Incentive Excitement

Ty Helms knows the hotel business. Helms has worked his way up the sales ladder during his 11-year career at Hyatt Hotels and is now senior vice president of sales for the United States, Canada and the Caribbean. He previously spent 10 years at Marriott and served in sales positions with several independent hotels. Helms knows the hospitality trade has one iron law: If you lose a sale today, you may never make it in the future.

Fortunately, Helms is confident of the skills and motivation of his sales team. Hyatt reps get a portion of cash compensation based on performance, measured by sales versus quotas that are set twice a year. The performance-based comp has no cap, and pay-outs can be very attractive for top performers.

But six-month quotas leave a few gaps in both motivation and performance – and that can mean empty rooms. So Helms has initiated a series of special incentives, precisely targeted at those gaps, over the past two years. There is evidence that Hyatt’s incentives are hitting the bull’s-eye with amazing accuracy.

Shortly after September 11, 2001, Hyatt launched CRUNCH, a special incentive for referring new business, closing tentative deals and cleaning up Hyatt’s database through intensive phone work. “We were in a lull, and people did not know what to do,” Helms explains. “So CRUNCH was an incentive to make some calls and jump-start production.”

The CRUNCH incentive applied to both group and individual sales. For example, Polly McLaren, a senior sales manager for business meetings at the Grand Hyatt in New York, picked up a pair of airline tickets for closing $267,000 worth of business in two weeks.

In terms of activity, CRUNCH’s goal was 40,000 sales calls in two weeks. The program fell slightly short, with 36,000 calls made. But the results of this activity were impressive. About 2,200 of those calls generated business that eventually closed, and another 1,200 calls yielded valuable referrals from one Hyatt hotel to another. Fully 30,000 calls improved the accuracy of Hyatt’s data on prospects.

The bottom line? Overall, according to Hyatt’s tracking system, CRUNCH added $14 million in incremental bookings for a program cost, including prizes and administration, of just $25,000. “It paid off,” Helms emphasizes.

Helms attributes these dramatic results partly to his reps’ competitive spirit. “They are passionate about what they do, and CRUNCH also gave them recognition in the organization and a lot of soft things, such as congratulation letters from our president and calls from me.”

In May 2002, Helms launched RACE, which focused on referrals, acquiring and closing business as well as exceeding quotas. Prizes were given for revenue, quality referrals, and exceeding quotas. The best performers in every category each received a $100 American Express gift certificate. In some cases, the best hotel in each Hyatt division received the check, with managers deciding who had contributed the most to team success.

RACE was also a test, to see if Hyatt could boost sales in May, which is traditionally a weak month. Reps tend ease off in May, knowing they have all of June to notch up their performance versus quota for their cash incentives. “Typically, reps do about 70 percent of quota in May versus 110 percent in June,” Helms explains. But RACE changed that, upping May performance to 95 percent of quota. That gave Helms the confidence to try a similar but larger program in 2003.

The third Hyatt special incentive, Olympics, ran from May through August 2003. Olympics rewarded reps for beating quotas, making referrals that turn into sales, closing business, and selling rooms that are discounted through rebates during slow periods. In all, 76 prizes were awarded, mostly $100 and $200 Amex gift cards.

Olympics rewarded performance during the problem months of May, July and August. After the May dip and a strong June, sales pipelines can be a little thin, so sales in July and August traditionally suffer. Furthermore, reps often take their vacations in July or August. These two months are typically the worst sales months, with commitments running at 36 to 65 percent of quota.

And 2003 was special for other reasons too. “Olympics started after the Iraq War, when there were concerns about the slow economy,” Helms explains. Hyatt was confident its business would remain strong over the long term. But Helms is still in the hotel business, so he wanted to get things rolling fast. And others are thinking the same way. “There are a finite number of meetings, and it is a fight in the trenches.”

Olympics focussed on activities that lead directly to sales: First, increasing close rates, which have declined about 5 percent industry wide as each property competes with two to five rivals for each event; second, boosting referrals among various Hyatt hotels; and third, selling rooms with rebates during slow months.

The last incentive fits Hyatt’s strategy of filling rooms by offering better deals, rather than special perks for meeting planners. “We feel that is a more ethical stance,” Helms says. And Olympics concentrated just on reps that make the big-dollar group sales.

According to preliminary data, Olympics worked just as intended. May sales were up 22 percent from April, while June still displayed its traditional surge, hitting 121 percent of monthly quota. In revenue terms, May rose $23 million over April, while June was up a further $36 million over May.

With these kinds of gains, Helms is confident the program earned a very handsome return on its investment. Hyatt spent only $15,000 on Olympic prizes, $5,000 on a special Website and $10,000 to administer the program.

Building on Passion and Communication

Hyatt designed and implemented CRUNCH, RACE and Olympics entirely in house. “We brought in our sales and marketing people and brainstormed it,” Helms explains. “And we could do that, because we knew our own salespeople. They want to be successful and they like to be recognized, to be put on a pedestal a bit.”

Familiarity with salespeople comes naturally to Helms, who runs a lean organization. Reporting to Helms, the VP for field sales manages five regional divisions with a total of 120 hotels. Reporting to these divisions are the 600 field reps who sell meeting and convention business, which represents half of Hyatt’s revenue. A VP for national sales guides the 70 reps who deal with travel agents and corporate accounts. Lean organization facilitates the personal touch that keeps Helms in touch with the sales force. “I can get very personally involved with the field,” he notes. “Given our size, I can send everyone a birthday or anniversary card. That is a little unique today.”

Hyatt reinforces these contacts with a program called Hyatt Masters, in which 100 top field reps gather for a three-day vacation each year at a fine resort. “I just got back from the Hyatt Masters at Huntington Beach, where we wined them and dined them,” Helms notes. These sessions rejuvenate him as well as his reps.

CRUNCH winner Polly McLaren made the Masters event in 2003. “It is both pleasure and business,” McLaren says. “Each year we get together at a new destination so we can cross-sell. We talk about our vision and where we are heading, and we get to know the other directors of food and convention centers.” The Masters brings recognition throughout the Hyatt organization. “It is an event where Hyatt treats its reps like they were customers,” McLaren says.

Another key to Hyatt’s success: “We tried to make the incentives as simple as possible,” Helms says. Hyatt tied all rewards to activities that it was already measuring. No rep or manager had to fill out an extra form or report to compete in the contests. Instead, they just made their usual entries in Hyatt’s sales software, Envision, which serves as both account-management and booking tool. “We wanted them on the phone or selling, not wasting time on paperwork,” Helms says.

Hyatt learned from its early steps, CRUNCH and RACE, how to make its broader program, Olympics, more effective. “For example, we didn’t use a Website for the first two programs, but we decided for Olympics that a Website would help with communication,” Helms says. Emails and voicemail did all the communication in CRUNCH and RACE. Reps can monitor their own and competitors’ performance on the Olympics Website. “They can check in whenever they want to. It fuels the competitive fire.”

Helms says managers can easily underestimate the importance of constant communication in making incentives work. “I have a communication plan logged into my calendar now. For example, on Tuesday I leave a voicemail for everyone in the field, reporting results for closing business. On Thursday, I pump them up with the results in one of the divisions. I continually go through a rigorous schedule. What gets measured gets done.” At the end of each month, Helms leaves voicemails for the entire Hyatt company on who won that month and how proud Hyatt is of them. “These are competitive people, and that motivates them for the next month.”

Hyatt chose Amex cards and checks because it wanted a noncash prize that was flexible and would suit everyone. In addition, the hotel chain has a partnership with American Express. “They have come to the table and supported us in other ways,” Helms notes.

At the Grand Hyatt, McLaren sells two- to four-day programs that can bring in anywhere from 150 to 1,200 guests. Relationships, location and fine food and beverage service are Hyatt’s main draws in the intensely competitive New York meeting market.

An 11-year Hyatt sales veteran, McLaren loves her job and does it well. CRUNCH presented an appealing challenge. “It was definitely motivating and fun. Every time the fax machine produced a signed contract, we rang a bell,” she remembers. “Ty put together the results weekly for each division, and it was exciting competing with all the other hotels.”

McLaren also won an Amex gift certificate for closing $165,000 of new business during RACE in 2002. Here again, she says, competition and weekly conference calls with Hyatt’s sales management boosted team morale. The hard-charging McLaren picked up another $200 in Amex spending power for closing $772,000 of business during the first month of Olympics. “I had a lot of tentative business, and the competition pushed me to go the extra mile,” she emphasizes. “I even went to pick up one contract with a bottle of champagne for the client.”

McLaren attributes the success of Hyatt’s special incentives to the company’s overall sales culture and the constant encouragement Hyatt reps get from headquarters. “We have a very strong corporate sales office; they are well liked in the field,” she says. “The key is that, working for Hyatt, people love what they do, so they want to do it better.”

Keeping veteran salespeople motivated throughout their careers is crucial in the hotel business, because those all-important meeting planners want to see the same faces when they book their annual events. Ty Helms and his team at Hyatt have developed some low-cost, high-energy incentive tools that keep their best reps selling through the tough months and keep them on board for Hyatt’s long-term success.