Differentiating at the right journey touchpoints is the key to value creation
Pre - stay
On - premise stay
Post - stay
Segment performance is strong; Rate card and customer reviews are the deciding factor for bookings
Q1 - Was it easy for me to assess the property and make the booking?
Voice of Customer insights
Overall impression on value for money is an important factor for customers while assessing the property and making the booking –
- “Our budget is usually around 5,500 to 6,000 rupees per day, including breakfast. If a high rated hotel fits that budget, we would try it.“
- “The location should be interesting, and the rates should be reasonable.“
Customers rely on accessible and unbiased reviews and testimonials to make a booking decision –
- "The people who write reviews, as far as I have seen, pay a lot of attention to cleanliness. No one would prefer to live in dirty rooms if they are paying for it.“
Despite good overall performance in the on - premise stay, differentiation is possible in check-in, dining and housekeeping services
Q2 - Did the hotel meet my expectations?
Voice of Customer insights
Customers look for appealing dining and beverage options during their stay –
- "The food must be good, especially when traveling with children. If the food isn't good, we have to go far to find something suitable.”
- "The food was good, we had breakfast there every day, and it was a holistic or complete breakfast with the option of choosing from two or three cuisines. There was South Indian, North Indian Punjabi food, a bit of Chinese, and some continental options.“
Customer’s perception of ‘value for money’ is reinforced if hotels provide –
- Daily housekeeping
- Complimentary toiletries.
Striking the right balance between delighting customer and the cost of servicing them is key to maximising value
Performance of the segment on the prioritised experience attributes
Programs like the Swadesh Darshan Scheme and PRASAD are boosting tourism infrastructure and promoting domestic travel, hence brands should rationalise investments in the right areas -
- Since majority of the bookings are coming from OTA platforms, the customer is less focused on the website experience
- Customers have limited expectations from budget hotels on the range of facilities.
With high market saturation and increasing competition from boutique hotels, the budget hotel segment should explore differentiation on-
- Loyalty programs should reward repeat bookings. These programs should include discounts on future stays, complimentary upgrades, or exclusive access to facilities
- This data can help identify trends and preferences, allowing hotels to offer targeted promotions and services that appeal to their loyal customers, ultimately driving revenue growth.
Performance of the segment across prioritised experience attributes can be mapped to low customer retention
Customer segmentation based on satisfaction and loyalty
(percentage share of respondents)
Customer retention is dependent on their satisfaction with the brand and their tendency to explore alternatives. ‘Ambassador’ are highly satisfied customers who will keep contributing to the brand’s success. ‘Switchers’ on the other hand, are always seeking better options. ‘Critics’ as the third segment, actively convey negative feedback about the brand, if not satisfied. Finally, ‘Dependents’ are customers who remain loyal despite low satisfaction due to lack of alternatives in the market.
11 percent guests are more likely to remain loyal to budget hotels that offer -
- Personalised customer services, creating a positive guest experience
- Engage in community outreach programs or environmental sustainability efforts
26 percent guests who felt they didn’t receive good value for money are likely to switch to an alternate hotel brand
24 percent will not return to the same hotel if the service experience is bad
18 percent of the guest, prefer staying with Hotels with credibility, and failing to provide assurance of facilities and a positive experience, may result in low customer retention
Despite highest weightage of ‘Expectation’ pillar in defining customer experience, fulfilment on the requirement is low
Performance across the KPMG Six pillars of Customer Experience
(Weightage of the pillars to the overall experience requirements)
‘Expectation’ (24 percent) is the key pillar of experience while assessing experience with a brand, followed by ‘Integrity’ (20 percent) and ‘Empathy’ (20 percent)
Budget hotels are failing to meet customer needs on ‘Personalisation’. Small initiatives can go a long way –
- Acknowledge and offer complimentary services on occasions like birthdays, anniversaries
- Allow guests to choose their room preferences, such as bed type, floor level, view, or even pillow type, in advance
- Provide personalised recommendations for local attractions, dining, and activities based on the guest's interests.
Budget hotels also need to reinforce empathy while providing services.
- Train staff to actively listen and understand the needs and concerns of guests
- Recognise and respect the diverse backgrounds and cultures of guests
- Ensure that employees are well-trained, supported, and appreciated.
Customers are willing to pay more from same services, if their expectations are consistently met on facilities and services
The top 5 experience attributes influencing the customer’s willing to pay a premium
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Complete delivery on the promises made on the experience provided by the service for the money paid
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Helping, respectful, and empathetic service from staff across online/ offline channels
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The brand is well known and preferred amongst social circle - family, peers, and influencers
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Widespread availability of the hotel-chain across locations
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Relevant program structure and personalised benefits, keeping the customer coming back for more
An individual’s willingness to pay a premium is driven by immediate needs. As today’s customer evolves, the focal aspects of premiumisation has shifted from functionality to experience. These aspect may as well translate as personalised convenience, omnichannel communication, or even exclusivity in customer support.
Meeting customer expectations drives a sense of premiumisation
- 35 percent of the customers would feel the price is justified, if the facilities and services exceed the pictures or even the value promised while booking
Beyond facilities in the room, service is the only dynamic factor, which makes or breaks good customer experience
- 30 percent would pay more for the same room, in a hotel that is perceived to provide or has provided better services in the past.
In newer locations, a known, trusted brand, wins the hand.
- 24 percent would pay more for a brand that is well known and trusted by their family. Hence, positive word-of-mouth plays a key role in justifying high prices.
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