J.D. Power: What's Changing in Guest Satisfaction Now - Andrea Stokes

Josiah: Are higher room rates driving down guest satisfaction, or is there more at play here? In this episode, we're learning from Andrea Stokes, practice lead for hospitality at J.D. Power, about what's going on in guest satisfaction. From the rising expectations that come with higher room rates to the importance of service, personalization, and property upkeep, Andrea shares insights you won't want to miss from the latest J.D. Power North America Hotel Guest Satisfaction Index. But that's not all. Later in this conversation, we also cover the new J.D. Power third-party hotel management guest satisfaction benchmark and discuss why third-party managed hotels are outperforming brand-managed or owner-managed properties. Wherever you're working in hospitality today, stay tuned to hear the factors that can make a big impact on your guests' experiences and your bottom line. Let's get into it. 

Andrea: We've been tracking the impact of higher hotel room rates coming out of the pandemic, looking at value for money. That is something we measure in addition to things like guest room satisfaction, food and beverage, the hotel facility, communications and connectivity, and all of those things. So we're still tracking those over time. We were curious this year to see the impact of higher room rates and value for money, and again, it's not the only thing that guests are thinking about when they stay at a hotel or they choose a hotel, but there you know that those higher room rates are kind of generating higher expectations. You know, you're paying more, maybe for a mid-scale hotel or, you know, even upper mid-scale, where, traditionally, it's limited service. You know, you don't get a room and maybe a free breakfast, but you're paying more. And, you know, the expectations are there. So we have seen satisfaction decline industry-wide this past year over 2023. we saw a decline even compared to 2022. And value, that value for money, was really what was driving that. But that said, it wasn't the same across segments in luxury and upper upscale, which, of course, we know those rates are higher than other segments. Satisfaction was pretty even, even a little higher. So guests, of course, looking for higher-end hotels, have expectations as well. It seems like those hotels and those brands are delivering for guests. They're delivering against those expectations. Whereas in the other segments, the limited service, you know, it's a higher room rate, but you're really not getting much diff anything different really than the past, and so we saw those scores kind of declined in those segments and then especially in the economy we do measure the economy segment and The value component there, even economy rates have really increased over the past few years. And, you know, the value, I think, for money, you know, the equation for those types of guests is sort of, you know, impacted, I think, by those higher rates.

Josiah: It's interesting. I hear you share that, and I want to get into the details of that, but I think it's important to remind our listeners why guest satisfaction matters in the beginning, right? You kind of alluded to higher room rates. That has been driven by a lot of different factors, from inflation to higher operating costs. Right. At the end of the day, guest satisfaction will always drive success in hospitality because, well, for a lot of reasons, I think your hotel is better than others in an area. If you have higher guest satisfaction, all things being equal, that's going to drive demand for you, especially in a world where people are sharing their experiences online. But it's also a consumer purchase, right? And so there's a big section of all guests that are traveling for leisure and even on the economy side, you know, there can sometimes it's the difference between staying at a hotel versus staying with a family member or something like that. And so guest satisfaction for so many reasons drives success, financial success and hospitality, which is why your research is so, so important on this in that kind of thinking about how do we deliver value for money, which I think is so important in a world of higher costs. We have to think about this, right?

Andrea: Right. And there are, you know, there are ways, even if you are a mid-scale property or, you know, upper mid-scale, I mean, you can still, yes, you're under higher costs, and you're dealing with all of that, but there are ways to differentiate. with guest satisfaction, with friendly service, and with little things. We always talk about the details matter. You should make sure the property is up-to-date, you know, furniture or beds, comfortable beds, right? Things that, you know, small things I think that owners and operators, you know if they're thinking about investment, it doesn't have to be a wholesale renovation, but just those little details that you can improve will make a difference, right?

Josiah: And it's probably true across the board, right, in every area of your hotel. I appreciate your research as you get into all the different drivers of guest satisfaction. Last year, we actually talked a lot about service. This is an interesting piece for me because it doesn't always require a large capital expenditure. I mean, maybe there's money in training. Were you seeing this again this year with staff service and kind of that a big contributor to guest satisfaction or dissatisfaction?

Andrea: It's not. In upper upscale and luxury, yes, service does have a little bit more importance, right, to the overall satisfaction score, what we call it. So that's important. In other segments, you know, service is sort of, even, Steven, with the guest room and hotel facility. Food and beverage where, you know, where the hotel is offering food and beverage. It has, you know, a little more even, but still, service matters. And often service, kind of when you look at all those different areas, service often does have a little bit higher score than, say, guest room or food and beverage potentially. So that, again, is a. You hit the nail on the head about training. It's not a huge expense, right, to train your staff on certain service behaviors, new behaviors, personalization is very important. I think even in, you know, lower-priced hotels, any way that the staff can personalize for the guest, address them by name or ask, you know, what they need, see what the hotel could do to meet their needs, right, and sort of anticipate their needs, you know, maybe based on the guests coming in as business travel, whereas the guests coming in with family in tow, right? You can kind of see, I think staff can kind of see and anticipate maybe what the guests might need. And the front desk is important. And what the front desk offers right at that first impression really does make a difference. And you're right, that's across hotel segments.

Josiah: I appreciate you pointing that out, though, because even if it is on par with these other aspects, they require a lot of capital to improve. And service is something that you can do, regardless of where you find yourself in the ecosystem. And as you were sharing that, I was just thinking about, Bashar Wali shared a story with me that has stood out where this personalized service, yes, it can be enhanced by technology or you know, expenditure into teams and training and that kind of thing, but can also just be an outlook and an attitude. You know, Bashar was sharing with me it can look like being that front desk agent, as you pointed out, hearing that a family just arrived and one of their children is having a birthday, and you go to the vending machine, and you spend 50 cents a dollar on a candy bar, and you give that It can be things like that that really stand out. Don't take a ton of money. But anyway, it's interesting that you found that in your study. I would also be interested to know what you're finding in the traveling public. You noted in your research that guests are taking fewer trips, but longer trips. Last time we talked, how has that played out over the past year or so?

Andrea: We did see some differences from the prior year. The number of nights we do capture. So when we ask the guests about their hotel stay, we do capture how many nights they stayed. And then are they a frequent traveler? How often do they travel? How many trips are they taking? So we did see some changes there. It's not surprising that, again, you've got a guest staying longer. So that means that when we go back to those expectations, your expectation for a one-night stay, may be very different than a three or four-night stay where you're actually spending a lot more time in the hotel. So that's just more opportunity for the hotel to either shine or more opportunities for perhaps the guests to notice maybe things that they aren't so satisfied with, right? And so it kind of goes back to sort of anticipating those guests needs when you know the guest is staying multiple nights. It could be a resort. It could be an urban downtown hotel. It could be, you know, whatever. I think that's very important, too. And that can add to perhaps what you offer the guests. Right. Again, a one night business traveler where, you know, they're barely in the hotel for 24 hours. is very different than a guest staying for leisure and that kind of thing. So I think whatever staff can do to look at those characteristics of the guest, who are they, what are they doing, who are they traveling with, it all goes back to the ability to personalize.

Josiah: I love it. Well, we're talking about the J.D. Power 2024 North America Hotel Guest Satisfaction Index Study. I'll include a link in the show notes where people can learn more about that. I appreciate hearing your thoughts about service and the power of that. But the reality is, which you touched on earlier, is that the physical property also plays a role in this. And in your study this year, really highlighted the importance of guest rooms, specifically in the property and property maintenance, as key drivers in improving value perception. I'd love to get your thoughts on a little bit more kind of what did you see in these areas?

Andrea: Yeah, I think things are improving in terms of facility and guest room, for which we capture several attributes. So for a guest room, for example, of course, we capture satisfaction with the cleanliness of the guest room, bathroom, condition of the furnishings, and condition of the bathroom fixtures. you know, for facility maintenance of lobbies and common areas and hallways and, you know, all of that. So we are capturing satisfaction with those. I think things are slowly improving. I think hotel owners and operators are, you know after the pandemic coming out right where, you know, they just could not spend any money on capital improvements at all during that time when, you know, we the demand was so low and all of that, I think it's, you know, we're out of that phase. So, you know, owners and operators can get back to those maintenance items, can get back to, you know, not again, wholesale renovations, but just generally improve those small improvements that they have to invest in over time. So I think it's good news. I think we'll continue kind of to see that over the next maybe two years, right, where, you know, anything that was put off during the pandemic, owners and operators are getting back to those things, right, and making sure that, you know, they could get those projects done. And then, of course, you know, higher room rates, you know, help with the revenue side. That's always good, you know, obviously, owners and operators are going to be looking at revenue when they're making these investments. It's hard to tell where rates are going to go. I think, you know, demand we've seen reports is ebbing a little bit coming out of the summer. Even this summer was not so much of a jump compared to last summer. And so, you know, it's hard to predict where that's going to go. But I think it's good news for owners and operators that they can get back to some projects that maybe they were putting off.

Josiah: You don't know exactly what's happening in the future. I was hoping you'd bring your crystal ball if we could tell everybody. That's helpful, though. That's helpful. I'm looking at the rankings now, and it seems that there are some companies that have maintained this really high kind of top position for consecutive years. Are you noticing any similarities between these ones that seem just to outperform year after year?

Andrea: I think that the leaders, yes, we do have awards for the highest guest satisfaction, the highest ranked, but when we look at the leaders, we tend to look at, well, what's the segment average and which is consistent, which brands are performing above that over time? And I think the driver of that is not only their performance in guest rooms, food and beverage, and facility service but consistency. So, we do have a way to measure consistency within our data for a brand across the states in which we collect our data set and then, of course, across properties. So that is also something to factor in. Consistency is important. When you have branded hotels, they have standards. It really reflects how well the brand's properties and the owners and operators adhere to those standards. So I would say that's kind of what, when you look at the leaders in any given segment, you can kind of see that consistency on the higher level versus other brands.

Josiah: Interesting. We've talked a lot about guest satisfaction here. Does anything else come to mind? I'm thinking for hotel managers that are listening to this, is there any sort of closing advice that you'd have around things that they should be thinking about now if they want to be providing that great value for money that will lead to higher guest satisfaction scores?

Andrea: It's interesting. You brought up technology a little bit ago, and we capture the usage of technology. So does the guest have the app? You would be surprised how few guests actually have the app through the brand at which they're staying. But they, you know, for the segment that does, they are using the app for things like communicating with staff, whether it's sort of through an in-app message, they're using their mobile device for maybe just text messaging with the hotel, right, the hotel staff. But we do see that though, you know, those guests who have a mobile device can, you know, have an app, can use the app, tend to be a little more satisfied. Maybe they're able to personalize their stay a little bit more on their own. They're able to check in online. They're able to maybe choose their room in the hotel if possible. If they're a loyalty program member, they can kind of see maybe what benefits they're getting at the hotel, the on-property benefits for the loyalty membership. So I think it's important when we think about the future and mobile apps, what can be done with a mobile device. It's not a bad thing. And I think as hotels if they can embrace that, rather than sort of, you know, think of it as, well, those aren't our guests, those are different guests, right? Try to embrace technology and ways to communicate with guests using the app or using a mobile device. I do think, you know, things will slowly kind of build there. Apps will have more features than they do now. You know, they're generally, and especially for the large hotel chains, there are quite a few features in these apps these days. I think as those features build out, you know, the impact of AI, especially with loyalty program members, where the chains know more about you, they track your history, right? A member, you're staying at their properties a lot. You can kind of see how AI maybe can start to be built in to help personalize the stay there. But still, I will say, even if you have the app and even if guests are using a mobile device, they still will end up at the front desk at some point. So it's not like you can get rid of your front desk staff. You've got to have really good staff at the front desk, really good employees. They have to kind of embrace the culture. and really make sure that the service is there. So it's still something we see in our study year after year around guests who use the app and all of that. They are still going to the front desk during this day.

Josiah: It's one thing you can count on.

Andrea: Yeah, one thing you can count on, absolutely.

Josiah: I wonder if we could speak about another study that you did, the J.D. Power 2024 North America Third Party Hotel Management Guest Satisfaction Benchmark. I was reading through this and have several questions for you on this, but I guess before we get into that, why did you do this study specifically on this part of the ecosystem? Because you alluded earlier to the relationship between brands and owners and operators, this would be the operators. Why did you do a study just on them?

Andrea: Yeah, well, I felt like there was that missing piece around, you know, how could, because, you know, we do have very large operators in the industry. In fact, our benchmark focuses on the largest operators. So, these are branded hotel operators with 14,000 rooms or more under management. And you've got a big range, even above 14,000 rooms, right? In terms of size and portfolios. But there really wasn't anything out there that allowed those management companies to sort of compare to their competitors. And that's really what the benchmark offers is a way for the management companies to kind of, you know, look at their performance and then, you know, compare to some of their competitors around management. Interestingly, it also allows us to actually look at the performance of that ecosystem and how those hotels are managed versus chain-managed or independently managed, right? And see where satisfaction ends up across those. And third-party managed hotels and companies, we did find satisfaction can be a little higher. Um, and I think any owner trying to think about, okay, uh, how am I going to, you know, manage my hotel? It's good news that there are so many companies out there that this is their bread and butter. This is what they do. And they can help drive a guest satisfaction.

Josiah: Right. And as we discussed earlier, guest satisfaction is going to be the driver of that financial performance. So this is a really, really critical study for not only management companies to benchmark performance among themselves, but for owners, as you point out, to make sure that they're selecting a company that's going to steward their asset. They're going to take care of guests and will drive financial returns. But what you mentioned there actually really caught my attention. These hotels that third-party management companies manage are outperforming chain-managed or independently operated hotels in terms of guest experience and guest satisfaction.

Andrea: Well, it's outperforming by a little bit. Not that there's anything wrong with chain-managed properties. They're delivering high satisfaction as well. The properties that third-party management companies tend to manage upscale, upper upscale, maybe is a little bit of luxury, or maybe a little bit of upper mid-scale brands, right? you know, the third-party management companies that we look at are not generally managing at scale or economy. So we kind of take that out of the equation there. But when you look at chain managed, you know, those hotels also tend to be upper upscale, luxury, maybe some upscale, right? And so it's a, it's, it is, you know, a little bit more, we're able to kind of look at that apples to apples. I think with third party management companies, you know, it just depends. Every company has a culture for employees, right? And every company is different. And every company approaches training differently. Every company might have a different mix of amenities at the properties. So I don't know if I can pinpoint sort of one thing, right, that third-party management companies maybe are doing well over other types, like chain-managed, for example.

Josiah: Well, I think you shared a few things there that I want to call out. I think you referenced culture. And in my conversations here on this show, I've seen that culture not only be a way to attract talent, retain talent, which of course is a big driver of service, as you pointed out earlier in the conversation. But it allows you to have an expectation that this is how we do things around here. That's essentially what culture is, right? And that drives the service that, again, you've pointed out as being such a big driver. And I guess I'm also thinking back, I spoke with Cornell professor Chekitan Dev a little bit about this a while back. He also said that the checks and balances of working with a third-party management company end up being very productive. And in his research, he was noticing this as well, kind of what you found where there's this relationship between the brand, you know, and let's say you're an owner, you have that hat on, you have the third party management company. There's something about that relationship that seems like it would be inefficient. And sometimes it is if you have a bad manager, but if you have a good one, he found that there's helpful kind of tension there. And maybe that's a driving factor as well.

Andrea: Yeah, I mean, very good point. We are looking at branded hotels, and third-party management companies tend to have really good relationships with large chains, right? So, they have great relationships with their owners, but they are also very much in tune with the particular brand that the franchisee has. So that's, yes, you're absolutely right. Those relationships are really, really key. And it all kind of blends together, right, where you've got the service culture of the company, but also their ability to represent that brand. Again, we go back to adherence to brand standards and the third-party management company. I mean, they've got to do that, and they've got to really, you know, kind of double down on that. Yeah, that's a great question, but very, very important.

Josiah: Well, I'm also thinking back to something you mentioned earlier in our conversation about how this perception of value for money can be driven by service is one of the factors there. And so, in your third-party hotel management study, despite higher room rates, guests were perceiving better value for money for these hotels that are third-party managed. So it does seem like it's all coming back to this kind of service, the culture that drives value for money, which is driving results, it seems.

Andrea: Exactly.

Josiah: I love it. Davidson Hospitality Group has been ranking the highest for the third consecutive year. What are they doing so well? They're just on a roll here.

Andrea: Yeah. So there, you know, they actually have the highest scores in our what we call our factors of guest room, food and beverage, hotel facility, connectivity, all of those things. So they're they're kind of firing on all cylinders there. And the leaders are as well. Right. You know, there are, you know, companies that, again, tend to be above average each year. And, you know, they're firing on those cylinders in terms of service and all of that. Interestingly, I will say, you know, food and beverage is become more important. So during the pandemic, there was no food and beverage. Right. Rarely could guests even get food and beverage at a hotel. Coming out of the pandemic, you just have increased consumer spending in restaurants and hotels, actually using the hotels, restaurants, and food and beverage facilities, whether it's a coffee shop, the restaurant, or whatever. And they're spending money there, which again, okay, they're probably paying higher prices for food at the hotel. So those expectations are higher. So it just means right that, you know, food and beverage service has to be there. Yes, quality of food, all of that menu variety, all of that, but We kind of found, you know, service of the food and beverage, whether it's restaurants or coffee shops, whatever, kind of having a little bit of a higher importance. And the leaders tend to have higher scores there. That's fascinating. So we talked about front desks and staff, you know, who want to give props to food and beverage staff at the hotel as well.

Josiah: It's such a big part of our experience. So, I'm sensing a few upcoming episodes about food and beverage and how to do that well. But I really appreciate you sharing your insights. I really appreciate your work. I'll include links in the show notes where people can learn more about these studies. But if people are just listening or watching, where would you point people to learn more about you and your work?

Andrea: Just go to jdpower.com/business, and select travel and hospitality. You'll find more information about our studies, not only in hospitality, but you know, of course, we have airlines and airports; we look at the rental car companies as well. So we're trying to cover the travel ecosystem, and you can find more information there. And if you are just looking for our press releases, look at the winners and see who our award winners are. We do have a press release section of our website as well.

Josiah: Amazing. Well, I encourage everyone to take out their phones, check the show notes, include direct links to all of that. Thank you so much for taking the time to chat. I really appreciate learning from you and appreciate your work.

Andrea: Thank you. Thanks for having me.