1. 1 ISM 158 Announcements Today: Wyndham Case Project Team and Topic Due –Stay behind at end if still don’t have group –I may ask groups to consider other companies if there are conflicts Quiz return

2. 2 Case: Wyndham International Fostering High-Touch with High-Tech

3. 3 Wyndham History High-end hotel company –Business travel REIT = Real Estate Investment Trust –Changed to C-corporation (different tax structure) Founded 1981 –First one opened 1982 in Texas under Tramel Crowe Corp –1985 had 14 properties IPO 1996 –Already substantial – total of 66 hotels Acquired 1997 by Patriot American Hospitality –Real Estate Investment Trust

4. 4 Overview Wyndham attempting to establish itself as recognized lodging brand Restructured from real estate to hotel company Core strategy of new guest program called Wyndham ByRequest

5. 5 ByRequest Program Came about after govt scrutiny –Slowing company down –Needed to differentiate themselves to regain market –80% drop in stock value 1999 Market change happening –Customer access channels changing Internet-based services used to book lodging Many chains lumped into similar category Commoditization of lodging Rewards Program

6. 6 Program Details Customization to very fine detail –Preferences –Loyalty Points? –Free amenities, snacks on arrival, local calls, internet access –Training staff to look for customers –Start with survey – customer particulars, preferences –Send preferences on to next hotel they stay Store all information in shared computer network First to allow cellphone reservations and internet access Used frequent flier programs already existing Other hotels: –Flier miles –Points based system

7. 7 Differences Qualitative vs. Quantitative –W strategy hard to quantify –Soft experience advantage –Other programs = direct incentive scheme Liability vs. expense –Financial difference in accounting Hotel managers more flexibility to make customer happy First to have many services – hair driers, internet, cellphone reservation, … Challenge of managing rewards –Cash in free nights different location to earning –Management difficult to give right incentives between locations

8. 8 Wyndham ByRequest Not points based Customized guest profiles Built on centralized IT infrastructure –Integrate data from different sources, and disseminate to geographically dispersed properties Dedicated property-level personnel Integrated organizational structure Operate at majority of Wyndham properties

9. 9 Competitive Advantage Positive and Negative Aspects of program

10. 10 Branding What is the value of a brand in the lodging industry? Associate hotel with experience at previous hotel of same chain Cheaper hotel much more important for low- price customers We don’t typically associate brand immediately –More interested in amenities etc. –Opportunity for brand to establish itself –Very difficult to sustain advantage

11. 11 Franchising Different owners in different areas Rapid expansion, more capital through franchising Separate managers have different interests Individual profit to company without direct service Need system of standardization –Used IT for this system –Compatibility issues Conformity issues –Each hotel built by different groups – perhaps different name or previous owner –IT infrastructure needs to be built together Increased business, marketing benefits for individual hotel owners – reputation No freeloaders in this system Economy of scale Loyalty to Brand name

12. 12 Sustainable Competitive Advantage What barriers have been created? What others could be?

13. 13 The Analysis of Sustainability: The Logic of Barriers to Erosion and Response Lag Drivers

14. 14 Group Exercise Take the role of central management overviewing this program –What additions/adjustments would you recommend –What data would you like to see? –How will you maintain any advantage?

15. 15 Our recommendations More amenities Business relationships –Car rentals –Other hotels Testing customer loyalty –Does it work? –Do customers come back? Add recommendation abilities in addition to survey responses Restaurants in area Increase advertising in tourist areas Tracking analysis Over and above service Increased flexibility for local managers High quality employees – benefits, training