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Industry News - January 21st 2011



Sheraton's Commitment to Website Design Pays Off

Sheraton.com, the website for Sheraton Hotels & Resorts, has been recognized as the best hotel website in its class for brand experience in the November 8, 2010 report, The Best Of Web Site Brand Experiences 2010 by Forrester Research, Inc. Forrester Research conducted an independent survey of fourteen consumer websites in the hotel, automotive, and skin care industries to identify best practices. The survey reveals that Sheraton.com leads the hotel category in Brand Action and all categories in Brand Image ratings. 
Forrester first conducted a Brand Action Review of each website, focusing on the “transactional, informational and usability aspects” of the site. The report revealed that Sheraton.com’s design has a “responsive interface” and utilized bullets to display hotel features in a clean, easy-to-read format.
Sheraton ranked the highest across all industries in the Brand Image category.  Forrester makes note of Sheraton.com’s “unique visual design” and use of a “distinctive color palette, differentiated typography, and superior production values” which offer a “visual experience that transitioned seamlessly from the company’s online ads.” According to the report, “Sheraton differentiated its site from more than just the competition – it did it across all groups.” Through consistent messaging reinforced by visuals and descriptions the Sheraton brand values of “connecting” and “sharing” were very clearly recognized.
“We have spent $6 billion revitalizing the Sheraton brand, including an overhaul of Sheraton.com which was re-launched in 2009. It was our goal to create a consumer-friendly, easily navigated website that is a true reflection of our brand values - based on these survey results we’ve succeeded,” says Hoyt H. Harper, senior vice president and global brand leader of Sheraton Hotels & Resorts.

Arby's Heads to Chopping Block

Wendy's/Arby's Group, Inc., the third-largest quick-service restaurant company in the United States, today is exploring strategic alternatives for Arby's Restaurant Group, Inc., including a sale of the brand. UBS Investment Bank is assisting in the process.
Arby's is the second-largest quick-service sandwich chain in the U.S. with nearly 3,700 restaurants. Arby's restaurants specialize in slow roasted and freshly sliced roast beef sandwiches as well as Market Fresh deli-style sandwiches, toasted subs and salads.
Nelson Peltz, chairman of Wendy's/Arby's Group, said, "We believe the way to maximize shareholder value is to focus all of our management and financial resources on continuing to build the Wendy's brand. Arby's is a good business, and we are making progress improving its performance, as evidenced by the 3.1% increase in company-operated same-store sales in the fourth quarter of 2010. However, despite Arby's positive momentum, the reality is that the Wendy's brand, given its relative size and scope, is the key driver of shareholder return, and we believe we should focus on the execution of the compelling growth opportunities at Wendy's."
Roland Smith, president and chief executive officer of Wendy's/Arby's Group, said, "Wendy's currently has more than 6,500 restaurants in more than 20 countries and is one of the most attractive growth stories in the quick-service restaurant industry. A pure-play Wendy's will enable us to focus all of our energies on growing the Wendy's brand via new store growth both in North America and international markets, and with accelerated same-store sales through the introduction of new dayparts and core menu innovation."
The company is planning to issue a news release after the market closes on January 26, 2011, with preliminary financial highlights for the 2010 fourth quarter and full-year. At that time, the company also plans to provide a 2011 outlook. Wendy's/Arby's Group plans to issue more detailed fourth quarter and full-year 2010 financial results, as well as its 2010 Form 10-K, on March 3, 2011.

Starbucks to Guests: "Will You be Paying by Cash, Credit or Smartphone?"

Starbucks’ U.S. company-operated stores now allow customers to pay for in-store purchases with select smartphones. The program builds upon the earlier introduction of the Starbucks Card Mobile App for select BlackBerry smartphones, the iPhone and the iPod touch, and a successful mobile payment test program. This national program now includes nearly 6,800 company-operated stores and more than 1,000 Starbucks in U.S. Target locations.
In addition to engaging a loyal base of several million cardholders with the offering, Starbucks anticipates mobile payment will be a draw for customers looking to experience the speed, ease and convenience of paying with their mobile phone. “Today, one in five Starbucks transactions is made using a Starbucks Card and mobile payment will extend the way our customers experience and use their Starbucks Card,” says Brady Brewer, vice president Starbucks Card and Brand Loyalty. “With mobile payment, the Starbucks Card platform further elevates the customer experience by delivering convenience, rewarding loyalty and continuing to build an emotional connection with our customers.”
To experience mobile payment at Starbucks, customers just need to download the free Starbucks Card Mobile App for select BlackBerry smartphones, iPhone or iPod touch mobile devices. More than one-third of U.S. Starbucks customers use smartphones, of which nearly three quarters use BlackBerry smartphone or iPhone mobile devices. In addition to the mobile payment capability, the app allows customers to manage their Starbucks Card account, check their card balance, reload their card with any major credit card (iPhone users can also use the PayPal feature), check their My Starbucks Rewards status and find a nearby Starbucks store with the store locator feature.
Building upon test market success
Customers can pay with their smartphone by holding their mobile device in front of a scanner on the countertop and scan the Starbucks Card Mobile App’s on-screen barcode to make a purchase. Customers have successfully adopted this technology in test markets in Seattle, Northern California, New York and more than 1,000 Starbucks in U.S. Target stores.
Mobile payment is built on the Starbucks Card platform, which continues to experience significant customer adoption. Customers loaded more than $1.5 billion on Starbucks Cards in 2010, an increase of 21 percent over 2009, driven in part by the My Starbucks Rewards program which provides benefits to customers who pay with a registered Starbucks Card at participating stores. With the introduction of the quick and easy Starbucks Card Mobile App and the mobile payment feature, customer will find yet another reason to use their Starbucks Card for payment.
“Mobile payment is just one example of how we’re continually innovating on behalf of our customers to enhance the Starbucks Experience,” says Brewer. “A growing segment of our customers use smartphones, and through the Starbucks Card Mobile App, we’re providing them with the fastest way to pay.”

A Wake-up Call for Travel Suppliers? Study Charts Potential of Third-Party Sales

A new industry study, “Cross-Sell Your Way to Profit,” charts the untapped revenue potential of third-party ancillary services to the travel industry, with analysis providing a wake-up call to travel suppliers as it identifies growth of 30% in revenues from third-party sales by 2015. The study, conducted by Forrester Consulting, identifies the growth of new ‘extreme’ services, such as virtual reality tours and digital concierges, set to transform the customer experience in the next ten years; highlights what travel providers must do to effectively market new services; and outlines the central role of mobile in driving adoption of new services in the next five years. 
The study was developed by Forrester Consulting, an independent research firm, and commissioned by Amadeus, a leading travel technology partner and transaction processor for the global travel and tourism industry.
The study states that: “Third-party ancillary services provide travel suppliers with an underexplored revenue-generating opportunity, expected to increase by 30% by 2015 compared to 2010. There is growing recognition that third-party ancillary services will become important revenue contributors to travel suppliers, provided they offer a relevant product mix and make these services available throughout a journey and across channels. Third-party ancillary services offer the potential for travel suppliers to extend the length and breadth of traveler interactions before, during and after a trip.”
The study is based on quantitative research, with 67% of respondents drawn from travel brands that generate annual revenues in excess of $1 billion. In addition, the study includes qualitative input from industry experts across airlines, hotels, rail and cruise operators that details the scale of the revenue opportunity, the future third-party ancillary services set to drive sales and the shifting mix of channels required to effectively sell third-party ancillary services according to customer needs.
Key findings:
  • Third-party ancillary revenue to grow 10 times faster than general sales in next five years: Third-party ancillary revenue is expected to increase by 30% during the period 2010 to 2015. Set against estimated travel industry growth of 3% during this period, analysis demonstrates third-party revenue growth is 10 times greater than that of general sales. The study finds third-party revenue is likely to represent 2.5% of total provider income by 2015 - or $25 million for a $1 billion company. 
  • ‘Extreme’ ancillary services set to transform the passenger experience, allowing providers to innovate in the next 10 years: While traditional third-party services such as insurance, car rental and hotel room sales are expected to remain popular, travel providers see great potential in a range of ‘extreme’, as yet unexploited, products and services. By 2020, more than half of travel providers (54%) expect to offer virtual reality services that can help passengers experience airports, hotels and cruise ships before arrival, digital concierges to improve the in-hotel or airport experience (80%) and in-journey spa treatments (37%). Travel providers expect future services to be shaped by a combination of macro-trends, with mobile having the greatest impact (81% believe it very important) and the rise in travel to and from emerging economies is also viewed as important (59% believe it either important or very important).     
  • Mobile to match websites as primary channel for third-party sales: Although respondents recognize the limitations of mobile’s effectiveness to sell third-party services today, ranking it behind traditional channels such as airline ticket offices and hotel front desks, they expect a dramatic increase in importance over the next five years. Driven by the increasing penetration of smartphones and tablet devices, as well as the industry’s desire to develop more flexible selling capabilities, travel providers believe mobile will be a very close second to websites in terms of effectiveness to sell third-party services by 2015. Increasingly, mobile will be a primary channel for the sale of third-party services beyond the booking stage.
Respondents also highlight social media and self-service kiosks as increasingly important channels to reach customers with third-party offers.

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