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Hotel guest satisfaction

Providing Additional Value for Hotel Guests in a Commoditized Era

The recent annual J.D. Power study for North American Hotel Guest Satisfaction found that maintaining satisfied guests will become even more difficult in the future, mostly because complimentary amenities like breakfast, Wi-Fi and other upgrades have become commonplace. As is the case with any highly competitive market, offerings that initially differentiate a provider but are easily replicated by their competitors eventually become commodities.

For hospitality providers, the result is that guests are starting to take a “what have you done for me lately” attitude, pressuring hoteliers to find ways beyond commoditized perks that might differentiate them from competitors. According to the J.D. Power study, this is the current reality for most hotels, with the exception of the luxury segment.

Here’s what we can expect from most hospitality providers:
1) They will take the same approach as in the past of providing guests with new amenities in an attempt to differentiate their brand.
2) The majority of the new amenities they choose to offer will be quickly replicated by peers within their competitive segment and guests will come to expect them as standard offerings (e.g., commodities), thereby eroding any short-lived advantage.

Hoteliers are right to continue providing the kinds of new offerings that most guests will inevitably want, especially if they are technology-driven innovations made available to all by outside vendors and relatively easy to implement, albeit sometimes at a significant cost (keyless room entry is one example.) The reason is that it’s only a matter of time before competitors offer it and guests expect it, which is a sure indication that they are on the path toward eventual commoditization.

With so many newer amenities evolving into commodities, how is a hotelier able to differentiate their brand or property? The answer is likely to be in the way they apply and integrate newer technologies to create a seamless and memorable experience for their guests. The enablers for accomplishing this are software applications, guest-specific data, and a vision for tying them together to better understand guest preferences. As we have suggested before, hoteliers need to focus on guests and go well beyond rewards programs that simply offer deals and discounts.

The core challenge is that there’s no obvious approach for how to accomplish this – if it exists it would be easy to implement yet become commoditized, like some of the amenities previously mentioned. Adding to this is the fact that executing the strategy will take a long-term investment of time and money, yet won’t initially be obvious to the bottom line. The danger is that providers will either fail to commit to a strategy or alternatively choose a “big bang” approach that will take years to begin providing more immediate guest value.

There is a reasonable, balanced alternative: Hoteliers can choose quick-to-implement technologies that improve guest experiences more immediately yet allow for the collection of guest-specific information needed to leverage the longer-term vision of understanding guest preferences. But to make the right choices, their ultimate goal must be to enhance the guest’s experience by understanding and giving them what they want. The risk is that providers will be driven foremost by the desire to push offerings on guests that seem to have the greatest revenue potential.

Yet we all inherently know that to grow any long-term relationship, we have to strive to understand and give before we can expect to receive. In hospitality, the indication of a healthy relationship is a guest’s loyalty to a brand or hotel and it can only be grown by truly striving to understand each guest and proactively giving them what they value the most within their entire travel experience. You can’t wait for years to begin building that relationship or be driven so heavily by revenue that it clouds your ability to implement technologies or choose amenities which fail to provide the greatest value to guests, both individually and collectively.

Loyalty is not a commodity and can’t be earned by simply offering more commodities. Instead, it must be established by learning what guests truly value in all aspects of their travel experience and providing it to them, and then nurtured by continuously improving your offering. It’s not any easy mission with an obvious path toward success but getting started now with technologies that are quick to implement, tangibly improve guest experiences, and allow you to keep learning more about your guests is a reasonable way to begin.


Hyatt Embraces the Sharing Economy?

While many major hotel brands are trying to combat the rise of sharing economy leaders like AirBNB, one hotelier is actually embracing it.

Hyatt Hotels Corporation has made an investment in Onefinestay – a provider of high-end home rentals in New York City, London, Los Angeles and Paris — as part of a nearly $40-million fundraising round completed at the end of 2014.

The global hotel brand has not fully disclosed how the investment will help it get a leg up in the new sharing economy arena. However, during a recent earnings call President and CEO Mark Hoplamazian said that the investment will offer a “learning opportunity.”

“We’ve always been drawn towards it, not sort of away from it, because we feel like we need to learn from what we’re seeing evolve in the market and how consumers think and how they behave,” said Hoplamazian, in this Hotel News Now article.

This learning opportunity – by investing outside of the core business – will allow the brand to gain insights into the stay-cycle of sharing economy guests. In addition, the brand will be able to learn more about affluent guests, and perhaps leverage data that will help them in developing high-end concierge apps and services.

In July 2014, Hyatt announced that it entered into a pilot program with Onefinestay, where it lets house renters freshen up at the Hyatt Regency London – The Churchill if they arrive early for their rental.

This is an interesting strategy that lets these types of guests to experience both the hotel’s amenities while also creating loyalty – in a situation where guests would not think twice about the hotel brand.

By taking this approach, Hyatt is going to achieve a leg up on the competition. Rather than fighting an emerging threat – or denying that it exists – the hotel brand has some “skin in the game,” and could potentially prosper in the long run.

Gaining market knowledge and insights on “sharing economy” guest preferences could be translated into the development of new programs that could greatly benefit guests – whether staying at Hyatt or at a Onefinestay property.