Customer experience: is the hotel industry heading for disaster?

Customers seem to be less and less satisfied with chain hotels, a problem that’s nothing new, but one that’s unlikely to improve, since its cause lies in the relationship between hoteliers and chains…and in the latter’s lack of courage.

Customers and hotel chains: an undeserved historic mistrust

As you may have noticed, at TravelGuys we tend to be customers of the big hotel chains, but not everyone shares this preference. You’ve probably already heard people say “I avoid the big chains because they’re not as good”, and perhaps you share this point of view.

We find this mistrust somewhat undeserved, despite the indictment that follows.

First of all, we have to agree on what makes a good hotel. For some it’s authenticity, the absence of standardization, for others it’s quality of service…

And then it depends on the volume of travel: if you don’t travel much, you can try to find an unfamiliar hotel on an ad hoc basis and hope you don’t make a mistake; when you travel a lot, you try to minimize the risks and choose based on your previous experiences with the brand.

When you go on vacation to the same place every summer, you return to the same hotel when you’re satisfied because you know what you’re going to find. When you change destination frequently, the frame of reference isn’t the hotel but the brand.

In the end, there are satisfactions and disappointments in both cases, but it’s the same logic: when you like something, you go back, except that in one case you rely on the hotel and in the other on the chain. And when you’re loyal you’re (normally) treated better, and if you change you run the risk of being disappointed.

All this to say that the systematic mistrust of chains does not seem deserved because as you can see from our hotel reviews, the experience at a chain can be as exceptional as it is disappointing.

A hotel chain shouldn’t disappoint

On the other hand, where we agree with the advocates of independent hotels is that, while the choice of such a hotel involves a degree of risk, this should not be the case in a chain hotel.

A chain hotel must apply brand standards: procedures, protocols, product quality, service levels, visual elements… Added to this, where applicable, are the benefits of the loyalty program for the customers concerned.

The whole concept of branding is to create a common base that can be found everywhere. Then some can do better, do more, but there should be no surprises on this base.

But surprises do happen, and even if there aren’t that many of them, they’re too many for our taste.

An independent hotelier is free to define his brand promise as he sees fit and to apply it or not, whereas a hotelier in a chain is not. And yet…

The industry’s business model at the heart of the customer experience (and not the other way around)

To understand why chain hotels are more likely to disappoint than independents, we need to look at the sector’s business model.

Let’s start with the independent.

He owns his own hotel. He pays for his marketing to attract customers, he receives them, and at the end of the stay the customers pay.

Like any entrepreneur, his goal is to earn more money (nights sold) than he spends (overheads including marketing, operating costs, reimbursements, etc.).

Let’s talk about the chain hotel.

The hotelier pays (sometimes very dearly) to the brand for the right to use it, and in return must apply the brand’s standards. He then receives the customer and the customer pays.

In the end, the economic equation and the quest for profitability are the same as for the independent, but there are certain differences.

For the hotelier, who is usually a franchisee, the fee paid to the brand is seen as his marketing effort, and he expects its name and booking site to bring him customers. In return, the requirements of the brand’s constituent elements increase its costs, or at least it perceives them that way.

With a purely short-term economic vision, unable to cut back on what it pays to the brand, it will cut back on expenses and deliver the brand’s standards only minimally or in a degraded way.

The consequence is well known: the customer doesn’t get what he expects and won’t return. And that’s the big difference with the independent hotel!

When a customer decides not to return to an independent hotel because the promise has not been kept, the hotelier is solely responsible, and will have fewer and fewer customers.

In the case of a chain hotel, the customer will have less confidence in the brand, so all the hoteliers who are members of the brand will have fewer customers, and the value of the brand will therefore decrease. A game in which everyone loses: the customer, the hotelier and the brand.

In fact, the problem arises when the hotelier doesn’t see the chain as a brand, with constituent elements in which he invests for a return on investment, which is to have customers, but as a simple marketing tool. He will cut back on the brand’s constituent elements in the short term, and lose customers in the long term.

It’s the business model that dictates the customer experience, not the customer experience that drives the business model.

The brands’ lack of courage

But the solution is obvious: all the brands have to do is enforce their standards! And for a long time, that’s what made the difference between good and bad chains, at least from our point of view.

The difference between a good chain and a bad chain is not the promise, but the execution of the promise.

If you book an Ibis that keeps its promise, you’re happy. If you go to a Sheraton that doesn’t keep its promise, you’re not happy, even if the final experience is better than the Ibis.

For a long time, our favorite target in this area was Accor, which couldn’t get its franchisees to respect it, something Starwood did perfectly. Afterwards, we did see a decline in experience after Starwood was taken over by Marriott, who, even if they did the job well, didn’t do it as well as Starwood.

Then there was COVID, with its health measures and a logical deterioration in the hotel customer experience. An experience that should have returned to normal by now? Not necessarily.

Some hotels made a lot of money by degrading the customer experience during COVID and have assumed that, in future, they’d rather maintain high margins than restore normal service. And even the most loyal customers had to expect that nothing would ever be the same again.

Hoteliers dragged their feet to avoid a return to normal, and the chains did little to thwart them. Why is that?

Firstly, after COVID, the value of their brand had declined, a process that had already begun before due to bad behavior on the part of hoteliers, but which was accelerated further then. There was no point in insisting, or the hoteliers would be displeased.

Secondly, because just as the hotelier sees the chain as a marketing tool and not as a brand, the chain also misreads the system.

The brand doesn’t want to disappoint the customer, but who is the customer? In a system based largely on franchising, the franchisee is seen as a customer (he pays a fee), and the customer is nothing more than the product that the chain brings to the hotelier, for which he pays. Satisfying the customer has become pleasing the hotelier.

It’s also the reason why hotel chains have let the practice of hotel fees get out of hand in shameful and uncontrollable ways.

And so the vicious circle that leads to a slow but certain degradation of the customer experience in hotel chains is set in motion. But if the hotelier’s short-termism plays a part, the brands’ lack of courage and their poor analysis of each other’s role has a major impact.

The dark future of the hotel business?

A hotelier who sees the chain as a marketing service provider, and a chain that sees the hotelier as a customer and the customer as a product, are unlikely to lead to anything good.

The first to lose out is the customer, who will be disappointed enough to abandon the brand. Then the brand will lose its value and the hotelier will have fewer customers. Second loser. Then the brand will be so worthless that the hotelier will leave it. Third loser.

The system now relies solely on the fact that loyalty programs will continue to bring in customers like cattle to the slaughterhouse. But given that the logic explained above leads to a deterioration in loyalty programs, even this safety net has a limited lifespan.

Is this the end of the system? Certainly not. This will restore value to brands that do their job, and to hoteliers who see the value and don’t despise the customer.

The others may (re)discover independence and its corollary: when you’re your own brand, you can’t damage it or disappoint the customer, because nobody will help you, and you’ll be the only one to pay the price for your mistakes.

Bottom line

Hoteliers and hotel chains seem to agree that customer satisfaction is only secondary as long as the business between them is running smoothly.

A short-sighted vision that forgets one thing: all this only works as long as the customer doesn’t decide to say stop because he’s no longer satisfied. And it seems that some have gone far enough for customers to start turning away from what used to be their favorite chains.

What about you? Do you prefer independents or chains? Have you also noticed a deterioration in the customer experience in recent years?

Have you decided to stay away from certain chains?

Image : guest arriving at the hotel by Africa Studio via Shutterstock.