Hotels Finally Turn the Corner on Customer Satisfaction

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.

Growth hits the skids in two key industry segments.

economic doldrumsAs further proof that the worldwide economy is sputtering in a pretty major way, here come two reports on stalling growth in two key industry segments: hospitality and mobile communications.

Technology research and advisory firm Gartner, Inc. has announced that it is revising its 2012 mobile growth projections downwards.

In fact, Gartner is reporting that worldwide sales of mobile phones actually declined nearly 3% during the second quarter of the year.  That’s a rude awakening for a market segment that’s been nearly impervious to downward economic pressures up to this time.

And on the hospitality front, industry research firm Hospitality Resource Group (HRG) is reporting that worldwide hotel rates during the first half of 2012 are essentially flat, following a significant rise charted throughout all of 2011.

While a smattering markets scattered around the world (Moscow, Mexico City, Dubai, San Francisco) have charted hotel rate increases in the 10%+ range, there were far more urban areas that experienced rate declines, led that dramatic drops in the following markets:

  • Bangalore, India: -30%
  • Barcelona, Spain: -26%
  • Munich, Germany: -20%
  • Bombay (Mumbai), India: -18%
  • Istanbul, Turkey: -16%

It may be comforting to hear the reassuring words of select politicians in Europe, Asia and North America as they reiterate that recovery is just around the corner.

But the facts on the ground are delivering an unmistakable message that’s far different – the commercial equivalent of a skunk at the garden party:  The economic doldrums aren’t going away anytime soon.

Caribbean Tourism: Calypso … or Cataclysmo?

Palm TreesWhen it comes to the travel and tourism industry, the Caribbean seems to have it all: Exotic locales, yet not far from home … a “live and let live” culture that outdoes even Las Vegas or New Orleans in its breezy permissiveness … an area blissfully free of terrorism or other nasty intrusions of the “post-911” world.

And yet, the 2008 financial numbers are in on the Caribbean tourism industry, and they’re not pretty. According to PKF Hospitality Research, hotels across the Caribbean experienced a 16% decline in profits in 2008. And the prognosis for 2009 doesn’t look any better.

The downturn is having a major negative impact on most Caribbean economies, because in this region, “tourism” and “the economy” are essentially one and the same.

How are hotels and resort properties responding? By offering all sorts of special incentives and package deals. Or course, that’s what hospitality properties are doing all over the world, so the law of diminishing returns comes into play.

Many hotel and resort development projects are being shelved, too. PKF Hospitality Research counts as many as 51 of 105 development projects in the region that have been mothballed for the foreseeable future.

Is a turnaround in sight? If there’s to be one, it won’t be known until next year. Most of the region’s tourism dollars are brought in during just three months of the year — January through March.

In 2009, of course, that three-month period just happened to parallel the very worst part of the global downturn. So, based on that very low benchmark, most observers are expecting — hoping — that early 2010 will turn out to be “Calypso Season” rather than “Cataclysmo Season.”

Skyscraper Graveyard

apartment-buildingBook TowerOn a trip to Detroit a few days ago, my family and I stayed downtown in one of the city’s newly renovated grande dame hotels. The 1920s-era Fort Shelby Hotel, now part of the Doubletree chain, reopened last December after being closed for more than 25 years. It’s a jewel of a property stuck in the middle of one of the most depressed cities in America. Reportedly, a whopping $80 million was spent on its renovation.

The timing couldn’t have been worse. Just up the street is the even more palatial Westin Book-Cadillac, which was the world’s largest hotel when it first opened in 1924. It, too, stood vacant starting in the early 1980s, miraculously avoiding the wrecking ball before being rescued in a $200 million+ renovation and reopening this past October.

So what will help fill the rooms of these showcase hotel properties? If a flood of reservations actually materializes, it will be for the myriad lawyers, accountants and government officials descending on the city to pick apart General Motors and Chrysler Corporation.

The city of Detroit can’t seem to catch a break. First, there’s the real estate crisis that has seen property values plunge even faster than the national average. Today, the city’s median home sales price is below $10,000, which has to be the record low for a major U.S. city.

Next up, the spectacle of dilapidated infrastructure, a dysfunctional school system plus governmental corruption, nepotism and favoritism run amok – all culminating in Detroit’s mayor being sent to prison.

Now comes the implosion of Detroit’s auto industry that has sparked the nation’s renewed attention on the crumbling city, including human-interest television reporting and lurid photo essays like the one just published in Time magazine.

Sadly, this is Detroit. Riding the People Mover, the 2.5-mile monorail system that loops the perimeter of downtown, one can peer into the second-story levels of building after vacant building. It’s truly a metaphor for the entire city … and a peepshow for the rest of the nation.

Is there a natural bottom? The investors in Detroit’s old hotels seem to think so. But you have to wonder, would those investors have moved forward with these initiatives knowing what they know today?

It was photographer and social commentator Camilo Jose Vergara who suggested more than ten years ago that the empty skyscrapers of downtown Detroit be preserved in their current state as a memorial and monument to a vanishing industrial age. Of course, the city government leaders were horrified at the idea and objected loudly. But really, what other use could they possibly come up with for these relics – silent and stark reminders that a city once the nation’s fifth largest has shrunk in under 50 years to less than half its former size.