The Four Seasons Company, as per current financial, seems very profitable and the earnings per share are increasing each year. From 1997 to 1998 EPS increased by 66% and from 1998 to 1999 it increased by 22%, actually from 1997 to 1999, the value has more than doubled. The main reason for the increase seems to be a total net earnings increase of 112% in two years. (See Exhibit # 1 for figures). This is a result of increase in revenues and also because costs increased less than revenues. This indicates that in addition to higher sales, efficiency improvements have been effective as yearly costs for operating items dropped 68% and the interest costs also have decreased by 105%, making it interest income.
Based on this information, the company is recommended to continue their emphasis on high personal service and quality for their hotels as the customer base are not price sensitive but concerned about service and luxury. It is important to have non-complaining, satisfied customers as this group is more satisfied than those where service recovery is needed, even when service recovery is performed at a high level. Also, satisfied customers are more loyal and a key to continue having a financially strong company. A key to this development is to continue to focus on employee satisfaction and employment procedures as this is resulting in low turnover (compared to the industry average), highly experienced and motivated staff and consequently excellent service.
Also, the strong financials support FSH’s (costly) growth strategy, and would further indicate that the company has the ‘back-bone’ to support such a strategy.
3.0 Leverage the website for marketing purposes
The Four Season Hotel (“FSH”) should further leverage their impressive website. First, they should maximize the site for mass – marketing purposes. For example, the site would allow customers to appreciate all FSH properties, and a customer who has never seen a FSH can view rooms, conference halls, restaurants etc. The website can further provide up-to-date information on vacancies, promotions, city tours etc. This same information could be updated at any time to reflect specials across respective FSH. For instance, the Milan hotel might anticipate low vacancy one week, and could attempt to fill some vacancies by listing a Milan resident special on the site e.g. with a two night stay and get a free dinner in the restaurant.
Internal marketing is another great possibility for the FSH, as long as the “high – tech” is followed by “high – touch”, and the system is not used to replace the human element. The intranet site should focus on cost-saving promotions, healthy competition between across respective FSH’s, employee feedback pages etc. Management should use the intranet as an additional medium to disseminate information to employees and as a means to obtain information from employees.
An easy to use e-commerce site for the hotel would be interesting for select Four Season’s customers. Again, this should not replace the “high – touch” that the FSH brand is identified with, but rather add another convenience for its customers. For example, some customers like making their reservation via the Internet and having an additional option with regards to making a hotel booking could turn out positively.
4.0 Establish and manage a common customer awareness database
The hotel should change the existing database containing guest preferences into a centralized database available to all FHS properties. This should be deemed a high priority. It would be a typical one-time fix to enhance customer satisfaction and for implementation it could leverage FSH’s existing intranet platform.
The main driver for a change of this sort would be its potential to further improve the FSH’s customer service. For example, as existing FSH customers are highly concerned about time there should be no need for them to fill in forms with preferences for each new hotel they arrive at. Also, it would be perceived as impressive for the customer arriving at a new hotel where the personnel would already know their preferences. This would increase the feeling of intimacy and personal touch during the hotel stay and consequently enhance customer loyalty and satisfaction. Additionally, the fact that only 9% of Four Season’s hotel guests are using multiple properties should not lower the importance of making such a change.
In fact, 9% of their customer base means that approximately 400.000 customers each year use multiple Four Seasons Hotels. (See Exhibit #1) Also, the positive word-of-mouth this change would bring will most likely increase the number of guests staying at multiple properties. Furthermore, as the hotel has a growth strategy, the number of hotels and rooms will continue to increase and as such enhance the need for the common database.
Also, in addition to customer satisfaction, having one database for all hotels would decrease costs for the chain in the long run as it will not have to maintain 50+ different databases.
5.0 Four Season’s management should solicit select feedback from customers.
The idea here is quite simple and essentially comes down to ensuring that the hotel maintains its brand. The FSH has done very well by establishing a strong brand and enjoys a high % of repeat customers. Management and employees alike know what the Four Seasons stands for and the experience they aim to offer the customer. That said, and as technology races forward it is important for businesses to leverage it where possible and ‘profitable’. The key for the Four Seasons is to leverage it in a way that does not negatively impact their brand i.e. detract from the overall customer experience offered by Four Season’s employees, which is highly personal, intimate and customer oriented.
For example, management could solicit feedback from customers as to whether they would use an automated (electronic) checkout service and whether customers view this as something consistent with the Four Season’s brand. This selective feedback could be centralized at first in that it is sponsored by the corporate office (so as to solicit feedback that could be leveraged across all properties) and then ‘tweaked’ per location to take into consideration cultural specifics etc. Findings could be leveraged across properties and stored in the central database to eventually maintain, reinforce and ultimately improve the Four Season’s brand, customer experience and ultimate profitability.
6.0 Implement a “Seasons Pass Loyalty Program” Enhancing Customer Loyalty.
Implementing a Loyalty program contributes to making guests feeling special, which undoubtedly makes a difference in his or her experience. A loyalty program could even extend to other value chain partners, thereby, allowing for further tracking of guest preferences. Without a loyalty program, FSH loses out on building strong relationships with its guests. As switching costs are minimal, loyalty is low unless a competitor differentiates and thereby increases its odds of attracting return guests. In order to compete successfully within this tier, a reputable brand name is imperative, which also represents a significant barrier to entry for potential new entrants.
The common database will undoubtedly enhance the relationships because clients enjoy the sense of community that is established when being part of a loyalty club. Therefore it is important to have mechanisms in place to ensure guests to remain loyal to FSH and choose the company as his or her accommodation provider. To facilitate this, the hotel should introduce a frequent guest card, the ‘Seasons Pass’, which will serve two functions:
1. Track guest activities within FSH so that their preferences can be recorded.
2. Allow guests to collect points every time they stay at a Four Seasons property and use them towards service companies affiliated with Four Seasons, creating loyalty as a result. It will also aid individual FSH locations to better understand which facilities within the hotel or resort are the most sought after and will be able to segment the information based on the region of the world or type of consumer (leisure or business). Through partnering with external companies such as high-end car rental companies, airlines, and travel agencies, FSH will be able to offer guests a solution to every decision they may encounter during their stay. Thus the Seasons Pass and the networked database will ultimately be the bridge to building and maintaining positive guest relationships.
Exhibit 1: Financial data for the Four Seasons Hotels – EOY 1997 to EOY 1999:
Exhibit # 2: Number of customers using multiple Four Season Hotels each year
* Assumed average coverage rate through the year is based on information in case, “The Roccoco New York Hotel” by Anna S. Mattila. Using the rate accomplished by the Roccoco New York boutique hotel.
** As no information of number of customers per room is provided, one per room is assumed.