As hotels aim to improve their brand positioning in the marketplace, they have worked hard to make emotional connections with guests – with the understanding that is the only real differentiator. With so many brands available, most of which have similar counterparts, the one distinguishing characteristic is how well brands create loyalty among their customers.
While loyalty programs are still a popular vehicle intended to create bonds with customers, they are often seen as too transactional where guests ‘do this’ to ‘get that.’ True loyalty is based on a relationship, not simply the result of paying people for their business through tangible rewards. Additionally, creating true loyalty goes beyond a marketing gimmick as it must be infused in every interaction and experience that a guest has, from the moment they begin to search for a room.
To examine the best ways to build brand loyalty in the hotel industry, we must first understand the emotional and rational drivers of hotel bookings.
Emotional Decision Making vs. Rational Decision Making
Decades of research by psychologists studying the human decision-making process has meticulously examined the relationship between emotional and rational decision making. In his groundbreaking book, Thinking Fast and Slow, Daniel Kahneman explains there are two systems that drive the way we think. System 1 is fast, intuitive and emotional. System 2 is slower, more deliberative and rational. In order to understand our customers, we need to know how both systems influence judgments and decisions.
As scientists study how the brain works, there is a large amount of research that suggests that emotional decision making has a greater impact on business than might have previously been acknowledged. Decision making is often best characterized by a quick intuitive judgment that is subsequently supported by slower, more reflective rational thinking.
In thinking about the rational and emotional stages that drive the decision making involved in hotel booking process, and ultimately drive brand loyalty, let’s start with the most rational consideration: price qualification.
Price qualification is simply determining rationally which hotel price point the guest considers affordable. This is the starting point for most decision makers. What’s the outer limit of the hotel price point at which I can afford to stay? While we know that value perceptions aren’t all about price, and that customers will often pay a premium for hotel brands they like, there is some price threshold guests will not pass, and this is a rational determination that begins the decision process for most hotel stays.
Location qualification is the second rational determinant of our choices. As with price, guests also have a threshold of how far a hotel can be from the central destination to which they are traveling. Some are willing to drive further than others, but everyone has a pre-specified range of how far they are willing to travel to and from their lodging prior to approaching the booking decision process.
For example, one traveler might prefer to stay on the Strip in Las Vegas and will not look at anything beyond that, while another traveler might prefer to stay off the Strip as it gives them a chance to escape the noise while still being nearby.
Once we determine which hotels qualify on the basis of cost and location to be in the consideration set, the next rational evaluation point is confidence in hotel quality. Each guest likely has basic acceptable quality considerations regarding cleanliness, safety, room size, bed comfort, and service. The internet provides a wealth of information about how previous guests evaluate the quality components of a particular property including hotel review sites, Twitter feeds, and Facebook posts.
As such, guest satisfaction ratings continue to rise each year due, at least in part, to the heightened transparency provided by social review sites. It is highly probable that, since so much information is available about relevant hotel characteristics, people make more informed choices and therefore, experience higher subsequent satisfaction with their stays.
The final rational determinant of hotel choice is a perception about integrity. When looking at hotel reviews, guests aren’t necessarily turned off by the negative reviews, instead they are looking for a balanced and fair assessment. Along with content about other aspects of the guest experience, reviewers and bloggers write extensively about how they were treated when a challenge occurred during their stay.
Guests looking to book at that property want to understand how negative situations were handled. Did the hotel respond in a manner that met or exceeded their expectations of how their challenge should be handled? Did the hotel show sincere regret over a problem occurrence and do all they could to rectify the situation? Or did they show indifference to the guest’s frustration? Did they maintain strict adherence to a rule or policy rather than placing the guest’s satisfaction as a priority?
Hotel companies spend a lot of time, effort, and money studying the rational drivers of hotel choice. They examine occupancy, average daily rate (ADR), and revenue per available room (RevPAR) reports from STR. They dedicate resources to tracking and managing guest satisfaction through surveys and review sites. However, most of these efforts dedicate little attention to studying the emotional drivers of guest experience and choice, even though these factors, according to research, are arguably the primary drivers of decision-making in many situations.
What are the emotional drivers of hotel choice? There are three that come to mind. The first is identification. Identification occurs when the hotel reflects that values and cultural symbols to which the guest best relates. Identification is the basis for all lifestyle branding. There is an effort to connect to the prominent culture, of some, but not all guests. It is reflected in the decor, the staff attire, and most of all in the values embedded in the brand presentation. We have all had that feeling when we walk into a hotel that this ‘is a place for someone like me.’ Conversely, we can relate to the experience of walking into a hotel lobby and immediately saying, ‘this isn’t for me.’
The fact that brands are created to attract some customers and not others, is a good thing because it drives differentiation. Brands emotionally attract new customers through marketing efforts and public relations efforts that communicate, ‘we’re like you.’ Some hotel brands maintain a strong stance on sustainability, which attracts like-minded guests, but perhaps turns off others.
This same impact can be seen with Southwest Airlines, one of the few airlines that has maintained consistent profitability since its inception. They intentionally express their mission and values in a way that emotionally connects with some customers, while deterring others. Many people love Southwest Airlines in a manner rarely shown toward other airlines.
A second emotional driver of choice is personal connection. Most frequent travelers have experienced a hotel stay where someone made a difference, in a big or small way. Sometimes it’s hard to explain why something mattered, but it did. The challenge facing hotels is that many properties are seeking ways to reduce the cost of staff interaction and make the guest experience more seamless. While bypassing the front desk may seem desirable to many guests, as well as the lure of reducing staff, the front desk at check-in is often the one place where the staff can make a personal connection with guests.
As a result, it will become more important for all staff, including housekeepers, breakfast attendants, engineers, to see themselves in the customer service business and actively look for opportunities to interact with guests, lest the physical property itself be the only aspect of the hotel brand a person experiences. These personal touchpoints are most often the difference maker in hotel choice and should be emphasized among all staff members.
The last emotional driver can simply be described as passion. Passion occurs relatively infrequently. Perhaps it occurs as result of identification and connection, but there are places and brands we love and will pull out all the stops for. We will go out of our way to stay at hotels we love, pay a premium price, and always choose, even when there are more logical alternatives. Passion develops over time and experiences when we’ve built up a cadre of memories and feelings. Perhaps it’s the place you went on your honeymoon or had a special vacation. You have pleasant associations and endorphins go off in your brain when recollections of this special place pass through your mind.
Finding the Balance
If you think of these various factors as a funnel, the rational factors of price and location qualification, confidence in quality, and integrity begin at the top of the funnel and narrow their way down as the consideration process progresses. Many times, guests do not have a particularly high amount of emotional involvement in their hotel decisions, seeing properties as commodities rather than as being distinctly different from one another. If a property is within the right price point, near a desired location, and meets some basic quality standard, it is acceptable.
For others, choosing a hotel is a much more emotionally driven decision. If I’m choosing a property for a special vacation or important business trip where I’m staying for an extended period, the decision becomes much more personal, and emotional factors become more important than if I’m quickly passing through for one night.
It’s important to underscore how, ultimately, both rational and emotional factors need to be met in order to build the sustainable customer base for a hotel. If a property is really cool and attracts like-minded guests, but the quality standards and service is poor, a business won’t be sustained over the long term. If a hotel is priced well, has a good location, and quality, but fails to make an emotional connection with its guests, it is not going to be memorable and will simply become one option among many.
Hotel properties need to determine what experience they want to provide and how they can deliver upon that experience. Whether it be providing an experience that is more rational-driven or one that is more emotional-driven, it is important to conduct research into what has driven past travelers into staying there. For example, a hotel near a convention center will be much more rational-driven than a hotel where a traveler identifies with their mission and values. By aligning on a desired experience, a hotel can ensure the needs of its customers are being met, and begin building a sustainable customer base.
Understanding that guests need to establish an emotional connection to be truly loyal is a challenge for hotel brands. Instead of having transactional loyalty programs, there’s an opportunity to shift to a more relational model. Think of how one treats a close friend differently than an acquaintance friend, or a stranger. The deeper the connection, the more special the treatment. As hotels continue to evolve where technology replaces humans, it’s going to be more important than ever to strengthen the emotional aspect of the guest-hotel relationship.
However, the integration is not necessarily a bad thing. Technology can gather valuable information on traveler habits, behaviors and preferences, unlocking a wealth of data that can help improve their loyalty program. Knowing when a consumer wants their breakfast and how they take their coffee provides that personal touch, and can help breed customer loyalty. It can also go a long way in improving the overall performance of a hotel’s loyalty program and its relationship with guests around the world.