How to root experiential with a strong ROI

Editor’s note: This roundtable was sponsored by Actabl, which participated in the discussion but had no influence on the editorial content.

LOS ANGELES — Ben Seidel, president and CEO of Real Hospitality Group, said his company manages over 100 branded and independent hotels. Last year it developed a novel approach to help employees understand what it's truly like to be a customer of those brands.

Ben Seidel

In October, Real Hospitality launched a program for the orientation of new properties where employees were enrolled in the loyalty program for that hotel brand. On their 90-day review, assuming it’s positive, those employees were given 25,000 points in that loyalty program. That meant employees often had more points than the customers they took care of and would get all the messaging about the experiences the brands offered.

“They get the emails that the other members get. They get all the offers. They get double-point offers and things like that — everything the customers they’re servicing are getting — they’re now a part of it. That’s been a huge game-changer,” Seidel said.

Seidel said that one of the unintended consequences is that the employees now feel bigger than just the hotels they work in and even bigger than the company they work for. They now feel like they are an ambassador of the overall hotel brand, the experiences and the hotel company. At the end of the day, that changed perspective revealed itself in how they treat their "fellow customers" — the hotel’s guests. 

“What’s neat is to see the attention to the customer’s experience that they encounter because [the employees] are part of that customer base,” added Seidel, who was part of a roundtable about experiential hospitality and how it could help a hotel's profitability and return on investment. The event in January was sponsored by Actabl and held during The Americas Lodging Investment Summit (ALIS) in Los Angeles.

The participants were Paul Bennie, vice president of strategic accounts, Actabl; Barrett Busscher, vice president of asset management, Electra America Hospitality Group; Krystal England, chief investment officer, TMGOC Ventures; Michael Heaton, president, Waterford Hotel Group; Ferit Ferhangil, CEO, Waramaug Hospitality; Daniel del Olmo, president, hotels and restaurants, Sage Hospitality Group; and Brian Waldman, chief investment officer, Peachtree Group. Rob Schneider, managing editor of Hotel Investment Today, moderated the session.

The executives discussed:

• What is profitable and what’s not?
• How data, technology and benchmarking can transform experiences into higher ROI.
• Which experiences are the next must-haves?
• How do owners, operators and developers keep it fresh?

Hotel Investment Today (HIT): In terms of experiential, what is working? What’s profitable and what’s not?

Daniel del Olmo

Daniel del Olmo: Let’s start with what doesn’t work. What doesn’t work is one size fits all, particularly when it comes to the experiential environment. People looking for unique experiences, particularly those guests who are used to unique experiences, can differentiate between a pretend lifestyle experience and a real, authentic, genuine experience where the hardware is just one component. But the software, through the service delivery, is essential… We take an approach where one size fits one versus one size fits all.

Michael Heaton: We have a very different customer coming out of COVID. Experiential is about memorable experiences up and down the spectrum of hotel classes. We’re talking profitability. So, I go straight to payroll and labor. Your associates are doing things differently now. They engage with the guests before they get there, while they are there, and after they leave. It’s very different from what it was traditionally, requiring a transformational change in how we train. It has to start with programming, messaging, training and education, and that messaging has to align with your marketing efforts, which are also all changing… Those experiential, memorable experiences will not just be reserved for upscale hotels; they will be expected up and down the hotel tiers, and operators will have to adjust significantly to that.

Brian Waldman: It all comes down to ROI, and looking at the ROI on specific projects… You can do little things to connect with the guests, whether it’s artwork, retail experience, or something to help drive and connect with the community. You can throw a tremendous amount of money at hotels, and when you’re looking at those hard-branded assets, the brands do a really good job with their prototypes.

We see a lot of owners want to make changes to their assets based on what they want. There’s not necessarily ROI on it. In a number of our hotels, particularly with the lifestyle hotels, there are little things that we can do to help connect with the community… No one wants to eat at the old food and beverage in hotels, at the branded restaurant in the hotel. I don’t necessarily need that. If I have at least a restaurant, that’s one thing. Otherwise, get people out of my hotel. Get them out into the neighborhood and get them to those cool restaurants. They can still have that experience without having the cost of it.

Ferit Ferhangil: We started looking at the human touch in our hotel business, even though they’re managed by third-party management companies, and looking at the customer’s experience even in hard-branded products. In select-service hotels, one of the things that we started doing is having the front desk staff learn about the great restaurants in the neighborhood because when you’ve recommended a good restaurant to a guest, you’ve touched them with something that they’ll remember and you’ve made that stay memorable... But something that has nothing to do with the hotel is just the human interaction.

Similarly, in our full-service hotels, we started looking at what our customers’ first and last point of contact was: the valet. Yet, in most of our properties, it was outsourced. Some people were not trained and were being paid the minimum amount. So, we started putting certain requirements for the valet regarding their training and how they appeared. Even if a customer had a bad experience, for some reason, at the front desk as they were leaving, if the valet smiled at them and said something nice to them, their departure was improved.

Paul Bennie

Paul Bennie: Sometimes, when we talk about our guests, we will say the guest is what makes us profitable. Actually, the guest is what brings us revenue… What makes us profitable is what we’re talking about. It’s taking the guests, trying to take the dollar they gave us, and translating that to the bottom line. In the process of doing that, we’re going through the motions of providing these experiences to them at a high value. Technology enables some of that to happen, where they can have this high value and high touch and feel like they’re being taken care of and feel like they’re being recognized and empowered… These high-touch experiences are helping to enable that to flow down to the bottom line to where we can be profitable.  

HIT: How do owners, operators and developers keep it fresh and profitable?  

Heaton: Another post-COVID observation is the world of beverage has changed considerably… We looked at our beverage offerings and asked ourselves, what is the parity with our room brands? We found there wasn’t always parity, and guests would pay a premium to stay at a property. We didn’t want to be in a situation where they must buy down to enjoy our lounge or restaurant. It really changed the discussion on how we present it and how to enhance the guests’ experience at different income levels at different hotels… Ultimately, that approach, changing our inventories, pricing, and everything we do for the betterment of the guests, will lead to subtle design changes in future renovations because there are all kinds of visibility issues for bottle placement and top-tier. So, now I have a critical eye when I look at lounges all the time, and I’m always finding things I think can be enhanced.

Krystal England: One of the things that comes to my mind is something that gets to be more exclusive, but not necessarily expensive to provide, and being able to provide something really interesting to the guests, but not a high cost. If you can offer guests the ski resort’s first tracks on the mountain at 7:30 a.m., they can be very excited about that. That’s not a high-cost item, but it is memorable for that guest.

Waldman: We went around the table, and everyone talked about guest touch and how to improve the guest experience. One thing that I didn’t hear was technology. What you’re hearing in the industry today is how we will use technology to replace people. I like the idea of technology to support the guest experience. But ultimately, it’s our people that create that experience. It’s our people that our guests connect with. If you remove those people and just put technology in place, you lose a lot of that connection and become a commodity.

HIT: How can data, technology and benchmarking help transform these experiences into higher ROI?

Barrett Busscher: AI becomes a copilot. It enables people to do their jobs better and makes things easier; I don’t think it will be taking jobs, but helping people create higher-touch experiences.

Ferhangil: I want to touch upon the cost side of our business with technology and using AI as tools to enable or empower our managers. When you went to the doctor, you’d have five pages of bloodwork, and the doctor would go through every line. Now your bloodwork comes out, and two lines are in bold, which are the only ones that are outliers, and that’s the only thing the doctor looks at. That saves the doctor five minutes per patient… I’ve been talking to the various management companies that manage our hotels and ask them to generate the P&Ls for GMs and regional managers to highlight items that are out of norm or out of benchmark, and bold them. But they’re not doing it… All the tools are available, but the mindset is not there. That would focus teams so much better on being more productive.

(From left:) Krystal England, Ferit Ferhangil and Brian Waldman.

HIT: How do you leverage experiential design to control intervals between replacements?

Busscher: It’s creating unique spaces, lobbies and public spaces that are more timeless. We just finished a renovation. We did all of the public spaces — the lobby and the restaurant, but we didn’t touch the rooms. But every guest that comes in now thinks the rooms were fully renovated.

England: Overall, the bones of the space need to be high quality. You should be investing in high-quality, timeless finishes, but you can put in features — artwork, whether it’s murals, a collage, or something — that are not expensive. But if you have it in your plan to replace it every two years, that allows for a freshening of the space, making the rest feel new to guests. That’s something that doesn’t have to be a pricey piece of art that’s on the wall.

It’s maybe a collage, mural, or a gathering of local things that change every few years in line with what tastes tasteful or trendy.

HIT: Any final thoughts?

Bennie: I just picked out a theme that I’m hearing, and that theme goes back to the high touch and the importance of the staff members themselves and the idea of using technology to help employees who intended to be in hospitality take care of our guests, and empowering them to be able to do that, while the guests are receiving this high-value and high-touch using technology… But we can also give our employees the power to do what they need to do… We’re looking at technologies from both angles and how we give a guest the experience, but we also have to empower our employees to do that high touch. Hence, employees need technology solutions as well in their jobs… That technology will enable us to be better at hospitality and take better care of our customers.  

Seidel: When I first got into the industry, it was arts and crafts, and it’s now an asset class, which makes it more blocks and tackles. There’s a big focus on our industry. You realize that the circle of the hospitality side is the developer, the owner, the lender, the brand, the staff and the guest, and all of them have a different agenda. The management company’s job is tough because it’s marrying all of that… We try to accommodate everybody’s agenda and priority, whether it’s brand equity, owner return, or lender risk avoidance. It’s our job to figure out through our people, and then use the tools out there, to focus on accommodating everybody’s agenda. That gets right to the heart of what it was when I got into the industry, which is back to the customer focus through the employee.

del Olmo: Four Ps: passion, people and purpose will ultimately lead to higher profits. If we all were more focused on enriching lives one experience at a time, we all would be making more money.

The discussion has been edited for length, grammar and clarity.