Hotel Guest Experience Needs to Improve to Maintain Rates

Excerpt from CoStar

Collaboration Between Revenue Management and Sales Teams Strengthened During Pandemic

The hotel industry has some serious investments to make in improving guest experience if hoteliers want to maintain current high rates, revenue managers said.

The problem: Labor issues and other challenges have caused an erosion in guest satisfaction at hotels, putting the wave of high rates hoteliers are enjoying in jeopardy.

J.D. Power’s 2022 North America Hotel Guest Satisfaction Index Study showed an eight-point drop over the past year.

Hotel revenue managers discussed the decrease in guest satisfaction scores and labor among revenue-management and on-property teams in a roundtable discussion hosted by Hotel News Now at the Hotel Data Conference.

Labor shortages are the cause of many issues, and Nicole Havens, vice president of revenue management, digital and distribution for Peachtree Hospitality Management, said it’s tough to maintain service and experience with employees who are working seven days a week out of necessity. The challenges of on-property staffing are affecting the performance of all teams.

For example, more channels are using reviews in their algorithm, which Havens called “a hot-mess express.”

When dissatisfied guests air their frustrations online, “the reviews are just something that’s out of a novel,” she said.

Prioritizing the customer experience comes at the cost of profitability but is necessary in order to maintain the rate growth seen over the past few years, said Priya Chandnani, vice president of revenue strategy at Benchmark, Pyramid Luxury & Lifestyle. Guests will eventually stop paying high rates if the service doesn’t match its value.

“We have to invest in that customer experience; it is the only way we will continue to maintain the rate momentum we’ve been seeing,” she said.

Toeing the line between the two will be the “biggest risk for next year” in the hotel industry, Chandnani said.

“That ability to say, ‘How do we focus on that customer experience whereas we’ve been riding this boat of pent-up demand all of this time?’ … How do we continue to maintain that rate?” she said.

Linda Gulrajani, vice president of revenue strategy and distribution at Marcus Hotels & Resorts, said group, business and leisure travelers will have “zero tolerance” for poor service and agreed that the value for the price paid will steeply decline.

The hotel industry has built some efficiencies when it comes to service with the use of robotics and other technology, Chandnani said. Combining that with building a positive guest experience will be vital moving forward.

Isaac Collazo, vice president of analytics for STR, CoStar’s hospitality analytics company, said it’s going to come down to more than just innovation; hotel staff need to come together like revenue-management teams did during the pandemic.

There are still ways to serve guests, but it’s different from the past, Collazo said. He cited room service not being available at certain hours of the night as an example of some amenities not being available to guests.

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