The following document offers advice that might be useful to any organization thinking about implementing an incentive program. Editor Customer Service Newsletter www.customerservicegroup.com Incentive Programs Compiled by: Kathy Friend, CHA Performance Consultant and Director, Marketing Information Choice Hotels International This document was prepared for Property Systems, Choice Hotels International by Kathy Friend and is used to show how Choice Hotel operators can use an incentive program to their best advantage. She can be reached by email at: Kathy_Friend@ChoiceHotels.com Building your Revenue through technology, technique and strategy!
Table of Contents Why an Incentive Program?..3 Making the most of your program...4 Rules of the program.5 Various Incentive program ideas: Upselling Program.6 Outlet Business Boost 7 Exceeding Budgeted Revenues.8 RevPAR Increase..9 Return Reservations.10 Choice Hotels International 2 Version 1.0-05/08/00
Why an Incentive Program? If you re losing employees, you re losing customers! "On average, American companies lose half of their employees every four years, and half of their customers every five years. This suggests employee attrition may have a significant impact on customer loyalty. Frederick Reichheld, author of The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value. KBS Research of Colorado Springs, Colorado, suggests an average cost for replacing a line level employee surpassed $5,000.00 in 1999. What is not included in this figure is loss of revenue due to unhappy customers. Finding exceptional staff is getting harder, why not go the extra mile to keep the great (and trained) team members you already have? Let s face it, the hospitality industry is not on the top of any career lists for high pay and short hours. And most of us are not in a position to match the wages and benefits of the bigger hotels and top resorts in our market place. So what can you do to provide a competitive package? How about initiating an incentive program starting with your front desk employees? Now, before you dismiss this idea, consider the following: COMMON PERCEPTIONS This is going to cost me money. This is going to take me too much time to track and administer. If we do this, we have to keep it forever. The owner won t let me spend any money. Why should we pay extra for the staff to do their job? How can do I decide what the award is? What about the other departments like housekeeping and maintenance? I have too much turnover it will be too hard to track. What if all the employees would like a different prize? How can I control guest service personnel from underselling rates or turning away business IF it interferes with their incentive goal? THE REALITY The suggested programs pay only for performance, thus being self-funding (or paying). Excel based tracking forms are included. Set start and end dates for each program. Remember that you only pay for incremental income so the program pays for itself and more. Everyone needs motivation and recognition in addition, some extra $$$ or type of award (merchandise/certificate/travel) along with the competition a contest generates is a bonus! Don t do it yourself; let your people have input on the type of award that would motivate them. You have to start somewhere. The front desk makes sense as an income-generating department. Start there, see how it goes, then try it in other departments! Again, each contest has specified start and end dates. Only those team members that stay throughout receive the benefit. In addition, incentives may help reduce turnover issues. Ask them to get them involved! Cash always works, but if the group comes up with something else.. try to make it work! Communication and training are the keys. Your guest service members need to be trained on how you expect them to handle specific scenarios. Choice Hotels International 3 Version 1.0-05/08/00
Making the most of your program On the following pages you will find sample stock incentive programs that you can easily use at your hotel. Here are helpful tips to get you started. Start by getting the involvement of your staff. Let them know what your goal is (raise average daily rates ADR or revenue per available room RevPAR book more returning guests, increase revenues of outlets, etc.), and that you are considering using an incentive program to accomplish that goal. Then ask what types of rewards would be suitable and enticing to them. Remember, employees who are made a part of the process in developing a program will be more enthusiastic and quicker to endorse the program. Every incentive program should have a specific goal. It is important to provide the staff with training and techniques to achieve that goal and helping them attain the reward. The incentive programs listed in this packet include training tips. Goals must be realistic and attainable. Incentive programs can be individual or team oriented. Try a variety of programs to reach your goals. Do not use incentives in lieu of fair and competitive wages and benefits. Consider different incentives. Our programs indicate different cash levels for awards, but you could easily substitute any of the following: Movie theater tickets Amusement park tickets Department store or mall gift certificates Restaurant gift certificates Toys, games, other small gifts Comp time (this one is always a winner!) Set beginning and end dates to meet the goal, usually one month or one quarter will work best. You can always extend or repeat a successful contest. Establish the rules of the program so there is no dispute or misinterpretation. A generic Incentive Program Rules form is provided on the next page. To drive excitement, host a party for the staff involved to kick off the incentive program. Post all incentive program information, and keep it updated daily or weekly. At the conclusion of the program, post the results. Give personal praise and recognition for a job well done. Finally, solicit program feedback from the staff for future use. This is to find out what they liked or disliked and what will help improve the program for the next time. Choice Hotels International 4 Version 1.0-05/08/00
Incentive Program Rules Rule #1 The program starts on and ends on. Rule #2 The following positions are eligible to participate in the program: Rule #3 To be eligible, you must be employed continuously from the start of to the end of the program. Rule #4 Any deceptive or dishonest practices will disqualify you from the program. Rule #5 If you are unsure of any aspect or rule of the program, please speak with the manager. In the event of any dispute, management's decision will be final. Rule #6 All rewards and incentives will be distributed on. Choice Hotels International 5 Version 1.0-05/08/00
Upselling Program Goal: Time Frame: Who: Method: To book more rooms at higher rates and to upsell existing reservations into more expensive rooms. Can be continual but typically tracked and posted on a monthly basis. Front Office staff with individual recognition. Determine a booking and upgrade bonus system (example below). As each staff member makes a new booking or upgrades within the system, they print a copy and place it in a folder with their name on it. The manager should review these weekly and keep a master tracking form. On a monthly basis (or quarterly), the manager posts the results. Upsell Bonus: $10.00 upsell to poolside $1.00 per night Upsell to mini-suite/specialty room $2.00 per night Upsell to suite $3.00 per night Upsell to Presidential/penthouse $5.00 per night Booking Bonus: Sell a reservation at under Rack Rate Sell a reservation at Rack Rate Sell a reservation at Poolside Rate Sell a reservation at Suite Fallback Rate Sell a reservation at Suite Rack Rate $0.50 per night $1.00 per night $2.00 per night $3.00 per night $5.00 per night Training Tips to sell a new reservation: Quote rates on a standard room and a suite. Point out extra features and benefits of a suite over a standard room. Training Tips to upsell existing reservations using the following dialog: "I see your reservation is for a standard double room. Would you like to try our suite that includes (list features/benefits) and is only $10.00 more per night?" Choice Hotels International 6 Version 1.0-05/08/00
Outlet Business Boost Goal: Time Frame: Who: Method: To generate additional business for outlets such as restaurant, bar and/or recreational outlets. Can be continual but typically tracked and posted on a monthly basis. Front office staff with individual recognition. Print blank business card and have the staff print their name on them. When they refer a guest to an outlet they give the card to the guest who in turn gives it to the outlet. The outlet will collect the card, indicate the amount spent by the guest on the back and return the card to the manager on a daily or weekly basis for tracking. Or if the staff makes a reservation (restaurant, tee time) the outlet will note the staff name and track the amount spent by the guest. The staff could be rewarded 5% of the revenue generated by the referral. As an added incentive to the guest, the card could have a bonus associated with it free appetizer, 10% off check or one free drink. Training Tips: During the check-in process, present the card to the guest as a reminder to use the restaurant or lounge. When a guest asks for restaurant or lounge recommendations, always suggest your outlet(s) first. Choice Hotels International 7 Version 1.0-05/08/00
Exceeding Budgeted Revenues Goal: Time Frame: Who: Method: To exceed budgeted or projected room revenue. Can be continual but typically tracked and posted on a monthly basis or as your financial periods allow. Front office staff working as a team. Post the budgeted or projected room revenue for a given month. The amount of actual revenue that exceeds the budgeted revenue is commissioned at 10% and split among the front office team. Split the 10% based on the hours worked (to be fair to part-time and full-time staff). You may want to focus this program on transient room revenue only (not to include any group business). Training Tips: Communicate daily with staff on how the hotel is performing for revenues. Train staff to react to guest problems quickly and to the satisfaction of the guest. This will minimize adjustments for the 100% Guest Satisfaction policy. Choice Hotels International 8 Version 1.0-05/08/00
RevPAR Increase Goal: Time Frame: Who: Method: To increase revenue per available room (RevPAR) of the current month over the same month last year. Can be continual but typically tracked and posted on a monthly basis. Front Office staff with group recognition. Post the RevPAR for the current month of the previous year. On a daily or weekly basis, post the RevPAR of the current month (to date) so staff can see where they stand on a regular basis. At the end of the month, post the final RevPAR. If there is an increase, reward the staff with 5% of the total revenue increase this month over the same month last year. You may wish to prorate the reward based on the number of hours worked by individual employees to remain fair. Training Tips: Communicate daily with the staff on how the hotel is performing in regard to RevPAR. Train staff to react to guest problems quickly and to the satisfaction of the guest. This will minimize adjustments for the 100% Guest Satisfaction policy. Choice Hotels International 9 Version 1.0-05/08/00
Return Reservations Goal: Time Frame: Who: Method: To secure more return reservations from guests at check-in and/or check-out. Can be continual but typically tracked and posted on a monthly basis. Front Office staff with individual recognition. Each time a staff member makes a future reservation for a guest at either checkin or check-out, they complete a voucher. On a weekly basis, tally the vouchers for each employee and post the results. At the end of the month, reward each employee $1 for every future reservation they booked. Training Tips: Ask every guest during the check-in and check-out process, Do you have any future dates I can make reservations for today? Choice Hotels International 10 Version 1.0-05/08/00