Released late last month, this year's J.D. Power and Associates North America Hotel Guest Satisfaction Index offered some surprising results. Although precipitous drops in demand caused hotels to significantly cut costs and staff, guest satisfaction improved in 2009, according to the study. Additionally, as corporate travel managers during the past year continually focused on negotiating lower hotel rates, travelers were selecting properties based on rewards memberships or those that offered bundled pricing.
Inconsistency among branded properties and shifting traveler priorities were also among the findings of the poll of more than 66,000 guests who stayed at a hotel from May 2008 through June 2009.
The survey examined all six segments--luxury, upscale, midscale full service, midscale limited service, economy/budget and extended stay--to determine overall satisfaction with reservations, check in/check out, guest room, food and beverage, hotel services, hotel facilities, and costs and fees. This year, business travelers ranked hotel rate as fourth on their priority list when selecting a property, after bundled costs, location, and brand familiarity, in that order. There was a big "push by the consumer to move away from a la carte pricing," said Michael Drago, J.D. Power and Associates director of global hospitality and travel practice. "What guests are looking for is bundled pricing, not to have the additional cost. The basic necessity, especially for the business traveler, is not for there to be incremental costs, but a flat fee up-front."
Drago said 37 percent of guests at luxury properties paid additional fees for parking and other amenities, which, "depending on what those rates are, can be pretty substantial.
"A lot of companies are scrutinizing the costs," Drago continued. "When you get an approval for X dollars for a stay and then you check in and add other costs, that guest is then having to explain to their boss what happened. 'If it is bundled, we know what we are getting into--life is easier.' "
Meanwhile, previous experience with a brand was third on business travelers' lists of priorities, according to J.D. Power. The deal breaker in many instances was whether the rate was bundled with amenities like free breakfast, free Internet and free parking.
Travelers Seek Consistency, Reward With Loyalty
Last year, J.D. Power and others predicted that business travelers would downgrade in search of cheaper rates, but Drago said many business travelers did not downgrade; as the economy plummeted, higher-end hotel rates did, as well, he explained. If a downgrade was made, most business travelers made a "reasonable tradeoff" by going from luxury to upscale or midscale with food and beverage, but very few dropped further down the tiers because they would "start to surrender some of those things that are essential to a successful business trip," said Drago.
The study also found that business travelers rated highly properties that were consistent across the brand. "The high-performing brands are doing the best at controlling [brand inconsistency]," said Drago. "By setting and maintaining high brand standards, hotels build a reputation for reliability, which breeds customer loyalty."
Almost 50 percent of business travelers booked at properties part of chains with which they had a rewards membership, according to the survey. Membership to Hilton HHonors, Marriott Rewards, InterContinental Hotels Group Priority Club Rewards and Starwood Preferred Guest ranked highest among business travelers.
"You can bank on a business traveler being a member of one or two clubs, if not all four," said Drago.
Although Wyndham Hotels and Resorts fared well in the survey--its Microtel Inns & Suites brand ranked highest among budget brands for an eighth consecutive year--Wyndham performed the weakest among business travelers, largely because so few were members of Wyndham's rewards program, said Drago. When asked for information on its reward program, Wyndham did not comment.
Wyndham had a healthy mix of both leisure and business travelers staying at its properties, but the top four loyalty programs "dominated" among business travelers, Drago noted. Drago added that 44 percent of the surveyed business travelers were members of Hilton HHonors.
Satisfied Overall, But Not With The Room
Four of the six segments--upscale, midscale full service, midscale limited service and economy/budget--improved in satisfaction in 2009, compared with 2008. Guest satisfaction with luxury hotels remained stable from 2008, while satisfaction with extended-stay properties deceased slightly in 2009. Across all segments, satisfaction with the reservations and check in/check out measures improved.
Overall guest satisfaction rose compared with last year, but satisfaction with the guest room declined. Drago said this was largely due to the outdated technology found in many hotel properties.
The survey found that guests were largely dissatisfied with rooms that lacked in comparison to their own homes. For instance, if their home has a flat screen television, customers expected to find similar accommodations in their guest room, Drago said.
"The issue is that as the economy slows down, hotels don't want to invest another $800 per room just to change the television, so it gets put off," said Drago. "The only way to offset that is through exceptional service. It is difficult to stay ahead of the curve, but properties need to stay on par with the standard home."
This puts additional pressure on the lodging industry to catch up to the guests' demand, Drago noted. As the industry reported overall profit reductions for the first half of 2009, there is little revenue to pump into renovations, but Drago suggests that over time the guest room offerings will be more of a deciding factor when booking, especially when booking a luxury hotel.
"Hotels are spending much less on hard costs," said Drago. "Renovations are being deferred because they cost hard dollars, but there's the ability to increase service levels."
List Toppers
As some of the larger brands retracted in property spend, other brands were able to emerge at the top of the list. In the luxury segment, Four Seasons Hotels and Resorts ranked number one in guest satisfaction, jumping 33 percentage points compared with last year, whereas Millennium Hotels fell 42 points.
"Assuming you stay adequately staffed when cost cuts were made, you can overcome that in service by cutting down wait times for check in or by having greater levels of attention for the guests," said Drago. "As far as the industry trend, there is a tendency for brands to cut fixed hard dollar costs, so some brands have made a greater emphasis on the service side."
Other top performers in customer service were Embassy Suites Hotels (upscale), Hilton Garden Inn (midscale full service), Drury Inn & Suites (midscale limited service) and Staybridge Suites (extended stay).
Contributing to the overall guest satisfaction increase could be the lack of occupancy, Drago concluded. Hotel staff is better equipped to provide more one-on-one service at check in/check out than in the past because there are fewer guests.