Erica Liu, Program Manager for the Royal Dining (RD) Membership Program at the Hong Kong Grand Hotel, hung up the phone after a call from a disgruntled customer.
Just then, Jerome Tan, Vice President of Hotel Operations, walked into her office. “I tell you, Jerome,” sighed Erica, “I’ve been getting calls from customers complaining about all the rules we have for the RD program. It’s driving me nuts.”
“Tell me about it,” Jerome replied. “These RD members really annoy our staff. All they’re looking for is free stuff. I heard the ultimate one yesterday. Some guy walked into the Cantonese Café with 10 little kids and wanted them all to eat for free! Yes, we have a rule that kids under five can eat for free, but not the whole city! It turned out it was his son’s birthday party. Can you believe that?” Erica sighed again. “I guess that means we’re going to have to create another rule for members to complain about. I mean, I think it’s a great program and all, and it definitely brings in a lot of business, but how are we going to deal with all these problems?”
THE HONG KONG GRAND LAUNCHES A DINING MEMBERSHIP PROGRAM
The Hong Kong Grand, a 140-room landmark hotel on Hong Kong Island, opened in the late 1800s and was considered a national monument. It was one of the world’s well-known grand hotels and had received numerous awards, including Best Luxury Hotel and Best Hotel in Asia. Its guest list has included luminaries such as Queen Elizabeth II, Bill Gates, and James Michener, and it was one of the most photographed sites in Hong Kong. The hotel had four restaurants, ranging from the 56-seat Hollywood Road Deli to the fine-dining 112-seat Kabuki. All the restaurants took reservations and were open for lunch and dinner. The adjoining convention center, the second largest meeting space in Hong Kong, provided an ideal setting for upscale conferences, and the adjoining shopping mall offered a multitude of shopping and dining options.

STUDY QUESTIONS
1. If you were in Erica Liu’s shoes, what would you present to the executive committee?
2. As Erica Liu, what analyses would you run to assess the financial performance of the RD membership program?
3. What effect does the RD membership program have on the brand and value perception of its local customers in Hong Kong and its full-paying hotel guests and diners?
How could the hotel address these issues?
4. Review the rules set for the RD program. How would you go about setting rules for the program that protect the hotel against abuse but do not make RD members feel that the program is unnecessarily restrictive and difficult to use?
5. How could negative server attitudes toward RD customers be handled?