The Value Department Index is Dropping Globally. Now What?
The current economic climate is stirring up a hornet’s nest. The worldwide drop in the Value department index in our Global Hotel Review Benchmark Report shows that these repercussions can be felt across every segment of the hospitality industry. So, we had a deeper look into what guests are saying about Value and what hoteliers can do about this drop.
The ongoing inflation has put a lot of pressure on the hospitality industry, which has translated into higher prices for staffing, food, and commodities. This has forced many hotels to increase their rates, which comes with an increase in guest expectations. All the while, many are still dealing with reduced staffing resources and an increase in demand. This means that in the following months, hoteliers worldwide will have to align lowering service levels with higher guest expectations.
But let’s first look at what the data says.
How Is the Current Situation Affecting Guest Sentiment for Value?
When analyzing global guest reviews, it was clear that the challenges of the economic slowdown are influencing guest sentiment. The Value index has dropped year after year since the pandemic and has shown the biggest decrease after Cleanliness. Compared to 2019, Value dropped globally by 1.4 points.
However, when looking at a regional scale, we can see that results vary a lot between the different regions and star segments:
- The region of the Middle East and Africa shows the smallest decrease and only drops 0.2 points. Surprisingly, their 5*segment showed the biggest drop by 1.8 points, while their 3* segment grew by 2.7 points.
- Europe too shows a small decrease since 2019, with only a drop of 0.4 points for Value. Their 3* segment, however, was hit the hardest with a decrease of 1.7 points.
- Then comes the LATAM and Caribbean region where Value dropped 0.8 points compared to 2019, and the 3* segment dealt with the largest drop of 1.4 points.
- APAC saw its Value index decline significantly since 2019 by 1.7 points. Their 5* segment decreased the most with 1.5 points.
- The biggest decrease came from the North America region, where Value dropped 5.2 points compared to 2019. The 3* segment dropped the most with a decrease of 7.7 points.
All in all, all regions are showing signs of decline in Value with only about half of the total review volume positive.
What Are Guests Saying?
When we dig a little deeper into what guests are saying regarding Value, we can see that the Value category is one of the top six categories driving down guest satisfaction rates. When we take a closer look at the category, there are three key pain points: price, quality, and value. The negative mentions for all three concepts are increasing compared to 2019.
Tips on How to Boost Your Value Perception
There are different ways that you can ensure a better value perception:
- Set the right expectations: Misleading advertising is one of the key factors why a guest experience doesn’t live up to the guest’s expectations. Especially if you had to reduce your services, make sure these changes are reflected in your OTA and booking profiles so that guests can book their stay with expectations in line with your operational reality.
- Automate to streamline: Leverage automation tools to support your staff in delivering better guest experiences. While automation will deal with the legwork, your staff will have more time to interact with your guests in more meaningful ways and serve them better.
- Be realistic: When trying to drive revenue via upselling and cross-selling, it’s important to keep your operations in mind. Can you deliver the special packages and services you are pushing in your marketing? Therefore, it’s key to have your revenue and marketing teams engaged with guest intelligence.
- Leverage management response: Review responses have a lot of visibility and are an excellent way of boosting your value perception. When responding to reviews, highlight some of the recent refurbishments or improvements you have made, or any awards your F&B team might have received. This will showcase how you are continuously investing in your services.
With lowering service levels and increasing rates, it’s hard to delight guests with an impeccable experience. This is why setting the right expectations and communicating transparently about your operational reality will help guests to perceive their stay as worth its money, something that in a challenging economy will become more valuable.
Discover more review trends for Q2 2022: