“As vacationers and business travelers reduce the time they spend on the road, hotels are quietly trimming amenities and services to save money.” (wsj, 01/22/09) Warning to the hospitality industry, once you start cutting back on the services people value, you begin the erosion of your unique value proposition–your customer service. The one thing that differentiates you from your competitors is that special something, sometimes an unquantifiable service quality that builds loyalty and keeps your valued customers coming back. Eliminating a service, a perk, or a convenience — even something that seems small and insignificant like hand lotion in the rooms– and your loyal customers might start staying elsewhere. Once they leave, they are unlikely to return.
“Hotels are hoping that the cutbacks will go largely unnoticed by guests. They also are dropping rates to keep customers coming back.” Now that makes sense. Cutting back on services to save money and then offering discounts on rates to keep your customers coming. First of all, once your customers notice the cutbacks, the discounts will not fix the problem. All the discounted rates do is reinforce the newly diminished value you have assigned your property. Worse, the changes in service amenities only support that notion.
A blanket note to the hospitality industry–Do not cut back on your services. Reductions in services and discounting rates is what killed the airline industry. The airlines are still trying to figure out how to make money under that formula–and not doing a very good job of either making money or providing good service. My recommendation is to improve your service, enhance your value, promote your differentiation, offer perks to your valued customers and they will come and they will stay. Cutting back on various amenities and service only serve to save money today; but, it will diminish your overall long-term value. Is losing customers worth the risk for saving a few bucks? I trust the answer is “no.”