Revenue Management: Group refines 'stay at one, dine at all'

CHALLENGE.
The four Starwood Hotels & Resorts Worldwide properties in Honolulu’s Waikiki Beach were losing restaurant business because employees would refer guests to competitive restaurants rather than restaurants at sister hotels. Employees said they didn’t have much information about all the F&B options at the other Starwood hotels.

SOLUTION.
A dual referral system in place now benefits guests and employees. Employees who refer guests to restaurants at sister properties get incentives. Guests receive discount coupons for taking advantage of the referral, and they can apply dining charges at any of the four hotels to their guestroom.The four Starwood Hotels & Resorts Worldwide-branded hotels in Honolulu’s popular Waikiki Beach offer a wide range of restaurant options. But restaurant business was lagging at the Sheraton Waikiki, The Royal Hawaiian, the Sheraton Princess Kaiulani and the Moana Surfrider, a Westin resort—all properties owned by Kyo-ya Co. and managed by Starwood. Brian Hunnings, director of food and beverage at the Moana Surfrider and a key developer behind the hotels’ new referral incentive program, talks about how the four properties now work together to refer business, a move that benefits guests and employees alike.

HM: What prompted you to come up with this idea?

BH: We went into an interest-based bargaining agreement with the Local 5 union, which represents our associates, to jointly tackle areas of concern, from a management side and union side. One of the biggest concerns was how to increase business in our restaurants. After looking at old promotional materials we used to use … it said one of the benefits of staying at any of our four hotels is that you don’t need to take a wallet with you because you can room-charge back to your home hotel, no matter where you dined. The “stay at one, dine at all” process always existed, but it was not widely promoted or endorsed by our associates.

HM: Why not?

BH: Upon doing some surveys among the staff, we found our own people often recommended restaurants outside our four hotels rather than recommend our own because they just weren’t familiar with the concepts. The owners had just invested several million dollars building or remodeling restaurants at each property and they were still new to a lot of employees.

For example, if I was dining at The Royal Hawaiian, a Luxury Collection resort, in the hotel’s seafood restaurant Azure and I asked a server for a steakhouse restaurant recommendation, nine times out of 10 the server would recommend a competitor, even though at the Moana Surfrider a half-mile down the beach, we have an award-winning steakhouse.

So the challenge became, how do we promote this “stay at one, dine at all” concept and get the associates behind it to promote it? After much debate the reward system for guests and the reward system for associates was born.

HM: So how does the dual reward system work?

BH: At any [restaurant] on property, when a guest receives his bill, in the check presenter is a comment card, which encourages the guest to leave remarks and opt-in to our email program to receive dining specials and event news at our four hotels. On the bottom of the comment card is a detachable coupon. For filling out a survey and opting into the email program, we reward our guests with a 15-percent off dining coupon for their next visit to any of the four Waikiki hotels.

HM: That’s the part that benefits the guest. How about the part that benefits the employee?

BH: That tear-off coupon … has a space on the back for the server, host, bartender or busboy to write in his or her name and associate number to personally refer the guest to one of our sister properties’ bars or restaurants. Once the guest visits a sister restaurant and redeems his coupon, we enter the referring associates’ number [into our shared internal system]. Each associate gets one point for every coupon redeemed and each point counts as a separate chance to enter a monthly raffle within their department for gift certificates, samples of new products, and more. At the end of the year, there is a grand prize raffle for all four properties combined.

HM: How does the hotel benefit from all this, besides increasing traffic and spend at all four restaurants?

BH: The hotel gains through employee referrals and increased business, but also by receiving honest feedback through the comment cards. We also get to develop our direct marketing list, and collect guest data, like their birthday or anniversary, which allows us to send special promotions.

HM: Once all the details were ironed out, how did you execute the program?

BH: The first key was familiarizing the staff with all the dining options available at all four properties. We invited staff in for tastings, did cross-promotional cafeteria days … and had sister properties cater associate parties and events so everyone could taste the food and understand the restaurant concepts.

Second was developing collateral to help drive traffic to the hotels. First was the comment card. … Then we printed a driving map of Waikiki and Oahu, which pointed out areas of interest and only advertised our restaurants and shops, for the bell desk, valet and concierges to give out.

Third, we came up with a piece the concierge could give guests with a 15-percent-off coupon as a teaser to entice guests to dine at our properties rather than ask the concierge to book them at outside restaurants.

HM: This idea centers on partnerships. Did you already have good relationships among the four properties?

BH: The most difficult part to overcome was the employees themselves—they are all so fiercely loyal to their own properties that in some instances, they would rather send business off property rather than send it to a sister property, because they wanted their home property to have the highest F&B revenue. It took a lot of work to break through that and create an inclusive environment. I have to give tremendous credit to the four GMs. They easily could have said they were only concerned with their own properties, but they … each drove the message at their property. Without Erik Berger (Moana Surfrider), Kelly Hoen (The Royal Hawaiian), Kelly Sanders (Sheraton Waikiki) and Fred Orr (Sheraton Princess Kaiulani), this project never would have worked.

HM: Can you give a rough estimate of the costs involved?

BH: The owners agreed to pay our associates who were part of the [planning] committee for their time to attend meetings, which was the largest expense. We had probably 20 associates who met [three to four] hours once a month during planning. Then the initial printing costs for the collateral was about $10,000.

HM: Did you have to make any infrastructure changes or upgrades?

BH: The point-of-sale systems were already set up to offer the “stay at one, dine at all” 15-percent discount with no problem. The biggest challenge was setting up the shared drive on the intranet all four properties share so each property could accurately input and track the referral cards that were coming back.

HM: How do you market this program?

BH: By word of mouth and the collateral we printed. Nothing is more powerful than a personal recommendation coming from a knowledgeable server you trust when you are asking for good dining choices.

HM: Can you tell how much additional revenue your properties have generated from this?

BH: I can’t share financial information, but I can share the amount of referral cards redeemed. Our smaller properties get back 200 to 250 referral cards in a month and our larger properties can get back well over 500 cards in a month. Our guests love it and we have the comment cards to prove it.