Status

Final Submission in progress

Prompt

Delivering Bad News: Notifying Guests That the Rewards Program Will Be Downgraded

Who's Involved

Nancy Jeffreys, director of marketing

• Has worked as a director of marketing since 2010
• Oversees all marketing efforts with the exception of conventions

Andrea Garcia, general manager

• Has worked as general manager since 2013
• The marketing team reports directly to her

Scenario

Nancy Jeffreys, director of marketing, just met with Andrea Garcia, general manager. Nancy showed Andrea how several of the Prestigio's marketing programs and campaigns did not seem to be paying off. Regarding the rewards program she commented, "I think we should lower rewards for several reasons. During the past two years since introducing the program, we've tracked the behavior of our guests. I compared guests who've been staying here for at least the past four years. After starting the rewards program, these guests did stay more days each year, probably because they could use their rewards points. However, altogether they paid for fewer nights. I estimate that we lose nearly $14,000 per year giving these guests perks that don't justify the expense. Also, our rewards program is currently far more generous than any of our local or national competitors. We should fall in line with their rewards programs to ensure we're maximizing revenue."

Andrea considered Nancy's reasoning fairly compelling and thorough. She asked, "What do you recommend?" Nancy responded, "I definitely think we need to increase the number of rewards points (or Prestigio Points) needed to get a free night from 9,000 to 15,000 for most hotel rooms. Generally, that means a guest would need to pay for five nights at the hotel to get a free night. In the past, it would have required about three nights. Also, the current policy states that rewards points never expire. I think we should change the policy so that re wards points expire in two years in the absence of purchase activity at the Prestigio."

Andrea responded, "Well, those seem like reasonable changes. What about our affiliation with the Galaxy Hotel Alliance?" Nancy answered, "I think we should get out of this alliance. It was a good idea originally, since guests could choose to redeem their points at roughly 100 hotels nationwide that belong to the alliance. But it costs us a lot to be part of this alliance, and I don't think we're seeing any returns."

Andrea agreed that these changes made sense. She asked Nancy whether guests in the re wards program should be notified of all these changes and how they should be notified. Nancy stated, "I think we should be open about this and tell all our guests about these changes. Many major hotel chain has made similar changes recently, so we're in line with industry changes. It's true that most major hotel chains have not gone out of their way to tell guests that reward points are no longer as valuable, but I think we're more likely to garner dissatisfaction from guests when they find out we tried to sneak these changes through without telling them."

Andrea said, "Okay, let 's move forward with these changes. One more question. We've got regular members and Elite status members. We've traditionally given Elite status members free Wi-Fi access, free access to the Prestige Lounge (a club on the second floor with free snacks, drinks, and other amenities), and free in-room snacks. Do you think this makes sense?"

Nancy replied, "I'm glad you brought this up. We've done analysis on this and are paying attention to what some other hotel chains are doing. We recommend now providing these services and amenities at 50 percent discounts."

"Great," said Andrea. "By the way, do you think there's anything positive we can include in the message?"

"Definitely," said Nancy. "We could point out many of the improvements in our business lounge, which has new computer terminals, free Wi-Fi, a minibar, and other services. Also, we could mention many of our August specials, including weekend getaways for rooms at just $119 per night."

"Thanks, Nancy, for analyzing our rewards programs and proposing these changes," said Andrea. "Go ahead and contact our rewards members as soon as you're ready."

Task: Write a Message to Elite Status Guests

Assume the role of Nancy. Write a message to Elite status members notifying them of changes to the rewards program. You can assumer that the changes will take place three months from now.