Service Is Back in Fashion

Brands across the hotel industry are racing to modernize their products and technology to stay competitive. Yet, corporate travel buyers in BTN's 2016 Hotel Survey rewarded brands that not only embraced modernity but also turned their attention back to a bedrock principal of hospitality: service.

BTN's survey ranked brands across seven tiers. Of last year's winners, only one brand returned to the top: Starwood Hotels & Resorts' Westin brand, which this year shared the No. 1 spot in the upper-upscale tier in a tie with Marriott International's flagship Marriott brand.

For the third consecutive year, Marriott International had the strongest performance among multibrand hotel companies, as Ritz-Carlton, Marriott, Fairfield Inn and Residence Inn ranked in the top three in their tiers. InterContinental Hotels Group and Hilton Worldwide each had three brands finish in the top three of their respective tiers, while Starwood, Hyatt Hotels Corp. and Best Western Hotels & Resorts each had two.

Combining the Present & the Past

High-speed Internet has become table stakes for hoteliers, and it's showing in where the industry is allocating its money. Bjorn Hanson, a clinical professor at the New York University School of Professional Studies Tisch Center for Hospitality and Tourism, said spending on Wi-Fi upgrades could prove to be one of the largest capital expenditure costs for hotels in 2016. Top finishers Ritz-Carlton, Crowne Plaza and Best Western mentioned Wi-Fi as a brand improvement or emphasis during recent years.

An emerging theme among many of the best-performing brands this year, though, was an increase in service initiatives. Fairmont Hotels & Resorts, for instance, updated its Service Promise training program, introduced in 2006, and required every Fairmont colleague, from general managers to bell hops to kitchen staff, to go through the program. Hilton's Homewood Suites, which came in second in the upscale extended-stay segment, revamped its "I Am Sales" program, which encourages every level of the hotel staff to feel like they're part of the sales team and to be "outrageously pleasing our guests" or OPOG, according to Adrian Kurre, global head for Homewood Suites and Home2Suites by Hilton.

While these new initiatives may seem like a return to the old way of doing business, they're more a symptom of a world in which online reviews can make or break a brand. "When you please a customer, you're encouraging them to talk about us on social media, talk about us to their friends, to return to one of our hotels the next time they have an opportunity," Kurre said.

Nikhil Nath, founder and CEO of global hotel software management company Knowcross, said something like a 1-point increase in a property's TripAdvisor score can lead to a double-digit bump in revenue. That's high stakes indeed for an industry that's on its way down from its peak in the current business cycle.

According to STR, every chain scale segment, aside from independent hotels, saw a drop-off in occupancy from January to July. Average daily rate is still growing between 1.8 percent and 3.6 percent, depending on the segment, but those declines in occupancy, when taken with a supply growth rate of 1.5 percent that's outpacing 1.4 percent demand growth, indicate future weakness for hotels. For buyers, that means more negotiating power in the seasons ahead than they've had in recent years.