MCLEAN, VA (Oct. 7, 2002) � One year after the events of Sept. 11 shook the hospitality, travel and tourism industries, a group of senior executives attending a recent HSMAI Executive THINK in Houston reaffirmed sales and marketing priorities put forward at a previous HSMAI Emergency Strategy Conference last October. 

Those sales and marketing priorities include a focus on basic selling tactics, innovative, value-oriented marketing initiatives, and cooperative sales and marketing programs with partners. 

However, participants in Houston concluded that the one major principle that was ignored, specifically to avoid steep discounting, has left the hotel industry looking for ways in which to return to normal rates and profitability now that occupancies are climbing. 

The HSMAI (Hospitality Sales & Marketing Association International) Executive THINK (Travel & Hospitality Innovation, Network, Knowledge) in Houston focused on �Rebuilding Profits: A New Definition of Value.�  Some of the hospitality and travel industry�s top leaders and visionaries met at the University of Houston Hilton Hotel & Conference Center to discuss the unique dynamics driving value in hospitality, travel and tourism in today�s marketplace. 

�We put 22 sales people in the field in a program called �Everybody Sells� and sent them into the marketplace to create business,� said Michael A. Leven, president and CEO of U.S. Franchise Systems.  This was part of Leven�s push to get everyone back to basic selling, combined with cooperative marketing to drive business and revenues. 

�The biggest challenge that we and everyone else faces today is the decline in RevPar that started in March 2001 and accelerated after Sept. 11,� said Thomas Corcoran, president and CEO of FelCor.  �I don�t think I�ve ever seen this long a period of negative RevPar,� Corcoran said, adding: �How we deal with the challenge is the issue,� referring to the steep discounting that resulted as the industry tried to compensate for the loss of business. 

Discounting has resulted in some hotels selling $200 per night rooms for half of what they would normally fetch.  �What is different today is that hotel owners want to make money,� Corcoran said. 

He added: �Today, we have to work with our brand managers to get the value up so there is more value in the real estate.  As capital is appreciated, today owners want to make more money.� 

�You can�t hide your pricing,� notes Leven, adding: �If you price the room at $59 and want $159, you will get a $59 customer, not the $159 customer, and you will miss the boat in positioning the product and have difficulty getting back to where you want to be.� 

Leven cautions that the �biggest black hole going forward� is pricing.  It is the most important factor, and why and where it works is the crucial answer for everyone in the hospitality, travel and tourism industry. 

The THINK, which generated tremendous audience participation and discussion, turned to interactive media and its impact on rates with a plethora of web sites promoting discounts on the Internet. 

Bob King, CEO of Neat Group, an interactive company promoting web-based travel products, noted, �Initially, it was great to fill in the holes, but now many third-party distributors are getting more power and leverage.� 

In reacting to the across-the-board discounting that has evolved over the past year, King said: �It�s like the horse has been led to water, but now some can�t stop drinking.�  King pointed out that new �rules-based� products are available to give hotels more control over their discounting through third-party distributors. 

The third party distributors and the discounting grew out of supply and demand imbalances and it will be very difficult to create discipline in the hotel industry pricing because of the industry�s highly fragmented structure. 

�Many hotel companies blame their value drop on the third party distributors, but they are not the enemy,� King said.  He challenged hotels to know their objectives and make pricing decisions in light of those objectives. 

Some of the THINK participants questioned whether these discounted prices are being driven by the competition or by the customers. 

�Those using the tools must know how to interpret the situation,� said Terrell Bradshaw, director of business development for WizCom International, adding:  �The people equation is really the issue.  Having the choice is the new way, but the people need to control it.� 

In was noted that revenue management departments never had to manage discounting in the past, just turn it off.  Training of people was urged to make sure the staff knows what the brand is and how to price the brand and generate sales.  �Both the consumer and business traveler have a new mindset and the distribution has changed,� said Bradshaw.  He noted that few companies are doing customer relationship marketing, and most are simply accumulating the data. 

While companies delay spending money on database mining, the world is racing on.  Unfortunately, most companies question the benefit of CRM.  �You see the dollars going out and question the value of that heightened level of customer service,� King said. 

Everyone suggested that companies need to take a leap of faith and do it in order to reap the benefits of CRM. 

HSMAI Executive THINK Facilitator Dr. Lalia Rach, dean of the Center for Hospitality, Tourism & Travel Administration, New York University Tisch Center, summed up the discussions on defining value:  �As indicated by our panelists and speakers, driving value in any hospitality business requires a communication-driven culture, passionate leadership, brand integration and a focused strategy and vision,� Rach said. 

�Accordingly, technology, if utilized correctly, can provide the competitive edge by adding value to the entire consumer experience,� she added. 

�The philosophy and success of the HSMAI Executive THINK sessions are due to the limited attendance by top senior executives who come to learn and debate issues that are the most pertinent to our industry and discipline today,� said Robert A. Gilbert, CHME, CHA, president and CEO of HSMAI.  �The line-up for �Defining Value� offered some of the greatest minds and experts who candidly discussed the key components that define today�s value proposition. � 

The THINK sessions included: 

�Does the Asset or the Experience Drive Value?�  Michael A. Leven, president and CEO of U.S. Franchise Systems, and Thomas Corcoran, president and CEO of Felcor, Inc., presented their definitions of the current way value is key to rebuilding profits in the hotel industry. 

�Dynamic Leadership Drives Value.�  Continental Airlines� President Larry Kellner shared his views on the critical success factors that contributed to the airline�s significant turnaround in customer satisfaction and profits between 1997 and 2000.  He also discussed the current state of affairs in the airline and travel industry and his perspective of what it takes to be successful in the industry today.  The Continental case is a study in the importance of dynamic leadership to build value in negative times. 

�Using Technology to Drive Value.�  Technology has been a constant transformational element for hospitality and tourism.  For the past decade it has been successfully used to improve the financial standing of companies large and small, new and old.  Bob King, CEO of the Neat Group, and Terrell Bradshaw, director of business development for WizCom, discussed value creation through technology as it relates to the power and influence of customization and dynamic packaging. 

�Redefining the Role of Sales and Marketing with the New Definition of Value.�  Facilitator Dr. Lalia Rach, dean, Center for Hospitality, Tourism & Travel Administration, New York University Tisch Center, reviewed the implications of the presentations and discussions, as well as assisted participants in summarizing the impact these changes have had and will have in the future role of sales and marketing professionals in hospitality, travel and tourism. 

Attendees received a workbook of handouts and reference material on topics and issues covered during the session.  This invaluable take-away can be used for reference when researching ideas, strategies, and tactics that can be implemented in organizations or destinations. 

Attendance was limited and registration was applicable to qualified executives in hospitality, travel, and tourism with a vice president equivalent or higher position. 

HSMAI is an international organization of sales and marketing professionals representing all segments of the hospitality industry. With a strong focus on education, HSMAI has become the industry champion in identifying and communicating trends in the hospitality industry, while operating as a leading voice for both hospitality and sales and marketing management disciplines.  Founded in 1927, HSMAI is an individual membership organization comprising nearly 7,000 members from 35 countries and 60 chapters worldwide.