The Disconnect between The Brand Promise and Reality: The Direct Booking Challenge — Part 2
Part 2: The link between Customer Satisfaction & Loyalty…
(If you haven’t read Part 1 of this series — please stop now and Click Here to read “The Direct Booking Challenge: How Hotels Can Stop Sabotaging Their Own Campaigns: Loyalty 101”)
In Part 1 of this series we learned that:
- True Loyalty is a factor of customers providing repeat business AND holding a positive attitude toward the brand;
- Customer Loyalty grows stronger based on continuous satisfying experiences;
- Loyal customers are willing to pay up to $41 extra at their preferred brand;
- Most elite-tier members book direct with a hotel;
- Frequent hotel guests spend up to 42% of their wallet-share with non-preferred brands.
“In the US hotel industry in just 2013, 6% of hotel customers switched loyalty due to an inferior customer experience.” — Accenture
Hotels face a challenge to get their best guests to “Stop Clicking Around”.
Guests that are already elite tier members might not book via OTAs too often, but they do regularly stay with competing chains.
“The data is clear; customers are actively asking for better service, not just better prices, in exchange for their loyalty” — Infotrellis
Staying in a different hotel is much easier than switching airlines. Hotels hand out status matches like candy, there is often little difference in perceivable benefits between a hotel’s mid and top-tiers in their loyalty program, and members often feel that hotels fail to consistently deliver on the brand promise contained in “program benefits”.
“Hotel loyalty programs are undifferentiated and typically fail to make customers feel like they matter” — Deloitte
The answer — as simple as it seems — lies in customer satisfaction. Elite-tier members are “clicking around” other hotel websites because their preferred program has failed to build the emotional and psychological attachment that comes with true loyalty.
As I’ve previously highlighted — what brands communicate and what they deliver is the biggest factor in brand credibility and consumer trust.
Research shows that customer satisfaction, together with brand trust and brand attitude are important antecedents of guest loyalty.
When a hotel advertises certain benefits to guests in return for the guest completing elite qualification requirements — there is an expectation that the brand will deliver on that promise.
When a brand falls short of meeting that promise — there is a direct negative impact on guest loyalty.
Frequent guests, particularly when traveling for business, report that they want to have a “hassle-free stay”.
Research also shows that frequent guests want to be treated well when traveling with a partner or with family, and it is on these stays that they especially want the hotel to deliver on promised benefits such as upgrades.
So how can hotels improve the guest experience to increase loyalty?
In short — by delivering on guest expectations such as room upgrades, late checkout, decent breakfast offerings, and ensuring that elite-tier members are made to feel like valued guests.
Let’s take a look at where the hotels can improve…
MARRIOTT
Marriott Rewards provides a great example of over-promising and under-delivering when they announced a host of new benefits this week for Gold and Platinum members.
THE PROMISE:
One of the new benefits includes guaranteed late checkout, which could be as late as 4pm.
There’s only one small problem……
THE REALITY:
The late checkout isn’t guaranteed for 4pm at all. It’s all based on availability and “could be” as late as 4pm according to Marriott. The online response was swift, brutal, and accurate (credit: One Mile at a Time):
- “Complete BS and marketing ploy by Marriott”
- “This smoke and mirror attitude is what Marriott is known for”
Luckily for Marriott — they realized the folly of their poorly-conceived “non-benefit” and quickly re-announced the benefit as a “guaranteed 4pm check-out”.
Marriott should be congratulated on taking immediate action to repair a mistake that should never have occurred.
HILTON
One Diamond member (for the last 5 years) had this to say upon recently receiving her Diamond-renewal pack:
“The back of the envelope said ‘Perks Inside’, I thought maybe it’s something new and useful. Opened it and read the contents and thought ‘What a total waste of my time’.”
LATE CHECKOUT
THE PROMISE:
All Hilton HHonors members (including base members) are entitled to Late Check Out.
Officially — it must be requested and is subject to availability.
THE REALITY:
In most cases — trying to actually get a late check out is met with disdain from hotel staff, and either denied, or a token 30 mins or 1 hour provided. Even then — it’s often only begrudgingly provided. And this is when requested by a Diamond guest. Denied even more often for lower-tier members.
UPGRADES
THE PROMISE:
“Space-available upgrade to a preferred room”
This is a stated benefit for Gold and Diamond members. Diamond members are entitled to a room upgrade including standard suites.
THE REALITY:
The fine print (which you have to go looking for deep in the T&Cs)… states:
Diamond HHonors guests will receive upgrades to preferred rooms, based on availability at the time of check-in. Upgrades for Diamond HHonors guests may include the next-best available room from the room type booked. Upgrades may also be rooms with desirable views, corner rooms, rooms on high floors, rooms with special amenities, rooms on Executive Floors, or suites, as identified by each property.
The only difference between the Gold and Diamond upgrade benefits, is the inclusion of “suites” for Diamond members.
Otherwise the policy is the same.
Hilton basically leaves the entire policy up to individual properties to determine.
The problem is that with such a “non-policy”, many individual properties exclude entire swaths of rooms from the upgrade pool, despite them clearly not being excluded types of specialty rooms such as villas or presidential suites.
One member reported that they were denied a Diamond upgrade, despite having just been chatting in line with a hotel manager who reported the property was only 40% full. The property then proceeded to offer the guest an upgrade — for a $200 surcharge!!
If Hilton chooses to offer upgrades as a status benefit — then it needs to provide them in a manner that meets reasonable guest interpretations of policy.
If you’re not going to provide a published benefit in a meaningful way, then you undermine your entire loyalty program.
It’s no wonder that Hilton elite-tier members are “clicking around”.
One Diamond member summed a feeling that I’ve heard several times now:
“The biggest farce is the trend (for Diamonds) of adding executive lounge access to a room and calling that the upgrade when access is a Diamond benefit anyway. I’ve been over Hilton for a while anyway — I only stay when there’s no decent Accor or SPG properties in the city I’m visiting.”
Or others:
“Hilton ‘upgrading’ me into an ‘Executive Room’ (exactly the same room as I’d booked, but on a higher floor). Better rooms and suites clearly available for sale. Pretty much any Diamond booking any time at Hilton… I now stay elsewhere.”
“The lying is the worst, especially when you know they have better rooms available”
“Properties failing to offer upgrades despite availability at check-in (or offering paltry upgrades despite better rooms available, properties excluding rooms & suites from the upgrade pool that are not “genuinely the presidential/honeymoon or other bona-fide specialty suite”
“If only the HHonors discount was less underwhelming”
STARWOOD
Starwood offers the most attractive and unambiguous elite benefits that we’ve examined so far:
LATE CHECKOUT
THE PROMISE:
4p.m. late checkout, subject to availability at resort and conference center hotels
THE REALITY:
Many SPG properties will automatically ask at check-in whether you would like the 4pm late checkout, but many don’t unless prompted by the guest.
The two issues with the SPG late check out benefit are that many guests get caught out by the “resort and conference center” exclusion to the guaranteed benefit. Many SPG properties fall under this classification.
Secondly, whilst the benefit isn’t guaranteed at resort properties, it is meant to be provided on a subject-to-availability basis.
However, many members complain that resort hotels take the approach of either refusing late check outs (even when the hotel is not fully booked), or only begrudgingly allowing token late check outs.
UPGRADES
THE PROMISE:
An upgrade to best available room at check-in — including a Standard Suite.
THE REALITY:
SPG has a systemic (and based on the regularity of occurrence — one has to assume that it is sanctioned by SPG management) member dissatisfaction point, Members are often not given the “best available room”.
Instead they are given a minor upgrade despite the hotel having standard suites for sale.
Savvy members are used to pulling out their smartphones to show the associate that suites are actually available and for sale on the SPG website/app.
At this point, there is usually some brief back office discussion, followed by “I’m awfully sorry Sir/Madam, it must be some kind of computer error, I can definitely upgrade you into that suite, I’m sorry for the inconvenience.” It would be funny if it didn’t occur as regularly as it does.
In fact, some members report that it occurs virtually 100% of the time, unless the property is genuinely sold out for the night.
One other issue that occurs with SPG is that members are often not properly recognized as elite members upon check-in.
The fault lies in the SPG reservation system, where if a member has previously stayed but with a lower status level, the system fails to update to the member’s new and improved status.
So you end up with a situation like I witnessed in San Diego recently, where a Platinum member was checking in next to me and the associate greeted him no less than 3 times as a Gold member, and proceeded to offer Gold level benefits to him.
Eventually he corrected her and advised that he was in fact Platinum, at which time more work on his part was required to actually get the Platinum benefits to which the program afforded him.
SUMMARY
Research by Infotrellis shows that hotel loyalty programs are operating on incorrect assumptions about what kinds of benefits customers most value.
“Specifically, simply granting loyalty members a lower price does not tend to make the customer feel particularly special or appreciated.”
The single biggest problem that the major chains have, is a disconnect between the brand promise, and the benefits that are actually delivered to members.
According to Accenture, 50% of customers who switched to another hotel loyalty program could have been retained just by being made to feel more appreciated.
“The business value of a loyalty program hinges on making members feel that the program is something truly special and worthy of their hard-earned dollars.”
The Infotrellis study found that if a hotel brand were to secure the true loyalty of only 1% of the 24 million hotel loyalty members who are highly likely to switch, this could result in a revenue increase of as much as $200 million per year.
Capturing any amount of the annual $20 billion currently unaffiliated with any genuine loyalty would yield significant ROI year after year; the investment required would be negligible after even a small amount of successful growth.
“Genuine loyalty drives share of wallet, migrates customer behavior, and, ultimately, enhances shareholder value.” — Deloitte
Hotels have significant work to do in improving the delivery of program benefits in a meaningful way if they want to improve customer satisfaction, and ultimately wallet-share –the figures don’t lie –according to Deloitte — up to half of elite-tier member spend is with competitor programs.
In the next article in the series, we’ll examine whether OTAs are in fact cheaper than booking direct. We’ll also examine whether Hilton is creating barriers to direct bookings and how to fix them.
David is a Loyalty & Reward Program Expert and can be contacted here.
References:
- Deloitte: Winning the race for guest loyalty
- Deloitte: A Restoration in Hotel Loyalty: Developing a blueprint for reinventing loyalty programs
- John T Bowen Shiang-Lih Chen McCain , (2015),”Transitioning loyalty programs”, International Journal of Contemporary Hospitality Management, Vol. 27 Iss 3 pp. 415–430
- Hugh Wilkins , Bill Merrilees & Carmel Herington (2009) The Determinants of Loyalty in Hotels, Journal of Hospitality Marketing & Management, 19:1, 1–21
- Bulking Up: The 2013 COLLOQUY Loyalty Census
- Accenture 2013 Global Consumer Pulse Survey
- Using Big Data To Capture $20 Billion In Hotel Guest Loyalty — Infotrellis
