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Wyndham International - Fostering High Touch with High Tech

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Wyndham International - Fostering High Touch with High Tech

Challenges facing Wyndham International

There are a number of challenges facing Wyndham International in 2001 as they move forward to capture market share of a distinct upscale segment of the business and leisure travelers. In 2001, Wyndham was not a well-known name in the industry. The company had been suffering financially and had sold considerable assets in an effort to promote the Wyndham brand. The challenge of building branch recognition in a market dominated by a few key players such as Marriott, Hilton and Hyatt compounded by the fact that the travel and tourism market was already suffering from the backlash of the September 11, 2001 tragedy make Wyndham's challenge somewhat overwhelming.

In addition to less than desirable branch recognition, Wyndham was just entering year three of a significant debt restructuring plan composed of a $1 billion equity investment, as well as a $2.45 billion restructuring of debt. Under such tight "purse strings" it is unlikely there will be any surplus funds available for any capital investment, excepting that which is deemed mandatory. Currently there is $30 million allocated for the ByRequest advertising campaign, however if this is consumed, where will additional funding be generated from? Current financials (Exhibit 1 of the case) are display a net loss to the business in 2001 of almost $139 million.

The leisure travel business is also changing evidenced by the following comment, "hotel products competing in the same segment are becoming indistinguishable in the customers' eyes" (Wyndham International: Fostering High Touch with High Tech, p. 7). There has been a tendency towards increasing competitiveness in the industry focusing upon price which has been propagated by internet technology. Technology has effectively enabled consumers to access data to book their own deals creating a lower cost delivery structure. According to Porter's Model, there are three strategies that can act as differentiators against competitors. They are cost leadership, differentiation and niche strategies (Turban, Leidner, McLean & Wetherbe, p.44). Clearly, in the face of financial restructuring Wyndham can neither afford to price out of the market nor afford to be the lowest cost provider. Establishing a differentiated experience or a niche strategy in the face of low brand recognition is a daunting task.

Wyndham's differentiation strategy to build brand recognition and share of wallet in the upscale business and leisure travel market, hinges to substantial degree upon the success of a guest recognition program named Wyndham ByRequest. The design of the program is focused upon offering personalized service to the members. CRM capability and investment in technology is pivotal to successful delivery. Interestingly enough, 'marketing research indicates that the primary elements driving selection decisions by business travelers were location and previous experience' (Wyndham International: Fostering High Touch with High Tech, p. 8). Wyndham is obviously trying to capitalize upon the experience piece. While Wyndham's strategy plays well to this market research, one in three surveyed indicated that frequent-guest points and airline miles are important and this in itself presents a challenge to overcome.

Finally, while technology is an integral component of the strategy, Wyndham's personalized focus hinges on the client experience and consistent execution. The challenge here is the staffing component, standardized training and communication to ensure that the client experience is outstanding regardless of the location. 'The technology infrastructure allows delivery of an experience and ByRequest is not a technology, it is a culture' (Wyndham International: Fostering High Touch with High Tech, p. 12). A culture that that needs to be diligently fostered.

How infrastructure strategy impacts overall IT goals and investments

In this business, the infrastructure was a critical factor in determining the technology strategy for Wyndham's successful implementation and speed to delivery. The majority of key competitors in the upscale business and leisure lodging market were franchisee based. Wyndham International presented an anomaly to this standard structure, as 85% of the distribution network was owned and operated. In a franchise based business, the IT expenditure typically fell upon the franchise owners and consequently budget decisions regarding technology were often given less focus. The result was a lack of standardization in IT. "Lack of a standardized computing infrastructure was due to the complex structure of the lodging industry, it high degree of fragmentation and the conflicting interests of the parties involved in making technology purchasing decisions" (Wyndham International: Fostering High Touch with High Tech, p. 4).

The competitive advantage that Wyndham strategically chose to focus upon was a differentiated, 'personalized' client experience. Centralization of client relationship management (CRM) data and ease of accessibility to this data was an essential ingredient for success. The fact that Wyndham controlled 85% of the distribution infrastructure complemented the IT and overarching business strategy perfectly.

Centralization of the IT piece allowed Wyndham to not only integrate the property management system with the central reservation system and ByRequest, but also generate efficiencies and economies of scale. IT staffing numbers were reduced, centralized systems and applications were more nimble. The IT investment was in an application service provider (ASP) model which facilitated access to centralized applications via internet web browser.

It is very evident in this case that the future direction and strategy was determined by business and that technology acted as an enabler. There was an organizational commitment to deliver an outstanding client experience for ByRequest members and the IT augmented this strategy. As mentioned, the success of Wyndham ByRequest, a key strategy, hinged upon the ensuring that every employee embraced the program. In an industry known of high staff turnover, consistency of delivery and training for key staff presented quite an obstacle. Current research indicates that Wyndham International has leveraged centralization of technology to provide a competitive edge with respect to training. Instead of relying upon more costly traditional training methods, such as: face to face , conference calls, e-mail and fax distributions, Wyndham collaborated with



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