Orlando-based Associated Luxury Hotels has morphed into a full service independent hotel chain with its purchase of WorldHotels 18 months ago. Its chief commercial officer Tom Santora, also executive chairman of WorldHotels, shares more about the acquisition synergies
Let’s go back to the beginning. Why did Associated Luxury Hotels buy WorldHotels 18 months ago?
We compete with the bigger chains, but we were a one-legged stool doing only meetings and incentives (the parent owns Associated Luxury Hotels International or ALHI, an independent global sales organisation serving the North American MICE market). We should also be doing corporate travel and leisure. Either we build or we buy. So we bought WorldHotels.
Why WorldHotels?
We have the same ethos, i.e. to prop up independent hotels for success. The portfolios were almost opposite, so there wasn’t an overlap from a distribution perspective. ALHI at the time had over 170 hotels in North America and 50-60 hotels internationally, while most of the 350 members of WorldHotels are predominantly in Europe and Asia, with only over 30 hotels or so in the US.
From the sales perspective, no one does MICE like ALHI, while WorldHotels is the ALHI of corporate travel. So we have two portfolios covering the globe. We’re now a full-service soft brand, not just a MICE global sales organisation.
ALHI has existed over 30 years. Why is it important to be a full-service soft brand today? How do ALHI members react to your being global, from US-centric previously?
It is a delicate but important subject in that in both groups, I don’t think members always want to see you grow. They want all the attention, so as we keep growing the organisation, sometimes they may feel they won’t be getting as much revenue as they used to get.
But if, say, our sales person talks to a customer and the customer says, ‘We need to have a meeting in Shanghai, what do you have there?’ If we don’t have anything there, well guess what? They are going to call Marriott or Hilton or someone else.
If you join ALHI, you probably don’t want the sales person running around selling 600 hotels (the combined number of hotels, roughly), but remember, the 600 hotels are not all MICE hotels, only a portion.
Do you see a day when the two portfolios will combine?
What we might see is the ALHI collection and the WorldHotels collection coming under one name. In some cases members might be in both (depending on the product). A lot of WorldHotels’ members in Asia are upper upscale hotels that need MICE, while the ones in Europe and the US typically have 150 rooms with three meeting rooms. There are already 35-40 WorldHotels members that have also become part of ALHI.
Give me an example how the purchase has benefited ALHI.
It gave us literally overnight an infrastructure to put more MICE people on the ground.
On our own, to hire someone to work for ALHI in Singapore would mean us knowing who the experts are, setting up an office, understanding the requirements such as medical benefits, etc. Now, they can start working in Shanghai or Beijing (WorldHotels has over 30 sales offices globally) and that’s the plan.
We’re going to put more MICE people on the ground globally. If you rewind to 18 months ago, everybody was in the US; today, we’ve already opened offices in London and Frankfurt, and Paris next, with offices in Asia and South America following.
Back to the two portfolios, how are you growing them going forward?
Our CEO (Josh Lesnick) stands behind the mantra that we’re not in the membership business; we’re in the revenue-generation business. We have always been a sales-focused organisation that highly incentivises our sales people to perform (http://bit.ly/2KhCrie). We’re not about the plaque; we want to be behind the scenes driving revenue and helping guide our hotels be successful.
So our combined portfolio moving forward is to have the right quality hotels in locations our customers want be, and to make sure we have the sales support to make those hotels successful.
That means saying no to hotels (that are not the right fit). In the past year, we have turned away over 10,000 rooms inventory from people who came to us (for WorldHotels membership). When we did the background, we didn’t think we could support them, so we didn’t want to take their money, or we felt their quality wasn’t where we’re going.
Apart from shifting WorldHotels’ culture towards more revenue-generation and sharper membership fit as you’ve just described, how else are you strengthening the new child?
We’re investing over US$10 million in WorldHotels alone this year on technology and people.
One of the big initiatives we’re taking is relaunching the loyalty programme. We’ve sunsetted Peak Points (the previous WorldHotels loyalty programme) and are launching an entirely new one, TheList, this fall.
There’s a focus among independent chains on loyalty programmes, as the big chains launch soft brands and other new threats such as home-sharing emerge. What gives your new loyalty programme an edge?
Our CEO Josh is the gentleman that came up with no blackout dates. He’s either launched or redefined maybe five different loyalty programmes from major chains like Hyatt, Starwood, Wyndham, plus he launched a loyalty coalition on Broadway, addressing issues such as how to get members to go to the different theatres’ shows – in short he’s Mr Loyalty, he gets it.
I redefined Omni’s programme (Santora was Omni Hotels & Resorts’ CMO and SVP of sales) but I also launched Global Hotels Alliance (GHA) which brought together 35 brands and 600 hotels around the world. Omni was a shareholder in that, so I had the chance to work with the CEOs of GHA to develop (the alliance).
And now we have a chance to launch a loyalty programme from the ground up, without being handcuffed by old technology or legacy programme.
How does one go about launching a new loyalty programme?
Understanding what our customers want is one of the first steps. In 4Q2017, we did a quantitative study of 100,000 independent travellers across the globe.
And here’s a really interesting finding: they feel they get inconsistent recognition at independent hotels. Say, when they arrive, they’re asked ‘is this your first stay with us?’ when it’s their third.
Then we went to the GMs and owners and did a similar survey. Guess what, the first thing they said was they needed to improve recognition for their guests – they know they don’t know their own customers.
So tied to our loyalty programme is a new CRM that will create extremely valuable profiles of every guest. This will provide them with better service when they travel and stay with our members.
We’re going to go back to the hotel, take three years of the customer history, and dedupe it. So instead of five times Santora (record), it becomes one, and that profile would say everything about me, not just where I’ve stayed – and that it’s not my first time at the hotel but third – but what my preferences are. We’re providing our members with technology that on their own, as independent hotels, will be expensive to have.
We’re still fine-tuning the programme and will roll it out in the fall, after the new WorldHotels website is launched this summer. There, too, the change won’t just be the skin of the website but an entirely different architecture. It will be fantastic from the functionality perspective, communications perspective and so on.
