesis Energy LP (NYSE: GEL). Houston-based GEL is a master limited partnership (MLP).

Roughly 90% of MLP revenue comes from oil and gas. Midstream MLPs connect refiners and producers via the transportation and storage of oil.
Because they are not out in the fields exploring and pumping the wells, the transportation and storage provider MLPs benefit from rising prices, but have far less exposure to any downside in the oil patch than oil producers do.

GEL shares currently trade at $36.36. Its one-year price target, according to Thomson Reuters, is $41.25. That’s a 13% price increase.

The other upside to GEL is a very strong dividend. It is currently 7.66% – impressively better than the 2.1% average yield of the S&P 500 dividend payers.

Three Factors That Will Drive Oil Prices Higher

For the rest of 2016, Moors expects WTI crude oil to trade in a range of around $40 per barrel minimum and rise to a range of $60 per barrel in 2017.
Despite that forecast, the markets have seen near-term fluctuations. In late July, markets reacted to a drop in oil prices. WTI crude oil price fell to $42.41 per barrel, the lowest price since mid-April, when it closed at $39.78. Futures dropped 12.2%. The Brent crude price per barrel was down 11% in late July.

Why such a relatively steep decline? Some analysts are concerned about rising supplies of oil in the United States. You see, the Baker Hughes (NYSE: BHI) oil rig count has been climbing. During July, BHI reported that active rigs were increasing for the four straight weeks.

A rise in rig count during 2015 led to a drop in crude oil prices of 50%. Morgan Stanley (NYSE: MS) estimates that supply outside of the OPEC producers will climb this year – and that crude prices per barrel will bottom at $35 in 2016.

Moors cautions that the pullback in oil prices is a normal market fluctuation, and oil won’t fall as low as Morgan Stanley predicts.

He cites three reason that support his $50 per barrel price range this year – and a rise to a $60 range for WTI per barrel in 2017.

The first bullish factor for oil prices is peaking worldwide output.

In the early part of the year, output by OPEC hit more than 32 million barrels daily, its highest level in nearly two decades. Output in Russia reached nearly 11 million barrels, the highest level in three decades.

Moors observes that production in the U.S. from shale is reaching a high as well. You see, tight oil wells and shale oil wells pump the majority of their production within the first year and a half.

According to Moors, production of oil by shale drilling, though, becomes expensive. As a result, oil companies are moving to a type of well dubbed “drilled but uncompleted” (DUC). As the term implies, a DUC hasn’t reached its output peak. They still have oil, so oil companies are going back to them.

Why? They are more affordable than other methods of obtaining oil.
DUCs are slowly being used to supplant shale as an oil supply source. The oil companies don’t want more supply flooding the market.

As Moors puts it, “an increase in DUCs doesn’t mean we are approaching some major boost in production. But they also represent another element restraining the slide in prices.”

The second factor supporting a bullish oil price forecast is falling supply due to the financial situation at oil companies. They can’t afford to keep wells working when their product commands just $46 per barrel at the market.

Over the past two years, supply has been on a steady downward march – which Moors estimates will not reverse soon. According to the BHI rig count, active U.S. oil rigs totaled 337 in late June. At its peak two years ago? Rigs totaled approximately 1,600. That’s a whopping decline of nearly 79%.
Because oil rigs can cost between $500,000 to $3 million to operate and maintain, it is not cost-effective to keep them going until crude oil starts to hit $65 per barrel. Production may ramp up when it hits that level. Most companies need WTI crude to be close to $70 per barrel before they hit reasonable profitability.

So, the BHI rig count shows that the oil companies are shutting down more and more oil rigs. Essentially, we will see a dropping count until supply is constrained enough to drive prices higher.