Study examines the link between hotel employee performance and guest satisfaction

By Robert Passikoff, Frank Mulhern | October 1, 2007

Reading time: 6 minutes

Abstract

This article describes an approach to establishing financial values for each aspect of the hotel guest experience. It addresses two critical planning questions: Can employee engagement and behavior be linked to guest expectations that allow for the calculation of potential “future value” created by better managing the guest experience? And, in an age when guest “delight” turns into “expectation,” how can hotels avoid commoditization and maintain guest loyalty?

Research Topics:: Customer Loyalty | Customer Satisfaction Studies
Industry/Market Focus:: Hospitality Industry
Content Type: Research Methodology

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What is the value of engagement?

Editor’s note: Frank Mulhern is chairman, integrated marketing communications department, at the Medill School of Journalism, Northwestern University, Evanston, Ill. Robert Passikoff is founder and president of New York research firm Brand Keys Inc.

This article aims to prove that employee engagement - and employees’ abilities to align their attitudes and behaviors with guest expectations - is becoming the experiential first contact touchpoint that can differentiate one hotel from another and increase profitability. The link between predictive guest value drivers and employee engagement can identify the financial value of implementing internal programs to change employee behaviors. We will show how management can more strategically sequence initiatives that address experiential touchpoints and quantify what financial value will be derived from increased levels of employee engagement in select touchpoint activities.

As all researchers understand the difficulty in gaining access to actual sales data in this (or virtually any other) category, in a rare instance, actual guest financial and behavioral data was made available for this survey by an international hospitality brand. As such, the article proves this approach can be practically applied, can accommodate a large number of variables and can provide the leisure industry with a way to consider return-on-investment measures in corporate decision-making regarding the most time- and cost-effective way to manage the guest experience.

This project utilized a three-step integrated marketing assessment to identify:

guest values and expectations as they relate to specific marketing, brand and experience issues in the leisure industry;
the relationship between employee engagement and behavior to guest values and expectations; and
the financial value that will result from changes in levels of employee engagement and actual behavior as they relate to managing the leisure experience.

Identify value drivers

The methodological framework utilized 1) “emotional bonding” engagement assessments to identify guest value drivers and the degree of alignment that exists between what a guest wants and to what degree employees are engaged with these desires, and 2) a financial analysis that relates the identified value drivers with actual guest visitation and spending behavior.

The research was conducted in three regions of the United States, in six hotels (three business hotels and three leisure hotels). Interviews were conducted among guests, where names were provided by the international hospitality brand of guests who had stayed in each hotel within the past three months, and front-desk/lobby personnel to identify and quantify the:

drivers of guest loyalty and value;
percent-of-contribution that 28 hotel process items made to engagement, loyalty and profitability;
order of importance of the value drivers of guest loyalty (which describe how the guest views the category, compares offerings, and, ultimately, becomes a loyal guest);
expectations held for each of the loyalty drivers; and
the financial impact on income flows from guests and prospects that changes in employee engagement and behavior will bring about.

The study also measured the degree to which employee engagement with the 28 process activities aligned with items that drive guest loyalty, but those findings go beyond the scope of this article.

Telephone interviews were conducted with 353 guests and 100 employees. Given the lack of meaningful brand differentiation for virtually every brand in every product and service category, 70 percent (maybe more in some categories) of the decision to become engaged with a brand, i.e., act positively toward a brand, is emotionally-based. That is why rational, direct Q&A-derived assessments alone, i.e., “how satisfied were you with your stay” questions, lack the ability to identify real engagement effects. Certainly, to know you is not (necessarily) to be engaged with you.

Based upon the reality of this 70:30/emotional-rational engagement ratio, Brand Keys developed engagement assessments that are a combination of psychological inquiry, direct inquiry and higher-order statistical analyses. This approach is designed to allow marketers to predictively identify and measure emotional and rational sources of brand loyalty and engagement.

The engagement algorithm identifies the top four drivers of loyalty and engagement. It also identifies how category and consumer attributes, benefits, and values - in this case 28 front-desk/lobby process items - come together to form the component “parts” of those drivers. Additionally, the assessment output calculates the individual percent-of-contribution each makes to the driver, and therefore, loyalty and engagement.

These data allow for a two-stage analysis:

1. The identification of the loyalty drivers that “describe” what guests want from the check-in/lobby experience.

2. How the guest values related to financial outcomes.

Same four drivers

Three critical findings emerged from the data:

1. Regardless of whether the hotel was primarily business or primarily leisure, the same four drivers of hotel value emerged among the sample of guests interviewed, in the same order of importance.

2. The four loyalty drivers were given their names based upon an examination of their attribute, benefit and value components: fast and efficient check-in; tries to satisfy customers; options and amenities; strives for precision.

3. From an employee standpoint, there is a lack of consistent similarity in the order of hotel value driver importance from one venue to another, or from one individual hotel to another. But again, this issue is beyond the scope of this article.

Category loyalty drivers for the ideal hotel are shown in Figure 1.

The individual loyalty drivers, their component attributes, benefits, and values, and the percent-of-contribution each item makes to profitability are shown in Figures 2a-d.

Once these factors had been identified and quantified, a statistical analysis to connect the loyalty drivers to guest visitation and spending behavior was conducted. The guest data that was provided by the international hospitality brand covered the three-year period from 2003 through 2005.

Four aspects of the guest behavior were evaluated (total spending; total number of visits; total nights spent; and spending per visit), with the overall findings as shown in Table 1.

The predictive model developed for this project explains the different levels of visitation and spending behavior as a function of the four loyalty drivers. As such, the model measures the link between the psychological (rational and predictive) drivers and the four metrics of guest behavior using a variety of statistical approaches, linear and nonlinear, to adjust for what turned out to be skewed spending levels among the sample of guests interviewed.

Results of the predictive modeling and financial analysis were as follows (Table 2):

Of the four loyalty drivers, only one – “tries to satisfy customers” - was a significant determinant of total spending dollars, with a coefficient of 2.27. This means that a 10 percent increase in a customer’s score on that driver will yield a 22.7 percent higher level of spending.
Of the four loyalty drivers, “tries to satisfy customers” was also a significant determinant of total spending per visit, with a coefficient of 2.03. Here, a 1 percent increase would yield a 20.3 percent increase in spending per visit.
As might have been expected, the number of visits to the hotel and the number of nights stayed at the hotel were not affected by any of the four loyalty drivers, as the need to travel and the time spent on a business trip or vacation are entirely outside of the control or influence of the hotel venue or process itself.

Build loyalty

The methodologies employed in this study confirm that employee engagement and behavior is linked to guest expectations and that potential “future value” created by better managing the guest experience can be calculated. By doing so, hospitality brands can identify the kinds of experiential components required to build loyalty and profitability.

This approach shows that employee engagement - and employees’ abilities to align their attitudes and behaviors with guest expectations - is the experiential first contact touchpoint that can profitably differentiate one hotel from another and can finally link guest loyalty drivers to employee engagement.

By identifying the financial value of employing internal programs to change employee behaviors, the approach provides a practical way to consider return-on-investment measures in corporate planning situations, allowing management to more strategically sequence initiatives that address experiential touchpoints by quantifying what financial value will be derived from increased attention to select touchpoint activities.