Customer Defects in the Hotel Industry: The Five (5) most common factors driving business away

There’s a common misconception between most hotel managers when it comes to dealing with customer satisfaction & loyalty - it is most often assumed without second thought that the most important factors leading to customer satisfaction in the hotel industry are also the most important when it comes to customers dissatisfaction and defection.

On the other hand it is interesting how much research has been done and how much effort has been put into determining the factors that lead to customer loyalty while much less information is available about the factors that drive business away – which supports the theory that it generally assumed that an important factor for customer loyalty is of equal importance when it comes to defection.

However, this assumption is not necessarily true, at least not for hotel customers. There are certain elements that build and create a loyal base of customers; the lack of these elements does not necessarily mean a customer will not set foot on the premises again. On the other hand, there are elements that do not help increase customer loyalty but the lack (or poor performance) of these will lead customers to never return to the hotel again.

The 5 factors factors most likely to drive customers away have been identified as the following:

1) Staff

Issues concerning staff and their behaviour have been reported as the most likely reason customers are driven away from a business, despite the fact that their overall satisfaction rating of the establishment might be high. Perceived staff rudeness seems to be the most common cause for customer defects and is an issue hotel managers need to be aware of to ensure staff conform to their company’s policies and are adequately trained and supervised.

 

2) Cleanliness

No matter how well a hotel is performing on other dimensions of customer satisfaction, if there is a serious lack of cleanliness around the premises, in hotel rooms or within its restaurants, the hotel will surely suffer from an increased customer defection rate. As it is also a key determinant of loyalty – and in some cases could even form the main reason for a customer’s loyalty towards a hotel - cleanliness is a factor of utmost importance in any type of lodging establishment.

3) Desire / Need for Change

Particularly important for the hospitality industry, the guest’s desire to experience new places (“need for change”) has been reported as the 3rd most likely reason a guest may not return to the hotel in the future. Although this seems to be an issue out of the hotelier’s control, it is actually a clear indication that customer satisfaction itself is not enough to create customer loyalty – and closing that gap is a tough challenge for hoteliers but also a key to creating sustainable (“true”) loyalty. If a hotel can deliver high enough satisfaction that it overrides the human desire for exploration and change, customer defection rate would be drastically reduced.

In addition, it should be noted that the benefits from high customer satisfaction are not cashed-in solely from the return of the same customer, but the power or referrals is a key matter to profitability.

4) Price – Affordability – Value for Money

While many studies have revealed that price is NOT a key factor in creating and keeping a loyal base of customers, it is a very common reason why a satisfied customer may never actually return to the business.

In practise, the meaning of this is that if guests are unsatisfied with their hotel, the likelihood of them showing any kind of loyalty towards it is low, no matter how cheap the room rate is - and even if this sort of “phantom” loyalty is evident customers will disappear as soon as a better alternative is found. However, it seems that rate issues are the 4th most likely to drive a customer away, as it is not unlikely that the satisfied customer might not afford the rate anymore and will be forced to search for a cheaper alternative.

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5) Food & Beverage

Hotel F & B standards appear as the most important in hotel tangibles and seem to be becoming increasingly significant in both creating a loyal base of satisfied customers and driving dissatisfied customers away. For customers of large or resort lodgings (especially All – Inclusive hotels), poor F & B standards make the top 5 in reasons why guests never return, although smaller city hotels seem to be slightly less dependent on their restaurants & bar’s performance.

Other factors that appear frequently as elements driving business away are the actual Hotel Rooms (state, comfort, a/c or heating, etc), Bad Service, issues concerning the hotel’s Reliability (delivering promised services, accurately and consistently), Managerial Behaviour towards special needs & situations that may occur, problems occurring with Other guests (and the general ambience the hotel’s other customers create) and Noise within the hotel or surrounding area.

The article above is based on a number of studies and publications, including a research by the author (N. GERONIKOLAS) carried out for the University of Strathclyde, titled ‘’SERVICE QUALITY IN SUMMER RESORT HOTELS: A STUDY OF THE DIMENSIONS AND THEIR EFFECT ON CUSTOMER LOYALTY’’ (2004)

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