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Hotel customer satisfaction is a dickens
July 27 2010

Despite often deep cuts in operating costs at hotels, guest satisfaction increased significantly during 2009.

Halfway through 2010, the hotel industry has finally started to shows signs of recovery from the worst economic downturn since the Great Depression. All three key financial indicators for the industry—occupancy, average daily rate and revenue per available room—decreased during every month of 2009, according to the latest STR data.

Throughout the downturn, hoteliers made hard decisions, and often deep cuts, to manage costs in line with declining revenue as best they could. At the same time, they tried to strike the right balance to mitigate impact on the customer experience, which could tarnish their brands. Beyond canceling development projects and reducing capital expenditures, the need to also reduce operating costs made these choices difficult, as hoteliers sought to make reductions where they were less visible and less likely to affect the guest experience.

One might assume under the economic conditions of the past year that satisfaction would decline—with hotels often running on leaner staffing levels, reducing services and deferring scheduled maintenance, to name a few.

Satisfaction actually increased significantly during this period, according to the J.D. Power and Associates 2010 North America Hotel Guest Satisfaction Index Study released today. The study is based on responses gathered from more than 53,000 guests who stayed in a hotel between May 2009 and June 2010. While lower costs and fees certainly improved guest satisfaction during the downturn, satisfaction was actually up across the entire guest experience—from reservations through check-out. We found similar increases in satisfaction in two other J.D. Power and Associates 2010 travel-related studies: the North America Airline Satisfaction Study and the North America Airport Satisfaction Study.

We know from our research and tracking programs with our hotel clients that with lower occupancy levels, satisfaction levels tend to increase. There are more complimentary room upgrades, less congestion on properties and better staff-to-guest ratios—even at reduced staffing levels. Check-in queues are generally shorter, food-and-beverage outlets are less crowded and the ability to find an open treadmill in the gym in the morning is quite a bit easier. We see similar benefits in the airport and airlines industries with reduced passenger volumes also enabling better operational performance and higher levels of satisfaction. It is not just about lower rates or fares.

Ignore customers, they’ll go away

High levels of satisfaction, regardless of economic climate, are highly correlated to building customers for life through repeat business and positive word-of-mouth recommendations, all the more significant in today’s socially connected digital world. High levels of satisfaction are also highly correlated with influencing incremental spend, all of which contribute to a healthier bottom line.

Customers expectations and competitive context

Even with the gains in satisfaction by many brands highlighted in this year’s study, it is imperative that hoteliers recognize the importance of staying on top of customer needs and expectations, which continue to shift and evolve. It is also imperative to understand your hotel’s performance in a relative context.

Many hoteliers may have assumed since their own tracking data showed they were improving during the downturn they must be doing better. They are, but they may have lost ground relative to competitors that improved even more.  We see that in our study results.  Hoteliers may have a false sense of security if they are using unreliable benchmarks to gauge their competitive positioning, based on a false alchemy of mixing disparate questions from disparate hotelier surveys and methodologies and rolling those into a benchmark stew instead of using a common survey instrument and measure across the market.

While a hotelier may not have an apples-to-apples understanding of how they really compare to the competition, their guests certainly do. After all, competitors are just a click away and their properties often right across the street or just down the road. 

A moving target

As the economy does recover, regardless the timing and pace, it will be interesting to see how the satisfaction dynamic plays out. Has there has been a temporary or secular shift in guest expectations and values? As rates recover and occupancy puts more stress on operations, can hoteliers build on the gains they have realized and find new ways to better address sources of guest consternation, such as slow check-in lines, that kept them from achieving higher levels of guest satisfaction in previous years?

Customer satisfaction is both an absolute and a relative game and one that constantly changes. As our company founder, J.D. Power III, put it best, “One of the profound lessons I have learned is that customer satisfaction is a moving target. You can never declare victory.”

Stuart Greif is the VP and general manager of the Global Travel and Hospitality Practice for J.D. Power and Associates.

No advertising or other promotional use can be made of the information in this release without the express prior written consent of J.D. Power and Associates.

The opinions expressed in this column do not necessarily reflect the opinions of or its parent company, Smith Travel Research and its affiliated companies. Columnists published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.

Lloyd C.
7/27/2010 1:07:00 PM
Another aspect- people are so overworked and uncertain about their future that the experience of just being away at a hotel that just delivers on the basics is a huge plus. Our focus in luxury and upscale lodging has at times tried to place the guest in an entire 'better than home' experience. We are now striking a balance among the services that they see as 'pampered' and the true comfort of their home. Kudos to all who are getting it right as we get through this- encouragement to others who are on their way.
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