Monetization: Measuring the ROI of Service, Product, and Amenity Upgrades
By Rick Garlick Vice President, Strategy Consultant, Magid | November 10, 2019
Over the past decade, most assessments of guest satisfaction, whether publicly available or proprietary to the hotel brands that collect this information, show guest experience scores generally have risen year after year. There are several explanations for this:
- Social review sites like TripAdvisor place transparency on the guest experience – thus raising higher levels of accountability from the hotels.
- The available amount of information helps guests make better and more informed choices for their needs, thereby resulting in a more satisfying experience.
- Finally, and perhaps most importantly, hotel brands have engaged in a type of escalation where they have upgraded the quality of breakfasts, beds, showers, internet, and other features and amenities to one-up competitors.
Of course, it doesn't take long until the competitors start to emulate each other, and the industry leaders are left to think about their next upgrade, enhancement, or innovation to make the guest experience even better.
While all segments engage in this type of escalation to one extent or another, it is especially apparent in the upper midscale and midscale segments. While these brands may lack the fancy lobbies and bar areas of their upscale counterparts, hotels in these segments have gone from offering a stale croissant and cold cereal to offering a very nice hot breakfast, often with a made-to-go option. The complimentary internet has gone from slightly better than the old dial-up speeds to some of the fastest available. Beds, showers, and furnishings have all been improved. Large flat screen, high-definition television screens are now standard. Even the quality of the shampoo and conditioner has gotten better.
Thinking back to this evolution, at some point, hotels were faced with the decision to stand pat or raise the quality of their service, product, and amenities. A hotel brand that fails to continually evolve risks being left behind, because an experience or hotel feature that exceeds guest expectations today may be commonplace tomorrow, and sub-par not long afterward. Competition among hotel brands is often seen as a race, but more often, resembles a treadmill. One brand's product enhancement may give it a momentary advantage, but competitors can quickly expand their own product and service offerings. A brand needs to improve just to stay in the game.
Being an Early Adopter Can Be Risky