Sheraton’s Link to Customer Satisfaction

Some of the most effective hotel technologies are those that simultaneously satisfy guests, improve operational efficiencies and generate additional revenues. That’s what Sheraton Hotels & Resorts believes it has in Link@Sheraton, a communications hub in hotel lobbies that doubles as an Internet lounge and a social networking hub.

The Link, in which Sheraton has partnered with Microsoft for both technology and content, is part of the brand’s multi-year, $4-billion revitalization plan that touches all aspects of the product. The initiative was launched in 2007 and includes an investment of more than $2 billion in new hotels, $1.3 billion in renovations and $400 million in signature brand initiatives, such as Link@Sheraton.

“Link@Sheraton has exceeded our expectations in every way possible,” says Hoyt Harper, Starwood’s senior vice president, brand management, for the Sheraton group and architect of the brand’s efforts to upgrade its look, portfolio and performance. “We took a group of owners to the Sheraton Toronto to see the pilot installation of Link. Some of them didn’t understand the concept or were unsure it would work in the way we described it. When one of the owners saw how busy it was, he asked, ‘You are paying those people to stand in line to wait for a seat?’”

The Link combines the functionality of a business center with the ambiance of a Starbucks. Guests can use the space to work, relax, connect electronically to friends and family and socialize with other guests. They can sit in oversized chairs or at communal worktables. Offerings include free Wi-Fi and Internet-enabled computer stations, flat-screen TVs and daily newspapers. Completing the scene are special scents, soft and task lighting and music.

Another feature in some lobbies is the Microsoft Surface, a 30-inch computer display set into a tabletop. Several guests can use the technology simultaneously without a mouse or keyboard. Content includes several applications Microsoft created specifically for Sheraton. They include CityTips, an electronic concierge that uses satellite maps and other tools; Sounds of Sheraton, a lobby-based digital jukebox populated by artists from Sony BMG, another of Sheraton’s partners; and Sheraton Snapshots, a photo library of the chain’s properties around the world.

“Through consumer research, we knew a significant portion of our customers want a place to go outside of their guestrooms, and in general people want to be around other people,” says Harper. “We also found that women business travelers are less likely to sit in a bar or restaurant by themselves. In the Link, guests can carve out their own space so they’re alone but not lonely.”

About 300 Sheratons, or 75 percent of the global system, have installed Link@Sheraton in their lobbies. Chain officials say 90 percent of the properties will have it by the end of the year.

REVENUE BOOST
Sheraton has made a few changes to the Link concept since launching last year. For one, popularity of the facility spurred the chain to increase the floor space for the latest versions of the concept. Another unexpected benefit: Harper says the Link draws customers from “all parts of the day—before breakfast, after breakfast, during meeting breaks, in the evenings and even the late hours.”

An offshoot of the project has been creation of Link Café, an outlet to sell coffee, drinks, snacks and other items. And while the café takes sales away from some other hotel f&b outlets, overall revenues have risen and operating costs have lowered.

“Our Overland Park, Kansas property, for example, has a nice restaurant but it was too big. By putting in the Link and the café, the hotel was able to reduce the number of seats in the restaurant,” says Harper. “The café serves Starbucks coffee and has breakfast sandwiches and pastries in the morning and snacks and food during the day. As a result, by having an alternative to a sit-down restaurant, the hotel has been able to increase its covers at breakfast. And overall beverage revenues have gone up substantially.”

It was a similar case at the Sheraton Chicago, which has a grab-and-go outlet on the main lobby and positioned its Link and Link Café on a lower level. “It created another destination in the hotel for guests,” says Harper. “The hotel doubled its beverage and café sales in the morning and reduced operating costs.”

Other than a few tweaks to keep the product fresh, Harper says the brand plans no short-term changes to the Link concept. “It’s a financial commitment for owners to install Link, so any change we would make would be just to keep it fresh,” he says, adding that an announcement this summer regarding Sheraton’s partnership with Microsoft will mean additional content and enhanced functionality for Link computers.

“There are a number of opportunities to create efficiencies by having Link@Sheraton,” he says. “One benefit we’ve found is that it’s no longer necessary to put kiosks in lobbies to print-out boarding passes as guests can use Link. It’s just another piece of equipment we don’t need.”

Similarly, business centers in the hotels become somewhat obsolete because, as Harper points out, guests would rather do work or use computers in a social setting than in a sterile business center.

PLAN NEARS COMPLETION
Sheraton’s revitalization program is about 70 percent complete and has resulted in major shifts in the composition and look of the portfolio. Renovations are complete at 63 of the 98 North American properties slated for renovation, and another 30 will be complete by the end of the year. Some high-profile Sheratons with renovations complete or underway include the Sheraton Denver, Sheraton Seattle Hotel & Towers, Sheraton Chicago, Sheraton Dallas, Sheraton Waikiki and Le Centre Sheraton in Montreal. As part of the program, 211 properties have added the brand’s Sweet Sleeper all-white 300-thread count bedding.

“From the investment standpoint of our owners, we were fortunate to have started this process in 2007, when economic conditions were still favorable,” says Harper. “It’s a substantial undertaking to have that many properties under renovation at the same time.”

The brand did extensive research to learn what their customers wanted in the product and then presented the results to its owners advisory board. “We wanted them to invest only in the things that will have the biggest impact on guests’ satisfaction and their perceptions of value,” he says. “That way, owners can expect to get a strong return on their investments.”

Despite the ongoing revitalization, Sheraton has recognized the difficulties some properties are having in this economic environment. To ease the pain, Harper says the brand has delayed some initiatives and given properties leeway in certain operational areas.

“For those properties that have been able to exceed our standards, we’ve allowed them to cut back in certain things that won’t affect the guest experience but will help them manage costs,” he says, citing shorter restaurant hours as an example.

SATISFACTION RISES
Even with the upgrading program still in progress, Sheraton has seen a meaningful bump in brand performance. According to Harper, guest satisfaction metrics have risen across the board. Overall guest satisfaction improved from 7.87 in 2007 to 8.12 today. Both likelihood to return and likelihood to recommend jumped by nearly a point to 8.78 and 8.74, respectively. The meeting planner satisfaction index, which is measured on a five-point scale, rose from 4.18 to 4.32 for the brand.

Harper is particularly proud of Sheraton’s performance in the Brand Health Monitor study, in which a third party surveys 3,000 frequent business travelers. “Our preference among this group is now ahead of both Hilton and Hyatt, trailing only Westin in the upper upscale segment,” says Harper. “And, even though just 40 percent of our properties have the new bedding program, our ‘comfort of bed’ score is second only to Westin.”

IN THE PIPELINE
Sheraton opened 26 new hotels in 2008, including 16 in North America and expects to open 20 more this year, including nine in North America. Another 50-plus should debut between 2010 and 2012, with half of them in North America. Target markets for development run the gamut from the Caribbean to urban and higher-end suburban markets.

“This year, we’ve already opened three hotels, with a property in Brooklyn and a convention-center hotel in San Juan, Puerto Rico to follow,” he says. “Also this year, we’ll be celebrating the repositioning of Sheratons in Denver and Dallas, two big-box hotels that have underdone $165 million in renovations between them.

“We’re half the size of Marriott in North America so we have plenty of opportunities to grow in existing markets and in new resort destinations,” says Harper.

As part of the brand revitalization program, 24 hotels that wouldn’t or couldn’t meet Sheraton’s standards left the chain in the past few years. Some properties were in markets that can’t support upper upscale hotels. Others couldn’t justify renovation because the projects wouldn’t yield reasonable returns for the owners. Even several properties in the company’s own portfolio in Maine, New Hampshire and Pennsylvania lost their flags.

“We’re being very aggressive in removing hotels, and 2009 isn’t the end of it. Going forward we’re going to make sure all hotels stay above our standards,” says Harper.

“I’ve been asked why other attempts to reinvigorate Sheraton didn’t work. We had to give up a lot of fee income to do this, and I’m not sure we previously had the mindset to do so. This time, Frits (vanPaasschen, president & CEO) said do it and do it as quickly as possible because of the long-term benefits of strengthening the brand.”

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