(Updated Sept. 29 to clarify a quote in the 26th paragraph to more accurately represent the source's meaning.)
NASHVILLE, Tennessee — 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.
“As an industry, we just gotta solve that, because that’s not an answer — you’re out of luck [to get food], but you’re paying $300 a night? That makes no sense,” Collazo said.
Innovation is still an important piece of the puzzle, though, and it can be used to solve some of the industry’s problems, he said.
“Someone has to sit down and ask, ‘How do we do this? Maybe we don’t do it like how we did it before, but how do we do it in today’s world?’ That way the guest will be happy,” he said.
Revenue-Management Staffing
While labor shortages have affected on-property operations staff, roundtable speakers said revenue-management teams have largely stayed together.
Gulrajani said her team was fortunate to not lose any members and the pandemic actually made them stronger in the long run. The whole team stepped up because they had the power to do so with staffing elsewhere taking a hit, she said.
“As an industry, we did a really good job of driving rate; we did a really good job not relying on [online travel agencies] like we did in the past — I’m really proud of what revenue management did during COVID,” Gulrajani said. “For me, I think it’s actually been a really positive growth experience for my team.”
Chandnani said her team also didn’t lose any employees. Navigating the perils of the pandemic together brought a sense of unity.
“If anything, I think we did come closer together. We rebounded from one of the worst crises our industry has faced, and we did it together,” she said.
The pandemic has allowed Chandnani’s revenue-management team to become more strategic with a total revenue approach rather than a room revenue approach, she said. This has increased the reliance on automation to push golf, spas, and better food and beverage offerings to guests.
Along with allowing more strategic thinking about room revenue, Havens said the pandemic has led to more collaboration among the commercial teams such as sales and digital.
“I’ve never seen sales, revenue management [and] digital [more] cohesively move towards a single goal,” Havens said. “That has remained the same even coming out of the pandemic.”