By Rick Garlick

For the past several years, the hotel industry has experienced an impressive comeback following the dark days of late 2001. Hotels are nearing full occupancy and average daily rates are strong. The dynamics have shifted from a buyer's market to a seller's market. However, under those conditions, there is always the possibility guest expectations will not be met.

In late 2006, Maritz Research Hospitality Group conducted a study of nearly 1,800 individuals that reported at least one overnight hotel stay over the course of the past 12 months. These individuals were asked a variety of questions about their hotel stays during this period of time, as well as their perception of the value they received for their money. By nearly a two-to-one margin, these hotel guests felt they received 'worse' value for their money (20%) compared to 'better' value (11%) than they received two years ago. While guests are accepting higher rates for the hotel rooms they are also finding some unexpected challenges in actually getting the rooms they reserved. This creates a potential 'double whammy' with respect to facilitating good will.

One of the most frustrating things that can happen to a guest is that they are not able to stay at their preferred hotel due to overbooking. The study showed this happened to one-in-ten (10%) some time within the past year. Half of these guests that were "walked" indicated this was the first time it had ever happened to them.

Guests were also asked about service requests commonly made by business travelers. The results provided evidence that it is becoming more difficult for guests to obtain early check-in and late check-out, a fact that is not surprising in light of increased occupancy. One of the most frustrating issues for travelers is their inability to obtain room upgrades. Thirty-seven percent (37%) said it was 'harder' to get room upgrades compared to a year earlier.

Another interesting finding from this study is that being a victim of overbooking did not significantly affect a person's overall perception of hotel service. In other words, the denial of a room was not salient enough to taint current perceptions of service quality compared to hotel service received in the past. This is true even among those who were first time 'victims' of overbooking. Eighteen-percent (18%) of these respondents said the overall service they received from hotels was 'better' than a year ago, compared to only 11% who said it was 'worse.'

Conclusions

While current market conditions reduce both the availability and flexibility surrounding hotel rooms, most guests seem to accept this as the reality of travel today. Perceptions of value are down, overbooking situations are up, and well-accepted 'perks' are reduced. In spite of this, overall perceptions of hotel service have not been impacted.

Perhaps the same dynamic is at play as with any scarce commodity. When demand is high and the product is scarce, customers may pay more, but still feel pleased with what they have purchased. For example, there are times when simply getting a hotel room in downtown New York City is a tremendous accomplishment, regardless of the rate you have to pay. When occupancy was lower, there was no acceptable excuse for not allowing a guest to check in early or stay a little longer in the room. Now that hotels are full, it is more understandable to be denied additional access to a guest room.

This does not suggest that hotels need not worry about overbooking situations. There are certain guests that may be "walked" to a competing property and in the process, transfer their loyalty as well. There have been horror stories of guests who made reservations only to find the hotel was oversold upon arrival. In the worst of these situations, if the hotel staff acted indifferently, they undoubtedly damaged the brand image from the resulting negative word-of-mouth. Every effort should be made to offer alternative options when a reserved room is not available or a guest's special requests cannot be fulfilled.

Rick Garlick works with Maritz Research