Have luxurious hotels discovered the secret of customer loyalty?
Keeping customers loyal in a competitive, constantly changing marketplace is the toughest challenge for any brand. For boutique and luxury hotels, getting closer to customers – for example, through social media, mobile media, deep data mining and advanced analytics – is essential, as they seek to offer a truly personalized experience.
The hotel industry has long looked to the personal touch to retain customers. The five-star chain Four Seasons are famed for their customer service and understated helpfulness of their staff. This has been emulated in the retail industry – putting experts, consultants and personal shoppers in place of salespeople. The holy grail is to keep good customers coming back. To do that, hotels need to know who these guests are, how they behave, and treat each customer as a valued individual. In times gone by, long-serving staff were key. Today, those stalwarts’ encyclopedic memories and attention to detail can be recreated by data analytics and customer relationship management systems.
The original ‘grand’ hotels attracted guests with a distinctive grandeur that was hard to replicate. Their guests chose to stay not in any top-class hotel, but specifically at the Waldorf Astoria in New York, or Raffles when in Singapore.
Other hoteliers globalized their brand, so that wherever travelers went they would find, say, a Hilton or Marriott offering a reassuringly similar experience. The industrialization of the hotel chain met a previously unanswered need for predictable facilities from business travelers and satisfied less adventurous voyagers seeking a home-from-home in a strange city.
The danger with this approach is that it can degenerate into a ‘vanilla’ experience that engenders no customer loyalty. With the big chains, reservation and enquiries services are often centralized, standardized and heavily scripted – some insist on a set list of phrases to greet guests. One group even stipulates that guests’ pets can weigh no more than 75lb (34kg). This may be efficient, but it doesn’t make customers feel so individually valued that they want to return. This approach may already be alienating richer guests: only a third of the top 100 hotels ranked by readers of Condé Nast Traveler magazinelast year belonged to chains.
The advent of the boutique hotel in the 1980s marked a return to some of theold values – particularly the idea of offering a differentiated experience. In place of piped elevator music, each establishment creates its own ambience targeted at a particular kind of customer.
By creating strong customer connections, facilitating feedback, they inspire word-of-mouth recommendations, while reducing the cost of future sales, market research and product development. A recent Gallup study found that the moreengaged guests were, the less they worried about the price of their room.
Boutique hotels are well placed to meet the growing demand for personalization. Aimed at niche markets, they are closer to their customers, who are distilled into ever more discrete ‘tribes,’ such as ‘bar crowds of 20-35-year-olds seeking social bonds’.
As the sector matures, this deep customer knowledge – boosted by social media and discrete analytics – is helping owners do more good things. These smaller, more nimble organizations can react quickly to new market developments, such as the internet-driven rise in private rent-a-room/apartment services. These hotelsmay not have worked out definitively what their customers want but they are constantly monitoring evolving preferences.
The larger hotel chains are waking up to social media. Four Seasons Hotels & Resorts encourages guests to share vacation photos on social networks (using the hashtag #FSFotog), using satisfied customers to present a positive story to potential customers. Such proactive social media activity can have a huge impact: TripAdvisor’s research found that 93% of people value peer feedback when selecting a hotel.
The new trends on the boutique hotel industry’s agenda are being driven by guests’ ever more intricate needs. These range from more sophisticated customer segmentation to mobile check-in facilities to reduce front-desk traffic and replacing standard rate cards with more personalized, adaptable pricing.
Technological advances can help – the latest offerings include in-room facilities that can pre-set a room’s temperature to a guest’s preferences – but innovations need to offer a tangible benefit, and all businesses have to get thebasics right. In the case of hotels, that’s a good night’s sleep in a comfortable room.
© 2020 KPMG Central Services, a Belgian Economic Interest Grouping ("ESV/GIE") and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.