By Michael Oshins
While classroom interactions, readings, group projects and homework can help students develop new insights and understanding, nothing beats experience for the ultimate learning opportunity. With that in mind, Boston University’s School of Hospitality Administration developed Tourism in China, a class that strikes a balance, with classroom learning provided for the first seven weeks of the semester followed by a 10 day trip to China during Spring Break. This past March, 24 students and three faculty members followed up the classroom portion of the class by traveling together to Beijing, Shanghai, and Hong Kong. In each city, they undertook field research as they visited, studied, and explored tourist destinations and luxury hotels.
During their trip, the students and faculty toured the front and back of house and met with members of the executive management team of The Langham, Hong Kong in Kowloon. Langham, a luxury hotel chain, is held by parent company, Great Eagle Holdings Limited. That company is headquartered in Hong Kong and boasts whole or partial ownership of 14 hotels under the Langham or Langham Place brand. Boston, for example, is home to the Langham Hotel Boston, located in the former Federal Reserve Bank. The General Manager of Langham Hong Kong, Bob van den Oord, served as resident manager at the Boston property a decade ago.
A highlight of the visit to The Langham, Hong Kong in Kowloon was the opportunity to learn about the hotel’s creative approach to operations. Several members of the executive management team spoke with the BU students and faculty about how they have worked to improve customer service, increase employee satisfaction, and also break down front-of-house and back-of-house silos.
To accomplish this, The Langham, Hong Kong redefined the role of housekeeping supervisors, expanding their responsibilities and changing their titles to Guest Experience Managers. Dean Dimitriou, the executive assistant manager of rooms, was responsible for implementing and overseeing the change process. In a one-on-one interview with faculty member, Dr. Michael Oshins, who traveled to China with the BU contingent, Dimitiriou answered questions about this innovative approach and its impact on hotel operations.
[Oshins]: What made you think of the idea to create Guest Experience Managers? Have you seen or experienced the dual role of housekeeping supervisor and experience manager at previous properties or companies?
[Dimitriou]: We came up with the concept internally. We brainstormed with the team on how we can further increase our engagement with our guests and collect more preferences to place on their profile. After a number of meetings, we all came to the conclusion that as our guests spend a considerable time in their rooms, why not bring our guest relations service to the guest floors.
The Housekeeping Floor Supervisors went through an intensive training including butler service, engagement training, and guest relations knowledge. With a slight adjustment on the headcount, we were able to reduce their room check responsibility from 60 rooms per day, to 50; therefore allowing them to spend that extra time to welcome our guests and engage with them during their stay.
In short, Guest Experience Managers ensure tailor each guests room setup based on their preferences, offer a warm welcome upon arrival, offer a personal room orientation, offer personalized unpacking service, a welcome beverage on arrival, a point of contact during their stay, engage with the Guest during stay, collect preferences from the guest (e.g. how they like their room setup or extra items they like in their minibar etc.), leave personalized notes in their room post engagement and offer a fond farewell on departure.
What was the process and execution for making the change happen?
With every project we work on, we follow a process, known internally as “Langham Logic”. This process involves:
- Defining the situation at hand: What is the purpose of the project, the problems and opportunities, and the duration
- Measure: Looking at past data, collecting current data for a period of time, understanding the processes involved, understanding where we are now in the current process, and benchmarking measures
- Analyze: Looking at the core areas of the process we are trying to improve
- Improvement solutions and an action plan
- Control: What the results are and ongoing measures to monitor performance of the process and continued effectiveness of our solution and analyzing the before and after impact.
Do you have any data showing tangible results?
Our main guest satisfaction measure, a guest survey completed by guests post departure, has shown a 7% post implementation of our Guest Experience Manager Roles. We also receive up to 30 guest comments per month from guests reflecting how impressed they are with the service received by these Guest Experience Managers.
Guest Experience Managers themselves gain an increased sense of accomplishment now having the ability to impact a guest’s stay through engagement; where in the past they only relied on ensuring their rooms were immaculate in terms of cleanliness.
How has the change impacted finances? Have the costs of implementation been high and have you seen a result in the bottom line?
A dollar figure cannot be placed against the increase of guest satisfaction; however we have seen a 50% increase in enrollments into our loyalty program based on our guests satisfaction during their stay, which is in turn resulting in an increase in the repeat guest ratio. So the increase in guest satisfaction is increasing the number of loyal guests we have and the fact our repeat guests not only will enable us to secure future repeat business, their off spend and average rate is typically higher than average.
The costs involved for this project were very minimal in proportion to the positive impact they have on our guests. By simply adding two additional people to the Housekeeping Floor Supervisor Team, we were able to allocate 50 rooms per supervisor and re-title them to Guest Experience Managers and kick-start the project.
What are the future plans for the Guest Experience Managers? Will the program continue? Are there plans to expand it or roll it out to other properties?
Currently our Guest Experience Managers service our Loyalty member guests. Future plans for this year are to service all arriving guests with the goal to roll this position out to other Langham Properties in the future.
Could this work outside of Hong Kong in the United States?
By providing the right training, re-working the job description, re-distributing the workload, and communicating the development opportunities for colleagues and their potential impact on their guests—yes I do think this is possible for any hotel to implement.
Can you think of any anecdotes from customers that demonstrate the impact that the change has made?
A regular guest of ours booked an Italian restaurant in town the second time he visited with positive feedback. Our file for him also shows that he likes outside seating, drinking out of a large red wine glass for his white wine, and likes to eat his ice cream with a soup spoon. Therefore on all future visits our concierge team sends him a pre-arrival email asking whether he would like us to book him in at his favorite restaurant. We also highlight any new Italian restaurants that have opened. We ensure that the restaurant knows his preferences and has his large wine glass, soup spoon for his dessert, and outside seating. We also tailor his guest room with extra soup spoons in his minibar and large wine glasses for his wine. Each time he says he is blown away with our attention to detail.
What do the Guest Experience Managers think about their new jobs and duties?
Lesley, one of our very bubbly Guest Experience Managers feels she is ecstatic with the fact that the hotel has given her the chance to engage with guests. Prior to the new role there was not an expectation that housekeeping should engage with the guests. Now, housekeeping is guest relations on the floor. I now keep in touch with some guests even after they leave. They just want to feel at home and I make sure they do. One guest was lovely—she called me all day for each item and she was delighted I was like her personal butler.
Can you give some details for the three training areas? Let’s start with butler training.
This involves anticipating guests needs, paying unrivaled attention to detail, and providing seamless and distinctive service. We strive for unparalleled service transcending the expectation of guests, indulging guests with thoughtful touches of luxury, and a memorable experience through personal service.
What about engagement training?
Engagement training with regards to various topics of discussion based on guest purpose of visit (e.g. leisure, business, tour group etc.), using guest preferences on file to tailor room setup and leave a little note for the guest. for example, if a guest loves Diet Coke, we place extra Diet Coke in the minibar and leave a note. We also collect notes about the guests’ hobbies or personal preferences, for example if they like a specific football team or enjoy going to the theater, we leaving relevant information relating to that in their room
And what about training for guest relations?
Guest relations training involves training on our 1865 loyalty program and how to manage guests profiles in the Opera system. We also train employees in how to ensure guest recognition through the hotel amenity program, repeat guest recognition program, special occasions and general adherence of guest loyalty program benefits.
What technology have you used to support the program?
Our Opera system is used to record all out guests preferences as well as our main operating system. The guest preferences also migrate to our 1865 intranet, which has a two-way interface with all our properties to allow the sharing of guest preferences.
How long did it take from original brainstorming to rolling out the Guest Experience Managers?
Brainstorming how to improve the guest experience started in 2012 and additional expenses and payroll was budgeted accordingly for 2013. The process involved the entire housekeeping supervisor team, guest relations team, Chief Concierge, Executive Housekeeper, Club manager, Front Office Manager, F&B Manager, and Rooms Management. Roll out of the new positions took approximately 16 months due to time taken to budget and source the right candidates to fill the two vacancies required to start the new roles.
What was the process or buy-in meeting with the housekeepers?
It is a non-union position and very much involved the buy-in from the housekeeping team.
Michael Oshins is Associate Professor of the Practice of Leadership in the School of Hospitality Administration at Boston University. He is former Vice President of Integer Dynamics, a hospitality consulting firm focused on operational productivity and technology. He holds a doctorate in human resource education from Boston University and a master’s degree in hotel administration from Cornell University. Email: firstname.lastname@example.org
Photos provided courtesy of The Langham hotel website
By Bradford Hudson
A popular cultural narrative suggests that hospitality chains are a product of modern America. Although it seems clear that multi-unit hotel and restaurant brands proliferated in the United States during the twentieth century, historical research demonstrates that the phenomenon is actually much older. The origins of hospitality chains can be traced back to the Roman Empire. Organizational systems and travel behaviors have remained remarkably similar throughout Western civilization during the past two millennia.
The ancient Romans built more than 250,000 miles of roads throughout Europe and the Mediterranean region, including more than 50,000 miles that were paved with stones. The primary purpose of such roads was to facilitate the quick and reliable movement of public couriers and military forces. These roads were divided into sections of 1,000 (mille) paces or 5,000 feet. This constituted a Roman mile and is the derivation of the English word ‘mile.’ Along major roads, the engineers installed stone posts every mile to mark the distance and provide information to travelers.
At regular intervals along these roads, relay stations were established where travelers could rest, feed and water their oxen or horses, exchange horses, or pass communications from one rider to another. These were located at a distance equivalent to one day of travel, which was typically about 20 miles. An extended journey was thereby divided into multiple stages between posts and relay stations.
Guest houses with dining facilities were established at each relay station. Originally the state operated these as barracks for military or government officials. Eventually a shadow system of commercial places to stay or eat developed near relay stations.
Travel patterns maintained a great deal of continuity after the fall of the Roman Empire. The roads were durable and remained the primary means of land travel well into the Middle Ages. Systems of communication also followed the Roman model, as messages continued to be transmitted by couriers on horseback.
The relay stations eventually fell into disrepair, but they were periodically replaced over the centuries, often being rebuilt on the same plot of land. Travelers still needed to stop at a secure place to rest for the night, couriers still needed to pass messages among themselves, and horses still needed to be watered or exchanged. The system of accommodation along the Roman waysides continued.
In Britain, many of the terms for elements of these transportation and communication systems were eventually replaced by English equivalents. The Roman roads became known as ‘post roads’ due to the distinctive milestones positioned or posted along the route. The public courier system was eventually reconstituted by Henry VIII, who appointed a ‘Master of the Posts’ to manage the network. The duty of station keepers to provide services to official couriers was recognized by their appointment as ‘post masters.’
The relay stations became known as ‘post houses’ or ‘posting houses.’ These often served couriers, but the suffix ‘house’ emerged to signify a lodging facility, while the term ‘office’ later identified the distinct function of a courier station. An Old English word for dwelling evolved into the modern term ‘inn.’
During this period, suspension systems were added to wagons to enable a more comfortable ride along uneven road surfaces. The new vehicles were known as ‘coaches.’ Those that carried passengers for hire along 18 the post roads, in stages between post houses, became known as ‘stage coaches.’
At the beginning of the eighteenth century, Thomas Newcomen developed the first practical steam engine, to pump water out of mining shafts in England. This is widely recognized as a moment of acceleration in the Industrial Revolution. A century later, the same engine technology was applied to a system of coaches running on rails to create the passenger train.
The first major railway in the United States was the Baltimore & Ohio Railroad, which was established in 1827. A half century later, there were more than 150,000 miles of track throughout the United States. Trains stopped periodically to pick up and discharge passengers and freight. More importantly, the steam engines that powered these conveyances needed to replenish their supplies of coal and water on a regular basis. Therefore, a series of stations were created at intervals along the rail lines.
Wherever railroad stations were established, a hospitality infrastructure appeared almost immediately, for several reasons.
First, efficient operations required that passengers be ready to board together during a narrow timeframe, which often required an overnight stay before or after the day of travel. Second, at stations located near regional maintenance facilities, the railroad companies needed transient accommodations for their own employees traveling on business. Third, during the early years, trains did not have dining cars, so passengers had to disembark during long journeys to obtain food and drink.
Some of these hotels and restaurants were constructed and operated by the railroad companies themselves, some were created through partnerships between railroads and independent operators, and some were started by enterprising businesspeople with no direct connection to the railroads. Perhaps the most famous of these partnerships was established between the Atchison, Topeka & Santa Fe Railroad (AT&SF) and the Fred Harvey Company.
Harvey opened the first restaurant of this collaboration inside the railroad station at Topeka, Kansas in 1876. By the turn of the century, his company operated nearly 100 hotels and restaurants, mostly along the AT&SF main line through the southwestern United States, and employed almost seven thousand people.
The road system in the United States was antiquated at the beginning of the twentieth century. Most roads were dirt or gravel. Few were paved with hard surfaces such as stone, brick, concrete, or asphalt. The modern American highway system has its origins in two phenomena.
First, consumer demand for automobiles increased dramatically after the Ford Motor Company introduced the relatively affordable and reliable Model T in 1908. Ownership grew steadily over the next few decades, surpassing one automobile per American household on average by 1950. During this time, drivers increasingly complained about the quality of the road system on which their vehicles operated.
Second, after military leaders grasped the importance of logistics and mechanized warfare in Europe during World War I, they turned their attention to improving the road system at home. The United States Army dispatched an experimental convoy of trucks to drive across the American continent in 1919, but the roads were so poor that the journey took more than two months and numerous vehicles were lost along the way.
Subsequent publicity led to passage of the Federal Highway Act in 1921, which supported the improvement of roads nation-wide and the construction of an integrated national highway system. Among the new interstate roads was Route 66 from Chicago to Los Angeles, the first portion of which was designated in 1926. This paralleled the main route of the Atchison, Topeka & Santa Fe Railroad.
Three decades later, renewed complaints about the quality of the road system and concerns about military mobility again led the federal government to act, with passage of the National Interstate and Defense Highways Act in 1956. This funded a series of new or upgraded roads, which borrowed design principles from the innovative German autobahn system, allowing safe travel at high speeds.
A few insightful hospitality entrepreneurs perceived opportunity in this changing transportation system. One was Kemmons Wilson, who traveled from Memphis to Washington during a family vacation in 1952. He drove the nearly 900-mile route, which required stopping several times for overnight stays. Wilson was extremely dissatisfied with the poor quality of roadside lodging, and he subsequently decided to build his own version of the perfect motel. The first such property was built in Memphis and named ‘Holiday Inn’ after a popular film. Within a decade, there were more than 100 such properties throughout the United States, mostly adjacent to highways.
The physical ruins of Roman roads remain evident throughout Europe today. Many of the identical routes continue to be traveled. Paving stones and horses have been replaced by asphalt and automobiles, but destinations and travel patterns remain remarkably similar.
Numerous British roads have been identified by their Roman origins for centuries. This includes the modern A3052 through Devon, which was known as the ‘Old Roman Road’ until the introduction of the modern numbering system in 1936.
Along this route today stands the Cat & Fiddle Inn, which has been operating as a hotel and restaurant continuously for several hundred years. It is plausible that this site has been the location of a roadside lodging facility since the period of Roman occupation.
Similar historic inns are located throughout Europe along former Roman roads. The idea of the post road was brought to America during the British colonial era. The ‘Boston Post Road’ connected Boston to New York via Springfield, following a route that was traveled as early as the seventeenth century.
About twenty miles west of Boston, along the Boston Post Road in Sudbury, David Howe began to offer hospitality services to travelers from his home in 1716. The celebrated poet Henry Wadsworth Longfellow visited in 1862, and subsequently used the Howe Tavern as the setting for his collection Tales of a Wayside Inn. The tavern quickly became known informally as ‘Longfellow’s Wayside Inn,’ which was adopted as its official name in 1897. Today, the Wayside Inn is one of the oldest continuously operating hospitality businesses in the United States, and is listed on the National Register of Historic Places.
Although the Boston Post Road is no longer a major highway, the longstanding travel patterns between Boston and New York continue. The historic route runs parallel to modern interstate highways through Massachusetts and Connecticut. And along the original post road itself—only seven miles west of the Wayside Inn at the intersection of Interstate 495—travelers today can find accommodation and refreshment at a Holiday Inn.
The Post House Principle
The ancient system of relay stations has also survived to the modern era as an intangible business practice. Entrepreneurs have been following transportation routes for centuries, seizing opportunities to meet consumer demand wherever travelers need to pause for refreshment or sleep.
This phenomenon is not exclusive to European civilizations or the regions formerly part of the Roman Empire. The practice of establishing stations along travel routes can be found in cultures throughout the world. Nonetheless, the interdependent development of travel systems and the business of hospitality are particularly well documented in the historiography of ancient Rome, and physical evidence is readily apparent at excavated ruins through-out Europe.
The Roman relay station, the medieval post house, the New England inn, the railroad restaurant, and the highway hotel all share a common heritage. Just as the horses of ancient couriers stopped for water, so did the ‘iron horses’ of the railroads. Just as ancient oxen paused to forage, so do automobiles stop for gasoline. And just as ancient voyagers needed to stop for sleep or nourishment, so do modern travelers visit roadside hotels and restaurants.
The idea of a multi-unit hospitality system—with a series of similar units operated by a single entity or by independent entrepreneurs using common principles, with relatively consistent expectations from diverse consumers, regarding the range and quality of services that might be available, across a broad geographic region—is nothing new. Modern chains of hotels and restaurants are following in the footsteps, sometimes literally, of prior generations.
The origins of American hospitality can be traced directly from the ancient Roman occupation of Britain, through medieval England, to the British colonial era in America, through the period of Industrial Revolution and westward expansion in the United States, and finally to the modern era.
Bradford T. Hudson, Ph.D. is Associate Professor of the Practice of Marketing in the Carroll School of Management at Boston College. He is also Assistant Chairperson of the Marketing Department at Boston College. Previously he was a faculty member at Boston University, with concurrent appointments as Associate Professor of the Practice of Marketing in the School of Hospitality Administration and Lecturer in Marketing at the Graduate School of Management. He holds a master’s degree in services marketing from the Cornell Hotel School and a Ph.D. in business history from Boston University. He is a former Fulbright Scholar. Email email@example.com
By Stephen Jermanok
In 1990, I left my job as a broker in Manhattan, booked an open-ended ticket to the South Pacific, New Zealand, and Australia, and wrote my first travel story, “Dining with the Descendants of Cannibals on a Fijian Island” for the Miami Herald. It would prove to be the start of a career in which I would write more than 1,500 stories, of which more than 300 were for the Boston Globe, and visit more than 80 countries. Then the recession hit. In 2008–09, I lost more than half of the editors for whom I was writing as magazines folded and newspapers either eliminated or greatly reduced their travel sections. Wanting to utilize my travel expertise, I convinced my wife to join me in a business venture and become an accredited travel agent.
Close family and friends scoffed at the idea, as if I just announced that I was becoming a blacksmith. After all, wasn’t it President Obama who suggested in a town hall meeting that travel agents were becoming obsolete? How could they possibly prosper against big-pocket online travel agencies (OTAs) like Expedia, Priceline, Travelocity, and Orbitz? There was just no need for them anymore; or was there? Since we opened our home-based travel agency, ActiveTravels.com, in May 2012, without the benefit of advertising dollars or a marketing department, there has been a steady stream of traffic. At a recent breakfast for travel agents at the Four Seasons Boston, many attendees we met said they had a banner year in 2013.
“Our sales are way up from 2012 and we’re hiring,” said Susan Fitzgerald, National Brand Manager for Travel Associates USA, which plans to open its new Boston Travel Center in Downtown Crossing next month.
There’s no denying that the advent of the OTAs had a great impact on the industry. According to the Bureau of Labor Statistics, there were 64,680 full-time travel agents in 2012, down from 95,360 employees a decade prior. The American Society of Travel Agents (ASTA) claims that the Bureau of Labor Statistics figure does not include home-based travel agents, a growing portion of the business, and that the 8,000 American travel agency firms now employ 105,000 people. Both agree that employment of travel agents will continue to grow by 10 percent per year.
While employment might have decreased in the past decade, revenues are substantially higher. Travel agencies generated $17.5 billion in revenue in 2011, up from $9.4 billion in 2002. Pricing is higher, accounting for some of that increase, but technology has also led to greater productivity. Few clients go into a brick-and-mortar shop without a clue where they want to go, only to be handed a pile of brochures as they were in the past. Nor are travel agents in the back room printing out paper tickets.
“Travel agents are still the largest channel for airline, hotel, cruise, and car companies. They cater to every type of customer, from the time-starved executive that wants an end-to-end travel management solution to the leisure traveler looking for an experience catering to his or her unique lifestyle,” said Zane Kerby, President and CEO of ASTA.
Here are some of the reasons why travel agents are still successful:
Personalized Customer Service
Coverage on Fox News in early January about the horrific flight delays around the county due to inclement winter weather and new FAA regulations that reduced the amount of time a pilot and the crew can fly before a necessary break included a man at Logan Airport who missed his Caribbean cruise. Travel agents always advise their clientele to book flights directly with the cruise line so, in case of a flight delay, the cruise line will find a way to get them to the next port. But the man at Logan did not know that; nor did he feel the need to acquire travel insurance, so he was out of luck. Just as important, he was stuck in an hours-long line with the airline trying to re-book the next available flight, while fellow passengers with travel agents at their disposal were sipping martinis at the Legal C Bar. Not to say flight delays aren’t a huge hassle for travel agents as well, but agents do have connections at airlines that they utilize during worst-case scenarios. Customer service from OTAs is not nearly at the level it should be, forcing many travelers to, once again, use an agent.
Susan Fitzgerald, of Travel Associates USA, said, “We act as advocates for our clients in the event that things don’t go according to plan.” She added, “We are here to help them 24 hours a day, 365 days a year, before, during, and after travel.”
If you Google “Italian villas” you will find more than 59 million results. Have fun with that research. According to Mark Orwell, editor at Travel + Leisure magazine, the average traveler is spending nine sessions on the web and visiting 21 websites before they book their travel. That number will surely increase with the deluge of travel content. A recent client came to my wife and me explaining that he had “analysis paralysis” after spending close to 30 hours trying to find a pension in Provence.
Adding to consumer research exhaustion is that many of the top-rated hotels on TripAdvisor and Travelocity are geared toward the low-end or middle markets. According to Larry Olmsted, travel columnist for Forbes, “It’s a numbers game and the luxury segment is very small. So when they are giving the airport Radisson a four and a half star rating, on that scale how can premier Hong Kong hotels, such as the Mandarin Oriental or Peninsula, be differentiated in a meaningful way?” This could explain why affluent travelers are seeking out travel agents. A study from the Harrison Group found that 20 percent of consumers with a household income greater than $100,000 used a travel agent in the past year. That’s up from one in seven affluent households in 2009.
Travelers are looking for first-hand expertise and the travel agent has evolved to fill that void. No longer are agents sitting behind desks all day researching trips from afar; they are often on the road gaining valuable expertise. For example, take Paula Hoffman, the Cruise Specialist at Wayland Travel. At last count, she’s taken 51 cruises to 41 countries. She knows a thing or two about which cruise line to recommend based on your interests.
Today’s traveler is well-versed on a destination before he or she arrives on a travel agent’s doorstep. Many times, they come with a list of properties they’ve found on TripAdvisor or Frommer’s. They simply want someone with expertise to give their stamp of approval, someone who has personally stayed in these lodgings or who knows clientele who have.
Contacts Around the Globe
Many people like to travel independently to the far corners of the planet. It’s simply unrealistic for any travel agency to have expertise on all countries. So agents rely on contacts made around the globe. These include a travel firm in New Delhi that provides transportation and guides to the Taj Mahal and Jaipur, a New Zealander who designs detailed self-guided driving itineraries to his favorite sites and B&Bs in the country, a naturalist in Sumatra who will help locate the native orangutans, and an art expert in Rome who will take you behind the scenes to talk about Michelangelo. Whenever a client returns with a rave travel recommendation for a guide, lodging, or local outfitter, we add them to a growing list.
Travel agents also have excellent contacts with hotel employees that can help clientele attain better rooms and service. In an upcoming story I wrote for the Boston Globe on “The Key to Getting a Better Hotel Room,” I interviewed Jacob Tomsky, author of the best-selling Heads in Beds (Doubleday). Tomsky, 35, spent a decade in the hotel industry; seven of those years were spent manning the front desk at an upscale midtown Manhattan hotel. When asked whether it was better to book a room via a travel agent or to reserve through websites like Hotels.com or Priceline, he replied, “From a business standpoint, people who book through third-party travel sites are looking for a discount. The likelihood that they’ll return to your hotel is close to nil. So discount reservations are our last priority. Also, those third-party sites often don’t know the property. I once had someone checking into a midtown Manhattan who wanted a beach view. A good travel agent knows to call the hotel 2 to 3 days before you arrive to speak to the front desk or general manager. It’s a business of people serving people. The more you can connect with the hotel, the better your stay.”
Barry Kushner, director of business travel and industry sales at The Fairmont Copley Plaza, agrees. “Travel agents provide a safety net during a trip that guests simply don’t get by booking on their own or through an OTA,” he said. “Having a top travel agent can also help guests receive room upgrades, special amenities, or a welcome from a GM.”
It also doesn’t help that OTAs are reaping exorbitant finder fees from lodgings, up to 25 percent of the cost per room from independent properties, compared to the average 10 to 12 percent commission for travel agents. The fiscal model has certainly changed for travel agents since the 1990s, when airlines started offering little or no commission. Fees for booking airline tickets are now standard as are as trip planning fees. We charge households an annual $60 membership fee to help supplement our income and fees for designing detailed itineraries that feature lodging, recommended restaurants, sights, activities, and guides. We are also aligned with a host agency in New York that allows us to offer benefits from the travel consortium Virtuoso. When booking one of the upscale properties in that network, we can offer free upgrades, complimentary spa services and breakfasts.
Need an affordable flight direct to Fort Lauderdale and a 3-star property near the beach? You can figure that out online. If you prefer 4- and 5-star properties in the Caribbean, want a private guide in Europe, are unsure which safari company to use in Africa, or can’t distinguish between the countless cruises to Alaska, it would be wise to talk to a travel expert, also known as your local travel agent.
Steve Jermanok is Co-Founder of Newton-based ActiveTravels.com with his wife, Lisa Leavitt. He is considered one of the most prolific travel writers in America, having explored more than 75 countries and written more than 1500 articles on a broad range of subjects, from art to adventure. He has lectured at numerous travel symposiums across the country, including keynote address at the New York, Maine, Vermont, Nevada, North Dakota, Nebraska, Louisiana, Mississippi, and Montana Governor’s Tourism Conference. He is a graduate of chemical engineering from the University of Michigan.
The Current State of the New England Lodging Market: New England Falls Short of the Nation in RevPAR Growth in 2013
By Rachel Roginsky and Matthew Arrants
Revenue per available room (RevPAR) for the New England region grew 5.2 percent compared to growth of 5.4 percent for the country as a whole. However, there is still plenty of good news:
- The region was only slightly behind in terms of RevPAR, exceeding the national growth rate for occupancy and recording the same rate of growth in demand;
- Two states (Massachusetts and Vermont) outpaced the national growth rates in RevPAR and occupancy; and
- Demand growth in all but two of the New England states was equal to or above the national average.
While this is the second year in a row when the region finished behind the nation in terms of RevPAR growth, it was much closer, lagging only 0.2 percent behind versus 1.2 percent last year. One reason for the region’s slow growth is that it has been outperforming the rest of the country in terms of absolute figures. In 2013 occupancy for the region was 62.5 percent compared to 62.3 percent for the country as a whole and the average daily rate was $131.46 versus $110.35.
As a whole, the state of Connecticut did not experience the same levels of growth as the rest of the country, but it did see a significant improvement over 2012. The table presents key performance metrics for the state over the last three years.
As the table indicates, Connecticut experienced a strong recovery in 2011 followed by two years of more moderate growth. In fact, demand actually declined in 2012. Fortunately supply growth has been very limited, which has helped statewide occupancy grow.
A review of the top four markets in the state indicates that only the Stamford/Danbury market outperformed the statewide averages. RevPAR growth for that market area grew by a strong 6.3 percent due to strong growth in both occupancy and average daily rate (ADR). The New Haven/Waterbury market did well in terms of RevPAR growth; however, it was due in part to a decline in supply that helped increase market occupancy.
Maine finished the year with an occupancy rate of 57.5 percent, an increase of 1.1 percent over 2012. Average rate of growth was the strongest of the last three years increasing by 4.1 percent. The table presents the state’s performance over the last three years.
The top performing market in the state was Portland, which experienced RevPAR growth over 10 percent with the growth fairly evenly distributed between both occupancy and average rate. Helping that market’s performance was the closure of the Eastland Park, which was undergoing renovations for most of the year. Bangor did not perform well relative to the rest of the state or to other markets due to new supply that pushed occupancy levels dow.
The Massachusetts lodging market is traditionally the strongest in the region. In 2013 the state finished with an average rate almost 40 percent above the national average. The table presents the state’s performance over the last three years.
Lodging performance in Massachusetts, as a whole, is heavily impacted by activity in Boston. More than half of the hotel rooms in the state are located in Greater Boston with approximately one-quarter in the cities of Boston and Cambridge alone. The Boston market performed very well in 2014. Market occupancy reached a record 80 percent due to strong convention demand during the first quarter, and strong playoff runs by the Red Sox and the Bruins. The strong market occupancy pushed demand out to the suburbs helping to increase occupancy levels for those markets.
The New Hampshire lodging market was one of the weaker performers in the region in 2013. RevPAR grew by only 4.4 percent with occupancy up 1.9 percent and ADR up 2.5 percent. The relatively slow growth in RevPAR in the last two years could be attributed to the very strong growth experienced in 2011. The statewide occupancy is lower than the national average, but given the seasonality of demand in the state, this is reasonable. The state’s ADR of $113.56 in 2013 is on a par with the national average of $110.35. The table presents the statewide lodging performance over the last three years.
Rhode Island’s RevPAR growth was the weakest in the region in 2013, increasing by 3.7 percent compared to 5.2 percent for all of New England and 5.4 percent for the country as a whole. Demand in the state grew at a respectable rate of 1.9 percent, however occupancy growth was limited by new supply, which grew at a rate of 0.6 percent. Average rates for the state grew by 1.8 percent, its lowest rate over the last three years and the lowest in the region. A look at some of the individual markets in the region suggests that Providence held the market back due to negative growth in ADR and only minor increases in occupancy. Warwick on the other hand performed well with significant increases in both occupancy and average rate. Newport’s performance was mixed with occupancy basically flat and ADR up over 2.5 percent.
Vermont was the top performing state in the region with RevPAR growth of 6.1 percent. Driving the state’s strong performance was a demand growth of 3.4 percent compared to 2.2 percent for the region and the country as a whole. Average rate growth in the region was less impressive in 2013 increasing at only 2.8 percent.
Several markets are poised for some changes over the next 12 to 18 months:
- Providence, RI – There are new additions to supply anticipated in Providence in 2014. The Biltmore is expected to complete a major renovation that will help to reposition the property and allow it to increase its rates. While fewer conventions are expected, there are more convention related room nights due to a large event at the end of November.
- Hartford, CT – The downtown market continues to slowly dig its way out of the recession with an increase in RevPAR of 4.0 percent due to growth in both occupancy and average daily rate. The absolute numbers, however remain relatively weak with occupancy at 57.2 percent and ADR at $101.96. Outside of downtown, the owners of the Delamar in Greenwich and Southport continue to work on a boutique hotel project in West Hartford.
- Portland, ME – The Portland market is bracing for a major increase in supply. In December, the former Eastland Park hotel reopened as the Westin Eastland with 289 rooms after being closed for a year and a half. A 130-room Hyatt Place and a 131-room Courtyard by Marriott are both expected to open in May of this year along with a 35-room addition at the Hilton Garden Inn at the airport. Next year a 110-room boutique hotel affiliated with Marriott’s Autograph collection is expected to open.
- Boston and Greater Boston –The Cities of Boston and Cambridge, and the suburban Boston lodging market, should continue to show very strong numbers in 2014 due to capacity constraints caused by limited new supply. In addition, 2014 is expected to be a strong convention year for the Boston Convention and Exhibition Center.
While RevPAR growth for the region was slightly below the country as a whole in 2013, we remain optimistic about the prospects for the regional lodging market in 2014. Only one market (Portland, ME) is expected to experience significant growth in supply. Limited supply growth in the region coupled with moderate growth in demand will result in higher occupancy levels and allow operators to increase their rates at above inflationary levels.
Rachel J. Roginsky, ISHC, is the owner of Pinnacle Advisory Group. She has more than 30 years of experience in hospitality consulting. Ms. Roginsky is a board member of numerous organizations related to hospitality, is a regular guest lecturer at the Cornell Hotel School, and is co-editor of five leading hotel investment books. Email firstname.lastname@example.org
Matthew Arrants, ISHC, is the Executive Vice President of Pinnacle Advisory Group. Prior to joining Pinnacle, Mr. Arrants worked in operations with Four Seasons Hotels and Rock Resorts.
He holds a master’s degree in hotel administration from Cornell University, and a bachelor’s degree in political science from Hartwick College. Email email@example.com
By Bradford Hudson
Three decades ago, American industry was obsessed with quality management. Thomas Peters and Robert Waterman helped create the enthusiasm during this era with their best-selling book In Search of Excellence. Although the subsequent quality movement was quite successful in the manufacturing sector, it has been less successful in services. Indeed, there is little evidence of effective quality management in the hospitality sector today.
The Quality Movement
The effort to increase consistency, minimize errors, and reduce costs has been a priority in manufacturing since the beginning of the Industrial Revolution. Notable milestones and pioneers include the interchangeability of parts attributed to Eli Whitney, the scientific management approach promoted by Frederick Taylor, the development of statistical process control by Walter Shewhart at the Hawthorne Works, and the influence of quality experts such as Edwards Deming and Joseph Juran on industrial reconstruction in post-war Japan.
The latter contributed to a significant and unexpected quality advantage among Japanese cars, which resulted in serious competitive pressure on the American automobile industry and the near collapse of Chrysler. This served as a wake-up call for automobile executives, but it also served as the catalyst for a renaissance in quality management throughout the economy.
The quality movement reached its zenith during the 1990s, in terms of its prevalence as a topic of discussion among business practitioners and within the popular media, and it has faded in importance during the following two decades. This decline could be attributed to several causes. Perhaps quality was never actually a problem, maybe quality was simply a fad, perhaps ideas about quality were not communicated well, or maybe the solutions proposed by experts never actually worked.
My suggestion is that the principles of quality management were embedded in the repertoires of practitioners and the curricula of business schools, and that quality management has become routine for any executive in the manufacturing sector. The lessons learned from the Japanese were widely adopted in the United States and Europe, and have now become global standards that are followed even in developing nations. The quality problems in manufacturing that existed two decades ago have now been solved or at least improved significantly.
The quality movement in manufacturing was followed shortly thereafter by a quality movement in services. A new academic field, variably referred to as service management or services marketing, was developed by faculty members at several leading business schools. Notable among these were Leonard Berry (Texas A&M University), Roland Rust (now at the University of Maryland), and Valarie Zeithaml (University of North Carolina). The pioneers also included numerous academics affiliated with Harvard Business School including Christopher Hart, James Heskett, Christopher Lovelock, Earl Sasser, and Leonard Schlesinger.
Services marketing is now an established field with its own extensive literature. At the core are two basic principles. First, services differ from manufacturing due to their intangibility, variability, simultaneity, and perishability. These characteristics can be problematic for managers who use principles and tools designed for manufacturing without adapting them to the unique aspects of the service sector. Second, services are usually produced and delivered by people rather than machines. This means that service companies must understand the linkage between employee behavior and customer satisfaction, and develop sophisticated systems in the areas of human resources, management, and organizational behavior.
Service Quality Today
Despite the attention paid to service quality over the past three decades, and the extensive academic literature that has appeared during this time, my contention is that service quality has not improved at all. Problems with service are prevalent throughout the economy, but they are especially notable in the hospitality sector. Two cases from my own experience will illustrate this point.
The first case involves hotels in the luxury segment. Two decades ago, we vacationed at a beach resort, which was part of an international chain of luxury hotels renowned for its quality management systems. The individual property was rated
‘Five-Star’ by the Mobil Travel Guide and ranked as the top resort in the United States by a leading travel magazine. During our stay, we experienced a series of errors and lapses in service that compelled us to write a letter of complaint. The general manager responded with a tepid letter of apology, which offered a complimentary visit to make amends. However, the problems were so serious that we never returned.
Earlier this month, my family vacationed at a different beach resort, which is part of another internationally renowned chain of luxury hotels. This property was rated ‘Five-Star’ by the Forbes Travel Guide and ranked among the top 20 resorts in the world by a leading magazine. Again, during our stay we experienced a series of errors and lapses in service that compelled us to write a letter of complaint. The problems were very similar to those experienced at the other hotel two decades earlier. Again, the general manager responded with a tepid letter of apology, which offered a complimentary visit to make amends. And again, the problems were so serious that we resolved not to return.
The second case involves restaurants in the quick service segment. Two decades ago, we visited a quick service restaurant that was part of an international chain renowned for its standards and consistency. During our lunch, we experienced a series of errors and lapses in service that compelled us to write a letter of complaint to the corporate headquarters. The area manager subsequently contacted me to apologize and offer some coupons to make amends. He admitted that similar problems at this location had occurred so often that his company decided to rescind the franchise rights and assume direct control of the unit.
Earlier this month, my family visited a different quick service restaurant, which is also part of an international chain respected for its standards and consistency. Again, we experienced a series of errors and lapses in service that compelled us to write a letter of complaint to the corporate headquarters. Again, a senior manager contacted us to offer apologies and coupons.
These two cases occurred in different industries within the hospitality sector, in different segments of their industries, with locations operated by different managers, represented by different chains, in different parts of the country, across the span of two decades. And yet, in both cases, the quality problems and the management responses were almost identical.
An astute reader might wonder if the problems in these cases were attributable to difficult customers who were impossible to satisfy or a typical guests with unusual preferences. In response, it should be noted that every unmet standard had been established by someone else. Guest expectations were calibrated against widely recognized industry or segment norms, explicit standards of the chain or property, or the star-rating system that the property was promoting.
One could also argue that these cases, while compelling, are limited and anecdotal. However, my personal experience as a consumer of services in numerous industries and contexts indicates otherwise. It seems indisputable that poor service remains a real and widespread phenomenon, and that these cases are representative of the status of service quality throughout the hospitality sector to day.
A Missed Opportunity
My academic expertise includes services marketing and hospitality management. My prior career includes work as a manager with a leading luxury hotel chain and as a consultant in the area of service quality for multinational corporations in numerous industries. Based on these experiences, three conclusions seem valid.
First, the quality management revolution somehow bypassed the hospitality sector. This is a stunning contention, given that leaders in the hotel and restaurant industries consider themselves to be the exemplars of superior service.
Second, the basic principles of quality management, specifically that poor quality and customer dissatisfaction are costly, remain valid. Service problems undermine the financial performance of hospitality companies and, due to the immersive nature of services, have a significant impact on the quality of life for guests.
Third, the techniques of quality management have proven to be quite successful in the manufacturing sector, and academics have subsequently offered voluminous advice on how these principles should be applied to the unique characteristics of services. The hospitality sector is simply not using them.
The Cost of Quality
Business practitioner and quality consultant Philip Crosby devised the maxim ‘quality is free’ to convey the idea that the savings achieved through improved quality typically exceed the expense of implementing quality programs. This reflects the prior work of Demings and Juran, who had proven conclusively that improved quality delivers financial benefits in manufacturing contexts.
The same dynamic also occurs in services. An example in the hotel industry is an erroneous room service order, which requires the entire production and delivery sequence to be repeated and the improperly prepared item to be discarded. The duplication in labor and food costs, which typically represent about two-thirds of the revenue generated from the order, are quite significant and completely eliminate any operating profit for that transaction. Now imagine the cumulative cost if such errors occur repeatedly.
My first job in the hospitality sector was as a room service manager in a five-star hotel. Even minor errors, such as a missing spoon on a tray, would cause significant problems, because the server would be required to repeat the delivery process. Given the consequences of failure, it was astounding to discover that the error rate for orders in room service was nearly 50 percent. More astounding was the revelation that senior managers had known about this situation for months and, while concerned, had not done anything to implement a systematic approach to diagnose and resolve the problem.
The hospitality sector has an amazingly lackadaisical attitude about service failures. Even in five-star hotels, a service failure will result in little more than a sharp rebuke to the manager responsible, a computer-generated apology letter to the guest involved, and perhaps an offer of a complimentary dessert or a room during the off-season.
This amounts to little more than appeasement of angry guests, and does virtually nothing to correct the root causes of problems, which will undoubtedly occur again.
Although service failures are typically regarded as independent events, caused by uncontrollable circumstances or ineffective employees, they are more often the result of poorly designed service delivery systems or inferior management systems throughout the organization. In some instances, such problems reflect the nature of an entire industry. My contention is that quality failures in the hotel and restaurant industries have fundamental causes.
First, the hospitality sector is not particularly sophisticated in terms of management systems and practices. The inseparability of production and consumption results in thousands of small and relatively independent locations, which cannot support the types or layers of specialized management that are common in centralized manufacturing facilities. This is further exacerbated in the case of independents, which have no corporate infrastructure. The tools required to effectively manage service quality are simply unavailable. Even if front-line hospitality managers understand quality techniques, the analysis necessary is often seen as peripheral to basic operations.
Second, the financial costs of implementing quality management systems are readily measurable and significant, while the financial costs of service failures are hard to measure and easily overlooked. It is very difficult to predict, capture, and measure events that never occur. Services generally cannot be returned after delivery, and the easiest remedy for unsatisfied guests is simply to return less often or never return at all. Nonetheless, the work of Frederick Reichheld and others in the area of loyalty and retention has demonstrated conclusively that a lost customer has a significant negative financial impact.
One of the case scenarios discussed earlier will illustrate this point. Since we experienced problems at the first beach hotel two decades ago, we have never visited another property in that chain, despite staying at numerous competing luxury hotels in destinations where the offending brand had a hotel. The leaders of the parent company have no idea that they have lost us as potential customers, nor have they attempted to measure the lifetime value of our patronage, which amounts to tens of thousands of dollars.
Third, strategic management is often separated from daily operations, even in contexts where operational experience is a necessity for career progression, such as the hospitality sector. During my appointment as chief executive officer of a restaurant company, my attention was devoted almost exclusively to financial performance and acquisitions, rather than the details of daily operations and the satisfaction of individual guests.
It was amazing how quickly my own experience as a quality consultant was forgotten, despite my philosophical commitment and practical expertise in this area.
A Way Forward
Another round of enthusiastic promotion and persuasion by quality experts, in which a series of logical arguments is used to garner commitment to quality principles by hospitality executives, is unlikely to have the intended effect. If the impasse is being caused by excessive attention to the costs of implementing quality management programs, and a lack of understanding about the true costs of service failures, then perhaps a solution can be found in the particulars of cost accounting rather than the platitudes of service excellence.
It is my contention that academics in business schools and hospitality programs who are committed to service excellence, and who have their primary appointments in non-financial disciplines (such as marketing, management, or operations) should engage more effectively with topics and colleagues in the disciplines of finance and accounting. The financial analysis of quality failures must be embedded within courses or modules about service management or services marketing. To the extent possible, faculty members interested in services should also request and encourage the discussion of service quality in courses about financial accounting, managerial accounting, and corporate finance.
One practical example of integrating quality management and financial management can be found in the service guarantee technique. In its purest form, guests are offered the opportunity to ‘return’ unsatisfactory service experiences by invoking a guarantee, which results in an immediate and unchallenged refund of their expenses.
To be clear, this is not the same as offering a complimentary dessert or room during off-season to placate a guest. This is a reversal of the entire amount charged to their credit card for the visit in question, which must then be deemed waste, in the same manner as an improperly formed beam in the steel manufacturing industry.
The nuances of the guarantee approach are described extensively in the work of Christopher Hart, who popularized the technique during his time at Harvard Business School, and will not be repeated here. The point is that, in the guarantee system, the amorphous nature of poor quality is made concrete, because it is formalized as an exact amount of unrealized revenue in the financial statements. At the end of every month, even the chief executive officer of a huge chain can evaluate the effect of quality levels at the unit level, and even a chief financial officer will become committed to guest satisfaction.
A Time for Reckoning
It is time for executives in the hospitality sector to be honest about the ubiquitous nature of service failures and admit that service quality has not improved in decades. Quality management systems must be adopted or improved, even at five-star properties. Significant advances could be made by more closely linking service operations to financial accounting, and academic curricula should be adapted to recognize this connection. Beyond that, we have an ethical responsibility to deliver on our promises. We can and should do better.
Bradford T. Hudson, Ph.D. is Associate Professor of the Practice of Marketing in the Carroll School of Management at Boston College. He is also Assistant Chairperson of the Marketing Department at Boston College. Previously he was a faculty member at Boston University, with concurrent appointments as Associate Professor of the Practice of Marketing in the School of Hospitality Administration and Lecturer in Marketing at the Graduate School of Management. He holds a master’s degree in services marketing from the Cornell Hotel School and a Ph.D. in business history from Boston University. He is a former Fulbright Scholar. Email firstname.lastname@example.org
By Christopher Muller
Hospitality : n. friendly and generous reception of guests or strangers, or of new ideas. –The Concise Oxford Dictionary
The idea of hospitality is evident in several types of human behavior including obligatory duties, commercial activity, and prosocial action.
These are intertwined and revolve around the commitment to caring for others whether they are relatives, guests, or strangers.
A Sense of Duty
The duty of hospitality is to family or tribe, as well as to strangers for whom cultural norms often mandate an obligation to host. This branch has a physical, social, and spiritual context. Such duty often incurs a personal cost, one based on the emotional commitment of kinship or honor. We come together because we are supposed to, but also because we feel a connection with others who are like us, a bond with those who share a common heritage.
Many social or cultural bonds are built on the duty to family above all else, including shared meals and ceremonies.
It can be observed that most, if not all, of human ethical, religious, or moral teachings include some form of service to those outside the family or kinship unit. In ancient Greece, the responsibility to provide hospitality (xenia) defined behavioral duties for both the host and the guest. The application of this duty (philoxenia) is still defined as the hospitality revealed in love (philia) for the stranger (xenos). While thousands of years old, this is still a crucial component of our modern mobile social structure, in which everyone is a stranger at some time and place. The principle is especially important when applied to the traveler, the immigrant, the exile, or anyone considered to be an outsider.
Consider the American day of Thanksgiving, an iconic national holiday during which families gather together to consume turkey with all the trimmings, the ultimate comfort food. The traditional, near mythical, New England roots of this festival are well defined. Images of Pilgrims and Native Americans sharing the bounty of the harvest have been exported to the rest of the nation and are now completely woven into our cultural tapestry.
In late November, we put aside our familial differences and sit for a few communal hours, hearing stories from otherwise ignored uncles and aunts, or even sisters and brothers. Many families welcome strangers to their midst, such as the college roommate of a child or sibling, who in turn praises the host who has been gracious enough to open their homes in hospitality. As the New England poet
Robert Frost wrote: “Home is the place where, when you have to go there, they have to take you in.”
A Commercial Activity
The commercial is the branch that we associate with the business of welcoming paying guests at hotels or restaurants. The business of hospitality also extends to anyone who we compensate to care for our physical and emotional needs, including healthcare or social workers. There is a fine line between the innkeeper and the hospital administrator. We pay people to care for us when we travel, need to eat outside the home, or become ill. Any time our family is physically or emotionally unable to fulfill their duty to care for us, we rely on others for our welfare.
New England has strong roots in all facets of this commercial hospitality realm. The role of public inns as a mainstay of community life is well documented. As noted in previous editions of Boston Hospitality Review, the region claims some of the oldest surviving inns (Wayside Inn, 1716), restaurants (Union Oyster House, 1826), and hotels (Parker House, 1855) in the nation. The New England Inns & Resorts Association has origins dating to 1907, and precedes the founding of the American Hotel & Lodging Association.
The same is true of professional healthcare. The Massachusetts General Hospital (1810), one of the three oldest hospitals in the nation, was proposed by John Bartlett as a facility to care for the poor and indigent. The Boston Lying-In Hospital (1832) was one of the first hospitals dedicated to women and maternity. The Boston Home for Aged Women (1850) was formed to assist elderly single women, who might otherwise be consigned to the poorhouse.
A Prosocial Orientation
The third branch, the prosocial, is intertwined in the principles of the other two. Often termed altruistic, the term prosocial is defined by psychologist Nancy Eisenberg as “voluntary behavior intended to benefit another.”
Being in service to others, whether for duty or compensation, requires awareness of the needs of others and empathy toward them. The difference in the case of prosocial hospitality is that there is no expectation of reciprocity or personal gain from the behavior. The act of helping others who are either unknown or unrelated to the giver at the time of the act, involves a sense of hospitality that is genuine, but often inexplicable. Recent research suggests that prosocial behavior may be initiated after receiving signals from an organization or another individual.
However, altruism appears not to be something that can be taught or even learned. It is often just simply done.
As is true with many professions, a proclivity for certain emotional rewards may be indicative of employee association and alignment. While there are many intervening variables, people with a desire to help others may naturally gravitate towards lodging, restaurants, healthcare, or other service-oriented employment. This could come from a sense of duty, a desire for economic gain, or simply because of a need to engage in prosocial work. But when that work involves volunteerism at non-profit events, including time spent working for charities and social organizations, the focus often changes from a duty or the commercial to prosocial hospitality.
New England is home to many organizations providing hospitality in a prosocial manner. Two examples are Community Servings in Jamaica Plain, Massachusetts and the New England Center for Homeless Veterans in Boston. These organizations were founded to help small targeted populations, but each has expanded to benefit thousands of individuals through the generosity of volunteers and donors.
Community Servings produces and delivers free meals for individuals too ill to provide for themselves or their families. Over time, the organization has also been able to offer job training skills for people who may enter into the foodservice industry.
Their work is done by a small professional staff and thousands of volunteers.
The New England Center for Homeless Veterans was founded as a way to offer emergency lodging and shelter assistance to homeless men who had served in the armed forces. Today it has expanded to include psychological counseling, job training, and other social services for both male and female veterans. Much of the hospitality comes from volunteers and donors.
Hospitality is certainly a business, but it is also a calling. Hospitality is often a duty, but sometimes it is nothing more than offering a hand to help the person beside us. For thousands of years, philoxenia has been recognized as the best that humanity has to offer.
Christopher C. Muller is Professor of the Practice of Hospitality Administration and former Dean of the School of Hospitality Administration at Boston University. Each year, he moderates the European Food Service Summit, a major conference for restaurant and supply executives. He holds a bachelor’s degree in political science from Hobart College and two graduate degrees from Cornell University, including a Ph.D. in hospitality administration. Email email@example.com
By Bradford Hudson
The advertisement for American Airlines that is reproduced on the following pages appeared in national magazines in late 1957. It is a two-page centerfold color spread depicting a couple arriving at the Ritz-Carlton Hotel in Boston, after a flight on American Airlines.
The discussion below provides a deconstruction and analysis of its elements, considers the related evolution of the airline and hotel industries, offers a glimpse of advertising agencies during a formative period, and reflects on some related issues in marketing. This will hopefully appeal to scholars and enthusiasts of brand heritage, transportation history, advertising history, or travel ephemera.
American Airlines was formed through a series of acquisitions of smaller aviation companies between 1929 and 1934. American quickly became the leading domestic airline, in terms of revenue passenger miles, and was listed on the New York Stock Exchange in 1939. American remained among the leading airlines over the following decades, ranking second in size by the end of the century, and arguably first in prestige among consumers and industry analysts.
This advertisement appeared at the dawn of the jet age. Most carriers were still using propeller aircraft exclusively, including American Airlines whose flagship was the DC-7 featured here. American would offer jet service on transcontinental routes starting in 1959, using the new Boeing 707 aircraft.
The headline “Sign of an important arrival – The Mercury emblem” refers to the travelers and their luggage tag, which displays the subsidiary product brand and logo for the ‘Mercury Service’ offered by American Airlines.
The name was inspired by the Roman winged messenger god Mercury, and had been used to designate high-speed transcontinental travel since the introduction of the DC-3 aircraft in 1936. This service became non-stop with the introduction of the long-range DC-7 aircraft on the route from New York to Los Angeles in 1953. Mercury Service was extended to ten other cities in 1957, including a non-stop route from Boston to Los Angeles. This advertisement was part of a themed series with different versions for each city. It was intended to reinforce the simpler and more factual announcements that had appeared immediately after the service extensions were introduced.
The hotel depicted in the advertisement is the original Ritz-Carlton property in Boston, located at the corner of Arlington Street and Newbury Street. Opened in 1927, it was part of a chain of luxury hotels throughout Europe and the Americas, which was founded in association with the legendary hotelier César Ritz. Most of these hotels did not survive the Great Depression, and the Boston location was one of the few remaining properties by 1957. The hotel was known to generations of Bostonians simply as ‘The Ritz’ and was widely regarded as one of the best hotels in the United States.
The property was sold to Atlanta real estate developer William B. Johnson in 1983, who acquired the building to obtain the rights for the Ritz-Carlton brand, which he then extended to a new chain of luxury hotels throughout the United States. The brand was subsequently sold in 1995 to Marriott Corporation, which is the current operator of almost every hotel using the Ritz-Carlton name worldwide.
This is not the current Ritz-Carlton property in Boston, which is located across Boston Common on Avery Street, and was opened in 2001. The original building depicted in this advertisement was purchased by the Tata Group in 2006, which is currently operating the property as a luxury hotel under the Taj brand.
The graph in the lower right corner of the advertisement provides a comparison of the change in airline ticket prices against the Consumer Price Index (CPI), during the period 1941 to 1956. The accompanying text notes that consumer prices increased much faster than airline prices during this period, but does not offer any conclusion about the relevance of this information for consumers. Presumably, the graph is presented as a form of evidence for a claim regarding the increasing affordability of air travel.
The same method of comparison can be used to extrapolate prices forward over the next half century, based on CPI data from the Bureau of Labor Statistics. As an example, a round-trip coach class ticket on American Airlines nonstop from New York to Los Angeles was advertised as low as $198 in 1957.
Using CPI data, we can calculate the equivalent value of this ticket at $1,618 today. However, during a recent search of the American Airlines reservations website, a similar ticket was priced as low as $324.Prices in the hotel industry offer another point of comparison. As an example, a room night at the Ritz-Carlton Hotel in Boston was advertised in the American Hotel Association Red Book as low as $9 per night for 1957. Using CPI data, we can calculate the equivalent value of this room at $74 today.
However, during a recent search of the reservations website for the current Ritz-Carlton in Boston, the least expensive room was priced at $395.
Combining these calculations for the airline and hotel industries provides a stunning contrast. The airline ticket in 1957 was about five times as expensive as the airline ticket today. The reverse is true for the hotel industry. The hotel room today is more than five times as expensive as the room in 1957.It must be acknowledged that such comparisons are based on single examples, and that the Consumer Price Index may not offer a perfect conversion rate for updating the prices of airline tickets or hotel rooms. Furthermore, there have been several developments since the appearance of this advertisement that have caused seismic shifts in the airline and hotel industries. These include computerized reservations systems, variable pricing methods and revenue management, the deregulation of the airline industry in 1978, changes in the ownership structure of the hotel industry, and the rise of internet travel intermediaries.
Nonetheless, even if these specific conversions are not precise, they are valid in principle. The price of airline tickets has declined relative to other goods and services over the past half century, including hotels. From a consumer viewpoint, airline travel became more affordable during the decade prior to this advertisement and this trend has certainly continued since then. However, from a business viewpoint, it could be argued that airline executives have failed in maintaining their strategic position.
The couple depicted is fashionable and presumably wealthy. The woman is wearing large diamond earrings, while the bellman in the background is carrying her fur coat.
This advertisement is attempting to position American Airlines and the Ritz-Carlton Hotel as comparable products. The Ritz-Carlton in Boston was certainly a luxury hotel at the time, and the brand remains so today. As the hotel industry expanded over the next half century, and as product segmentation became more pronounced, the Ritz-Carlton brand maintained its prestige.
In contrast, the entire airline industry has lost its associations with luxury. Air travel was originally an expensive mode of transportation, reserved for small numbers of senior executives and affluent individuals, but this changed during subsequent decades. According to Almanacs of American Life, the number of airline passengers increased from about six thousand in 1926 to 12 million in 1946 to almost half a billion by the end of the century.
Underlying causes included improvements in the speed and comfort of aircraft, growing confidence about safety among consumers, an increase in disposable income, and the competitive effects of deregulation. The subsequent rise of discount airlines seriously undermined consumer associations between air travel and luxury, while wealthy travelers eventually abandoned commercial aviation entirely, after the introduction of fractional ownership systems for private jets.
This advertisement offers an early example of cooperative marketing between two separate companies, which formed an alliance to promote their brands together. The benefit for Ritz-Carlton becomes apparent if one considers its strategic position at the time. The hotel was built as part of an extended chain, but this was now defunct and the Boston property was independently operated. The owner could not afford such an extravagant promotion, and was undoubtedly delighted to have the advertisement funded by a marketing partner.
The benefit for American Airlines becomes apparent if one considers the changing nature of airlines, which were already in the process of transforming from luxury products to consumer commodities.
American Airlines needed to differentiate itself from other airlines, while reinforcing prior associations with luxury that could support premium pricing. It wanted to share in the reflected glory of the Ritz Carlton.
This advertisement includes visual signals of both aspects of the conflicted status of the airline industry at the time. The woman outfitted in furs, the elite status of the hotel, and wording in the text clearly indicate an appeal based on luxury. And yet, the chart comparing airline prices to CPI data acknowledges that ticket prices are dropping precipitously compared to other goods and services, implying a growing democratization of air travel.
Lennen & Newell
The advertising firm for American Airlines during this campaign was Lennen & Newell. Although virtually unknown today, it was a leading agency with clients that included Colgate-Palmolive, Lorillard, and Nabisco.
The strategic approach, copywriting, and artwork for this advertisement were heavily influenced by Carruth L. ‘Bill’ Smith, who was the account executive for American Airlines at Lennen & Newell.
Perhaps not coincidentally, he was also the brother of Cyrus R. ‘C.R.’ Smith, who served as president of the airline from 1934 to 1968.
This period represents a formative ‘golden age’ for agencies on Madison Avenue, during which the advertising profession entered popular culture. This is exemplified by numerous entertainment offerings in which advertising executives played prominent roles, including feature films such as Lover Come Back (1961) and television series such as Bewitched (starting in 1964).
More recently, this era has been featured in the retrospective television series Mad Men. Lennen & Newell reportedly served as one of the models for the fictitious Sterling & Cooper agency during development of the series. The methods and atmosphere portrayed in the program are not entirely misleading. Former employee Allan Hayes recently remarked that the agency “came closer to Mad Men’s ‘historical accuracy’ than any other place I ever saw.”
Artwork and Copywriting
This advertisement was not considered important by art directors of the era, nor is it considered significant today by art connoisseurs or advertising historians. When asked recently for reactions to this advertisement, several former art directors were dismissive. One remarked that it “follows all the period conventions. Inoffensive, no factual substance, despite the silly graph, and loaded with the client’s good opinion of itself. In 1957, all us lowly artists really dreamed of doing [more innovative] work like Helmut Krone, Milton Glaser and, just a bit later, George Lois.”
The latter refers to advertising art director George Lois, who would eventually be inducted into the Art Directors Hall of Fame and receive the Special Medal from the American Institute of Graphic Arts. Ironically, Lois worked briefly as art director for the American Airlines account at Lennen & Newell during 1957. Lois had a difficult relationship with the agency, the account executive, and the client. In an incident that is now legendary, Lois became so aggravated during a meeting with Smith that he overturned his desk and stormed out of the office, subsequently resigning a few days later. When asked recently to comment on the advertisement reproduced here, Lois disavowed any connection.
Nonetheless, this advertisement is particularly evocative of a distinct era in commercial illustration, and offers a superb example of a style of advertising that was common on Madison Avenue during the post-war period. It also remains a visually compelling and appealing image for certain audiences today, particularly those who have nostalgic views of bourgeois American culture during the 1950s.