J.D. Power

Hotel guest satisfaction surveys — According to J. D. Power, hotel guest satisfaction ratings in North America are up for the first time in years.

One of the industry segments that took the biggest beating in customer satisfaction during the recent recession was the hotel sector.

Annual surveys conducted by J. D. Power charted a continuing decline in satisfaction rates. In everything from reservations and the check-in process to the cost of stay, hotel customers have been giving “thumbs down” for the past half-decade.

Until now.

Marketing information services company J. D. Power & Associates, part of McGraw Hill, has just released the results of its latest annual survey, based on responses from more than 68,700 hotel guests in the United States and Canada collected between July 2012 and May 2013.

J.D. Power has conducted these hotel industry surveys annually for the past 17 years.

According to the 2013 North America Hotel Guest Satisfaction Index Study, the overall guest satisfaction rating index is 77.7 on a 100-point scale.

That may seem like a “Gentleman’s C,” but it’s an increase from last year’s 75.7 score.

More to the point, it’s the first time in quite a few years in which the aggregate rating has gone up.

Where has satisfaction increased? Pretty much in every category surveyed, with the largest gains coming in the reservations process, check-in/check-out procedures, and hotel costs and fees.

Other categories included in the study were guest room satisfaction, food and beverage service, other hotels services, and hotel faciliites.

The largest area of continuing discontent is in Internet usage. Customer complaints are all across the board — ranging from spotting connectivity and slow speeds to usage charges.

Other areas where improvements are sought are in HVAC comfort and controlling noise levels.

What about customer reaction to rising hotel rates? After all, they’ve gone up by about 5% over the past two years.

But the J. D. Power survey found little concern about rate increases. Rick Garlick, director of the survey, suggests that pulling out of the economic downturn might explain this lack of concern. “The economy may be playing a part in price satisfaction because people have a little more to spend,” he noted.

The people who appear to be the least satisfied with their stay experience are the ones who chose to stay at a hotel based on price alone. It’s like the adage says: “You get what you pay for.”

On the other hand, the most satisfied guests weren’t necessarily people who stayed at 5-star properties. Instead, they’re ones who evaluated hotels carefully beforehand using online tools such as third-party hotel reviews and ratings. The “eyes wide open” strategy, as it were.

Such evaluation tools have made it easier to know what to expect from a hotel stay, contributing to overall satisfaction ratings because there’s less likelihood of a “rude awakening.”

The J. D. Power surveys also ask respondents to rate hotel brands. I was interested to see which hotels scored highest in the various different categories in this year’s survey:

Luxury category: Ritz-Carlton
Upscale: Hyatt
Midscale Full Service: Holiday Inn
Midscale: Drury
Economy/Budget: Microtel (Wyndham)
Extended Stay: TownePlace Suites

Come to think of it, none of these results is particularly surprising. In fact, three of the brands (Ritz-Carlton, Holiday Inn and Drury) have been tops in their category for three or more consecutive years of the J. D. Powers studies.

Additional survey findings are available here.

Big Three Automotive Manufacturers — The “Big Three” auto makers: Exactly how loyal are their customers?

Those of us “of a certain age” can remember the days of the Big Three U.S. auto makers. Each of them had a full brand lineup of vehicles designed to accompany a car owner’s pursuit of the American dream. For each step up the corporate or status ladder, there was a car perfectly suited for the event.

General Motors had its five “ascending” brands: Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac. Rival Chrysler Corporation had its five auto brands that tracked neatly with GMs: Plymouth, Dodge, DeSoto, Chrysler and Imperial.

Ford Motor was a bit different in that it had only three flagship brands – Ford, Mercury and Lincoln – but the idea was the same. Capture the consumer at the very beginning … and stay with him or her for years thereafter. When I was growing up, I can recall friends who came from a GM family, a Ford family or a Chrysler family – such was the affinity and loyalty people felt for “their” car companies.

Fast-forward to today, and the picture is completely scrambled. Not only has the prestige – and market share – of the U.S. car companies plummeted in the face of strong competition from foreign-based car rivals, but the brand offerings of the Big Three [sic] have been telescoped severely.

GM is now down to three flagship car brands (Chevy, Buick and Cadillac), while Ford and Chrysler are down to two each (Ford and Lincoln … Chrysler and Dodge).

The rationale for the recent decisions to jettison brands was to gain better control over operating expenses. Moreover, the amount of true difference between some of the brands was modest at best. So the goal of the auto makers has been to retain the loyalty of buyers and shift them to the remaining brands, thereby controlling operating costs while keeping customers in the fold

How’s that working out for everyone?

Well … not exactly as planned. General Motors dropped Pontiac, Saturn and Hummer in the latest round of brand downsizing in 2009, but had hoped to keep most of the buyers of those vehicles in the GM family. Reportedly, there are ~3 million of these vehicles on the roads today. However, the Detroit News is reporting that a majority of these owners are opting for non-GM products when they’re in the market for a new vehicle – brands such as Honda, Nissan and Toyota.

In fact, statistics from auto research company J.D. Power & Associates show these sorry retention rates for GM during 2010:

 Hummer owners staying with GM: ~39%
 Pontiac owners staying with GM: ~36%
 Saturn owners staying with GM: ~26%

These figures compare to an industry-wide brand retention rate of ~48%.

The statistics on Saturn are probably the least surprising. After all, Saturn was promoted as “a new kind of car company” – presumably in stark contrast to other GM car brands as much as any rivals. It stands to reason that Saturn owners would probably find almost any other company preferable than staying with GM.

GM has certainly tried to keep its customers from straying – including offering special deals such as one-year free maintenance programs, discounts on new GM auto purchases, offers to test-drive GM cars, and special invitations and events to introduce customers to new GM dealers.

Some industry observers feel that GM miscalculated to a degree, in that the three brands dropped by the company had a measure of distinctness that is difficult to replicate in the remaining GM brands. J.D. Power’s Executive Director of U.S. Automotive Research, Steve Witten has noted, “The truth of the matter is they didn’t have many options for people to stay in the GM family. Now, there are holes.”

[It didn’t help either that some Saturn dealerships jumped the GM ship when the brand went away – taking many of their customers with them.]

What about Ford Motor’s experience in dropping the Mercury brand from its lineup? It turns out the news for them has been better. In fact, Ford has managed to hold on to ~46% of Mercury customers.

Ironically, the company has benefited from what might normally be considered a brand weakness: the Ford and Mercury lines had very little differentiation between them. Thus, it has proven easier to shift Mercury owners to Ford vehicles as an alternative.

Chrysler went through its auto brand downsizing a bit earlier … the Imperial nameplate disappeared back in the 1980s (I know: I owned one of the last models manufactured) … while the Plymouth brand bit the dust seven years prior to the 2009 economic near-meltdown.

Instead, the big news at Chrysler has been its shift from one foreign parent company (Germany’s Daimler-Benz) to another (Italy’s Fiat). For many, the jury may still be out on the long-term viability of Chrysler – the next two or three years will be the acid test.