this week, kipton hotel ceo has no reservations telling us about expansion into hot markets, last-minute check-ins, and the in-room yoga mat. and consumer behavior expert on popcorn prices, internet review, and the changing relationship between shopper and store. our reporters this week on "press here." good morning, everyone. in 1930, the waldorf astoria in new york city sent a worker up

with a food of plate and room service was born. one recent development, the corporate-owned corporate-owned boutique hotel. charming yet elegant, with the advantage of being part of a huge company. nobody does that better than the largest operator of boutique hotels in america. this is the hotel monaco in san francisco. and this is the ceo. mike's been in hotels a long time. he essentially invented residence inn. now in charge of 7600 employees and rated as one of the best places to work in the united states. thank you for being with us this morning. >> thank you. >> great to be here. >> start with this strange idea of the largest chain of boutique hotels. there seems to be some sort of conflict there to me.

you could do something small and well. you can do something big and efficient, but you can't do both. >> yeah, it's a bit of an oxy moron. we're not that big. we have 60 hotels around the country. we're in 26 major markets. we look at every single hotel as a one-off. every one is uniquely designed. 60 hotels. we can still do that. >> mike, that's not efficient. you need to label them all the same, have the same bar of soap in every one. then you'll save a lot of money. >> so you think about all the other hotels out there, the big change hotels. they are efficient. we would call them mostly transactional. get in, get out, very efficient. we want to be relational. we're about creating an emotional connection with our customers. they walk in and see great design. unique design for every location. great restaurant. unique restaurant for every location. it's a bit of a lay before bor . >> this gets into something i wanted to ask you.

hotels can cost $65 a night. hotels can cost $400 a night. yet, the thread count is nicer in some, but really, what is it people are buying when they're basically buying eight hours of sleep? that's not what they're buying, is it? >> well, some people are buying eight hours of sleep, and they're perfectly happy to stay at motel 6. other people have reasons for why they're staying some place. they need a great restaurant. they have a business meeting. they're stressed. they're on the road. it's stressful to travel these da days. they come into one of our hotels, it's highly designed, interesting. i don't know why i feel better. i just feel better here. then they come up to the front desk person, who is very natural, very authentic. they have this nice little interaction. n now they're feeling better. they're feeling more like the person they were before they got on that airplane. >> that leads to a question i have. that is, how do they know it's your hotel? i walk into the sir francis drake, i look around and say it

looks nice, i like these people, i enjoyed this hotel. i never have any idea that the hotel monaco is owned by the same company and i'll probably have a similar experience. >> yeah, you think that would be a problem for you. >> we actually started out with never putting the name on everything. in 2005, people would come out and say, i love this. are there anymore? if we put the name on it, people are going to think, i used to stay at this great hotel, sir francis drake, then these guys bought it. then we started putting it after every name. that's where we are now. how do people know? if they can read, they know. >> maybe that kind of squares the circle on these are boutique but collective. one might argue you're buying on an economy of scale. really, you seem to be engineering a series of experiences to justify a net price, right? and that's something you made

consistent across the line. >> it's not that efficiency is not important, but efficiency is only important to us in things the customer doesn't really care as much about. for example, what kind of toilet paper we buy. we buy it in bulk. doesn't really matter. but at the restaurant, that chef wants to go to a local farm and bring the food in locally. those kind of things matter to great chefs. we need great chefs to have great restaurants. >> the money is in making people feel looked at, understood personally. >> this is less about efficiency, more about how do we develop our relationship with our customers that creates an emotional connection. >> so what is your approach to customer service? i know you have this university for employees to go through all the training. what is that all about? how do you try to differentiate on customer service? >> our customer service models are what i would call care. you think about a normal hotel, especially a ubiquitous chain-style hotel, one size fits all, where they have a service standard. you have to do everything by the book. well, we're trying to do something different than that. we're trying to do something

where we're trying to train people -- first of all, we want people to care. then we're allowing them the space to actually care about the customers. so it's a different -- i think it's kind of a higher calling, if you will. >> you put people through this training system that analyzes which of nine personality types they are, and this teaches them how to interrelate better. >> if the model was care, then the question becomes, well, how do we care for our employees? so they turn around and care for their fellow employees but also our customers. one way we do that is we do a lot of work on what we call self-insight. we're trying to help our employees understand their personalities so they can understand more about themselves. if you grow the people, you grow the enterprise. the best thing you can do for your relationship is be the best you, you can be. the best thing we can do for our company is have the employees be the best them they can be. we're giving them tools to be the best them they can be.

>> mike, does that scale -- virgin america, terrific. if you've flown it, you know it. it's this small airline. it feels like a family. everybody is in this all together. but that can't scale. eventually you're going to hire that one person who comes from some other airline who doesn't get it. and at 60 hotels, maybe. at 100, yes. at 150 hotels, you're going to hire the wrong person. >> and you already have, what, 7,000 employees? >> 7600. at 2,000 hotels, in doesn't work. it works at 70 hotels, 80 hotels. all about culture. we hire for culture. >> who's the more interesting competitor, a juggernaut or a high-touch environment? >> well, they're both in the hotel business. air b&b more and more. when i think about the big chains, the hyatts, the

marriotts, the holiday inns, what i think about is people that are putting more dots on the map all time. what they care about is distribution strength. more dots on the map, stronger marketing programs, stronger frequent flyer programs, if you will. then i think about the business we're in. we're in the operational excellence business, which is about customer satisfaction. not so much about dots on the map because we can't beat those guys in the dots on the map business. they win at dots on the map. we win in customer satisfaction. j.d. powers last year named us number one in customer satisfaction, which i'm really happy about. we didn't even plan on it. the goal of the company is to be the best in customer satisfaction in the world in our business. and we just got named again by another group. >> mike, we'll get to it the air b&b question. we're going to take a quick commercial break and be back with "press here."

welcome back to "press:here." >> so how many hours a night does air b&b keep you awake? >> oddly enough, i was with chip connolly yesterday. i went down to their headquarters. it was a lot of fun.

i loved it. i think they're a real disrupter. they're going to disrupt the business in some way. their already doing it. i think it's public out there that there are plans to sell 40 million room nights this year, 30 million of which are offshore. there's 5 million traditional hotel rooms in the united states. that's two nights of occupancy. it's not insignificant, but they're mostly a lower-priced product. we're priced at over $200 a night. they're probably priced around $100 a night. the average stay is five nights. hours is probably two nights. they're heavily skewed toward leisure. we're heavily skewed toward business. i think they're going to get into that market. i'm not terribly worried. they're a bigger competitor threat for the more limited-service hotels at a lower price point. >> i do see it especially in this area. i rent out my place, and i get all business travelers. all the time. it just seems like you said it's a natural next step for them.

do you have any kind of plan to counter that? you hear about hotel chains, larger hotel chains that are thinking about, you know, starting their own air b&b. >> i think they're thinking about it. it's a very different business. it's more like ebay than the hotel business. i think they do a tremendous job at what they do, and i love the way they set it up. but i like my business a lot. i don't need to worry about air b&b. i don't even worry about too many competitors. it's still really early days in the boutique segment. maybe 2% of supply out there of our kind of rooms. demand has to be a multiple of that. i think we're far away from worried about it. >> you do participate with hotel tonight, the app that allows you to get a quick hotel. you have to wait until about noon or so. then you get a discount. what's that magic between i would like to not pay your full room rate, thank you very much,

but i don't want to -- how do hotels, and yours in particular, i'd like a cheap hotel room, but i don't want to stay with other people who have a cheap hotel room. does that make sense? >> exactly. this is a bit of a conundrum for a traveler. i think a lot of travelers think if they beak on expedia or orbitz it's cheaper. >> the selection is exposed. co that. >> how do you get trained to do that? >> because of all the advertising. the pricing is very dynamic. it's changing all the time. somebody is shopping on expedia, oh, i found it cheaper. they probably did because the price just changed. if they went to the website of the hotel, it would be the same price. >> it's just more efficient. >> but there's a problem with it. most of the major hotels don't allow you credits for the frequent guest program they have. if you have a problem with your booking, you can't -- you got to go back to expedia. you can't go to marriott or

hyatt. >> where do most of your customers book through? is it different versus the larger chains? >> we're going to do about 15% through the online travel agencies. other competitors that are in our business might do 50% through those guys. the big chains are probably 10% through those guys. and they're helpful to us because we have needs we want to fill where we want that on a sunday night, we want that business. >> so what is your -- go ahead. ask your really good question. about a minute left. >> what is your most interesting problem, challenge, opportunity? is it tech based? is it people based? what do you think about the most, about what you want to do next? >> well, it's mostly about how do we grow and keep this culture we've got that produces the goose laying the golden eggs. we have 14 hotels in our development right now with a base of 16. that's a lot of activity for a fairly small company still. that's what i worry about. it's really about getting the best people because our people are our product.

we got to continue to get the best people. >> how does it scale? >> i think it scales pretty well from this point. if it gets much bigger, 300 or 400, who knows. >> mike, thanks for being with us. >> my pleasure. thank you. >> well, why do consumers choose the products they do? fascinating inside information from the person who knows the answer better than anyone in america when "press:here" continues.

welcome back to "press:here." let's talk a minute about popcorn. you probably noticed the super sized popcorn at the movies is just a few cents more than the medium size. it's an extremely old trick. the medium-sized popcorn sets a price in your head. the super size now seems like a bargain. it's only a few cents more. you get so much more popcorn when you super size. you think you're getting a deal. why buy the medium? nobody expects you to.

the medium is a decoy. it's there to make the large look like a value, when in reality you're paying $8 for 50 cents worth of popcorn. decoys are everywhere. take cameras. if there's a cheap one and expensive one, most people buy the cheap one. add a higher end but not quite as good model, it lacks a couple features. give it an expensive price anyway. what happens is you drive people to the most expensive camera. they think they're getting a bargain. now, one stanford professor doesn't just know about this, he discovered it. he's one of the world's leading experts in consumer decision making. his later book called "absolute value." the most unusual thing about this book, he starts dismantling many of the theories he held dear if so many years. you discovered some of the ways to trick, and i'll use that in the most neutral way, to trick consumers into buying the

product that we, the company, want them to. but with the advent of the internet, i can now sort of look at those cameras and really determine which one is the best one and that's changed the way that stores have adapted to customers. >> well, first, let me object to the word trick. >> object. >> but indeed, i spent the first 20 years of my career studying how consumers make choices when they cannot assess the quality of the product and services they'd like to buy. so for example, one thing that i studied many years ago i called the compromise effect. suppose that you're thinking of buying a camera and you evaluate three cameras that differ in terms of the number of features and price. well, many consumers tend to buy the middle one, the compromise, okay. now, that is irrational. why? because suppose i showed you

different three cameras. now a different camera would be a compromise, and you would choose a different camera. that's really irrelevant. >> i still choose the middle one is what you're sayi ingsaying. >> that's exactly right. and that's irrational because your choice is influenced by something that's irrelevant. this goes well beyond the compromise effect. i mean, when you cannot assess the quality of things, you tend to rely on proxies like brand name, your prior experience with the brand, where it was made, how much it costs and so on. these are all proxies. sometimes they work. often they do not. now, what has changed is, as you said, that today with the help of the internet and expert reviews and user reviews, we can assess the quality of each product individually. we don't have to look at the other products being compared to, and we don't have to rely on brand name. >> i get what you're saying from

an economic point of view, that there is a now closer to perfect information environment. but you're also assuming that people who go to yelp and write reviews are evenly spread in their likes, dislikes, and neutrals. i think people who are motivated to write a review are either at the very high end or very low end. so i'm actually getting an imperfect view by looking at those sites >> i think it is true that people with extreme views are more likely to write reviews. however, let's say if you have, say, a restaurant with 200 reviews or a hotel with 200 or 500 reviews, i think if you look at the distribution of reviews and the average rating, you get really good information about this specific hotel. and again, to come back to the hotel example, i think the idea of giving a different name to each hotel makes a lot of sense.

consumers will look at each hotel, how it is evaluated, and whether it belongs to some big umbrella name or not makes much less difference. >> that drives me crazy. i read in your book that now that we as consumers know what the price should be and know this camera is better than that camera, et cetera, or if i'm wearing a pair of shoes, i can find out which store is going to sell it to me cheapest. it's a brand issue. now all the sudden i would think brand loyalty becomes hugely important. that nordstrom would want me to buy the same exact shoes over at macy's. they'd need so say, well, we'll put it at the same price, but remember us, we're nordstrom. we love you. all the sudden brand becomes hugely important. >> let me disagree. for one thing, in most cases two options are not identical. maybe you have to drive longer to get to macy's.

>> sure. all things being equal. >> so if all things being equal and you are a regular shopper at macy's, i think you're much more likely to try nordstrom because, you know, now that you can tell the quality of the shoes at macy's and the quality of shoes at nordstrom, you're much more likely -- you're less loyal to macy's. you're more likely to give newcomers, in this case nordstrom, a chance. so that's exactly the point. that newcomers, even if they don't have big name recognition, they have much greater opportunity. >> how has it changed how brands compete with each other, though? >> well, i think that brands now have to emphasize the actual quality and doing the right things -- >> of their product or is it more emphasis on differentiating with customer service or delivery? >> whatever customers define as

value. and that's reflected in the reviews. >> well, the gentleman from the hotel spoke purely in terms of experience. there were a few things that mattered physically. mostly it was the psychological effect of the hotel. is that going to be true for cola? is that going to be true for yo-yos? >> i think that's a good -- >> anything. >> i think that's a good point. what we are talking about would in the apply to paper clips or to soap until consumers start checking reviews for paper clips before they go to the office supply store. >> izus, here's a company that made most of the computers that god branded as major computer makers. they started making their own. they wouldn't have a prayer ten years ago because everybody said, i never heard of these people. but with online reviews, they could type it in, say, hey, this is a pretty good computer company. this is a well-rated company. all the sudden they were able to

get into a market they shouldn't have been able to get into it. >> that's exactly right, and that's a great example that we like so much. >> i read it in your book. >> we put it in chapter one of the book. the idea is that, as you said, they used to make pc components for other manufacturers. then when they decided to go directly under their name, people said, oh, no chance. you have no recognition. >> but because people could find out online, they got a chance. >> they introduced a product called eeepc. great reviews. word got around. i think now in 2012 they were top five in laptops, in tablets, in various categories. >> the most valuable thing that's been created in the last 10 or 15 years are filters, things that push things away. google knows the entire internet and it kind of pushes away all the other sites and gives me the

ten links i want. facebook pushes a lot of information and links me through my friends. these are filters of information. aren't brands kind of a superior filter. you're saying they're running in the other direction and not pushing away irrelevant information anymore. >> i think that's exactly right. i think brands today where consumers check reviews are less important, less influential because perhaps i bought another product by the same brand. it was a great product. doesn't mean that the next product will be as good. and therefore, before i buy the next product, i'm going to check to see what people think. >> but apple sells an experience. >> apple seems to be exactly, you know, the counterargument to what you're saying. m >> you know, it's such a good example that wherever i go and whenever i'm interviewed about the book, people say, hey, what about apple?

i think first, the fact that everyone comes up with apple tells you something. otherwise, maybe you would have come up with another example. having said that, if the next apple product will not be well reviewed, it will not do well. so, yeah -- >> in-and-out burger. >> okay. now, i don't know -- well, in-and-out burger, yeah, people are talking about their burger. >> people love the in-and-out burger. >> what's your point? >> that's a brand that matters. >> the fries are not good, is my point. >> he agrees with me. >> a minute left. what's the point of in-and-out burger? >> they created an experience that people expect to have replicated that is classic brand behavior. >> well, apparently people -- first, hamburgers. i don't know. that's a little different. i'm not sure people check reviews. apparently they don't replicate

the atmosphere. i've never been to in-and-out burger. >> it's fantastic. you have to go. >> i'm going to pull the ejection handle. i really enjoyed your question. i'm not so sure about yours. the author of "absolute value," brilliant professor. we appreciate you being with us this morning. >> and you really need to go to an in-and-out burger. >> they're not bad. >> we'll be back in a minute.

that's our show for this wreak. my thanks to my guests. during our interview with the kippton hotel ceo, we talked about chip connolly and the hotel happen. they've both been guests on this show. you can find their interviews on our website. pressheretv.com. thanks for making us part of your sunday morning.

welcome to "comunidad del valle." today we look at maria key vargas who are planning another summer concert in san jose. plus cash for your college. this is your "comunidad del valle." we begin today with some exciting things happening over at cet. the center for employment training. our guest from cet, let's start with the renovations. you're going through a whole renaissance, if you will there. >> yes. >> what's happening there? >> so, cet, you know, since its establishment back in the '60s our major mission