Understanding the State of CX in the Hospitality Industry
How does the quality of customer experience differ across industries? To address this question, the XM Institute conducted a large-scale benchmark study where we asked 10,000 U.S. consumers to rate their recent interactions with 294 organizations across 20 industries.1 In this Industry Snapshot, we examine the state of CX in the hotel industry. To develop this Industry Snapshot, we:
- Found the average XMI Customer Ratings – Overall for each industry. To generate the average CX rating for each industry, we asked respondents to evaluate their experiences with companies over the past 90 days.2 These questions – rated on a seven-point scale – covered the three components of an experience: success (were they able to accomplish their goals?), effort (how easy or difficult was it for them to accomplish their goals?), and emotion (how did the interaction make them feel?).3 We found the XMI Customer Rating – Overall for each of the 294 companies by averaging the ratings for these three experience components. We then calculated the average Customer Rating for each industry by averaging the Customer Ratings of the companies within each industry.4
- Calculated NPS. We asked respondents who had interacted with a company to answer the standard Net Promoter® Score (NPS®) question: How likely are you to recommend <company> to friends and colleagues? Consumers selected a response from 0 (not at all likely) to 10 (extremely likely). We then determined the percentages of each firm’s respondents who were promoters (selected 9 or 10), passives (selected 7 or 8), or detractors (selected between 0 and 6). We then calculated the NPS for each company by subtracting its percentage of detractors from its percentage of promoters.5
- Determined likelihood to repurchase and trust. We also asked consumers how likely they are to consider purchasing more products or services from the companies they had interacted with on a scale of 1 (extremely unlikely) to 7 (extremely likely). We also asked how likely they are to trust that the company would take care of their needs on a scale from 1 (do not trust at all) to 7 (completely trust).
- Established the frequency and effects of poor experiences. We asked respondents to identify which organizations they recently had a poor experience with and then asked, “Since the time that you had a bad experience with these companies, how have you changed the amount of money you spend with them?” They could answer that their spending completely stopped, it decreased, it didn’t change, it increased, or that they haven’t spent any money with that company.
- Identified the most broken customer journeys. To better understand which types of interactions are most likely to affect the customer’s perception of an organization, we asked respondents to identify which journey within a certain industry needs the most improvement. We also looked at the correlation between which journeys a customer identified as broken and how likely that customer was to recommend the company.
Hotels & Rooms Deliver Average CX
When we looked at the current state of customer experience in the hotel industry and how it compared to the broader CX landscape, we found that hotels:
- Earn average Customer Ratings scores. Hotels received an average XMI Customer Rating – Overall score of 65% and came in 8th place out of 20 industries . When we looked at how hotels performed across the three components of an experience – success, effort, and emotion – compared to the average of all 20 industries, we found that although they score about the same as the overall average for both success and effort, they are actually ahead for emotion. This is good news for hotels as, of the three components, emotion is most strongly correlated with customer loyalty and tends to have the lowest scores.
- Get recommended more by older consumers. We found a strong connection between customers’ experiences and their likelihood to recommend a company. Companies that significantly outperformed their industry’s average XMI Customer Ratings also earned a significantly higher-than-average NPS . Compared with the 20-industry average, hotels have a slightly higher percentage of consumers who say that they are likely to recommend the company. Although younger consumers are slightly less likely to say that they will recommend a hotel compared with the cross-industry average, older consumers are much more likely, with over 73% of customers over the age of 45 indicating that they would recommend.
- Enjoy returning visitors. Customer experience is strongly related to a consumer’s likelihood to rebuy from a company – with a correlation coefficient of 0.85 . Almost 70% of hotel customers say that they are likely to repurchase, which is slightly higher than the 20-industry average. To boost that percentage even further, the hospitality industry should focus on the emotion component of customer experiences as, of the three elements, it most significantly impacts likelihood to rebuy. In fact, 86% of customers who gave a hotel a high emotion rating said they would probably purchase more from the company.
- Fail to inspire trust in younger consumers. While a customer’s experience with a company does impact their likelihood to trust that company, the correlation is slightly weaker than it is for their likelihood to recommend or repurchase . And while hotels outperform the cross-industry average for most age groups, they fall behind the overall average with the youngest consumers. Only 56% of 18- to 24-year-olds say that they trust a hotel to take care of their needs.
- Pay a price for poor experiences. Only 5% of customers who interacted with a hotel over the previous six months say they had a bad experience . However, of those customers who did endure a poor experience, 53% of them say that they either decreased or stopped spending after that poor interaction, which is higher than most other industries. Interestingly, although hotels perform better with older customers across all the CX dimensions we evaluated, they deliver a higher percentage of poor experiences to consumers who are 65 or older compared to the cross-industry average.
- Struggle to resolve customer service issues. Nine percent of customers identified “resolving customer service issues” as in need of significant improvement . Customers who selected this journey as broken had an average NPS that was 47 points lower than the industry average. And while only 4% of customers selected “spending time in the hotel/location” as the most in need of improvement, those who did gave hotels an average NPS that was 42 points lower than the industry’s average.
Propel Your Customer Experience to the Next Level
Companies within the hotel industry have long competed on the experience they deliver to guests. However, as other, more technologically savvy industries also shift their attention to CX, hotels will need to increase their rate of innovation – particularly around self-service and personalization – to meet their customers’ growing demands and expectations. To thrive in this changing landscape, hotels must establish Experience Management (XM) as an organizational discipline by mastering six XM Competencies and 20 XM Skills .6 These capabilities will help hotels succeed in the new environment by allowing them to:
- Continuously learn. Hotels with strong XM Competencies and Skills will be able to continuously collect and analyze feedback and behavioral signals from the people who interact with them – gathering the information necessary for understanding the experiences, perceptions, and attitudes of their customers, employees, and prospects. For example, hotels with robust XM capabilities will be able to identify which moments most affect the loyalty of key customer segments – such as resolving a customer service issue or eating in the hotel restaurant – and then establish listening posts that collect ongoing insights about the quality of those interactions. These insights will include experience data (X-data) like NPS or satisfaction scores as well as operational data (O-data) like loyalty status or length of visits. Hotels that are capable of combining these two types of data will be able to more accurately forecast the value of CX improvements and gain a deeper understanding of their customers’ actual experiences. For instance, a hotel may find that satisfaction scores for its high value customers are closely related to their ability to check in or out digitally.
- Propagate insights. Once hotels understand how the people who interact with them think, behave, and feel, they then need to get those insights into the hands of the people across their ecosystems who are best equipped to act on that information. For example, hotels with strong XM skills will not only recognize that, say, checking into the hotel is an important journey for customers, they will also be able to quickly share qualitative and quantitative insights about these interactions with the people who are directly and indirectly responsible for delivering them, such as employees at the front desk and the hotel general manager. Furthermore, they will tailor both the content and the form of these insights for each role, with customized alerts triggered when certain criteria – such as a low score for friendliness or helpfulness – are met.
- Rapidly adapt. Distributing customer insights in the right form to the right people across the organization will allow hotels to act quickly on the intelligence they’ve collected and shared, thus enabling them to rapidly create or improve experiences in a way that addresses people’s changing needs and expectations. For example, customer feedback may highlight that stepping into their room for the first time is a key moment of truth, so the hotel could use O-data collected from the customer’s previous visit – such as a request for an extra pillow or charges for sparkling water from the minifridge – to personalize the guest experience.
- Data comes from the Qualtrics XM Institute Q2 2019 Consumer Benchmark Survey – an online study of 10,000 U.S. consumers completed during May 2019. Survey respondents were representative of the U.S. Census based on quotas for age, income, ethnicity, and geographic region.
- See the XM Institute report, “2019 XMI Customer Ratings – Overall,” (September 2019). The XMI Customer Ratings – Overall are a continuation of the Temkin Experience Ratings. The Ratings were renamed after Qualtrics purchased Temkin Group in October 2018.
- We developed ratings for each of the three components of an experience – success, effort, and emotion – by subtracting the percentage of consumers who rated a company poorly from the percentage of consumers who rated it highly.
- Although consumers rated a number of companies for our survey, we only analyzed the ones that received at least 100 consumer responses. Ultimately, we examined data from 294 companies across 20 industries. For this Industry Snapshot, data on hotels comes from over 4,300 respondents evaluating their experiences with 21 large hospitality companies.
- See the XM Institute report, “2019 XMI Customer Ratings – Consumer NPS,” (October 2019).
- See the Qualtrics XM Institute report, “Operationalizing XM” (July 2019).