Since 1994 when the ACSI was introduced, the hotel industry score for customer satisfaction has dropped steadily from 75 -- on a 100-point scale -- to a four-year low of 71 in 1997, where it remained in 1998. In comparison, the service sector, overall, saw its ACSI customer satisfaction score rise 6.6 percent to 72.2 this year. 

While the hotel industry's score for customer loyalty rose one point from last year -- from 59 to 60 -- it's still below that of previous years -- and well below the customer loyalty score of the service sector overall (66). Ron McNair, partner, Arthur Andersen's business consulting hospitality industry practice, attributes the low loyalty score and decline in customer satisfaction to several industry trends. "Last year, record occupancy levels and sell-outs during high demand periods forced many properties to bump would-be guests, leaving them to find other accommodations," said McNair. 

McNair added that with the unprecedented number of mergers and acquisitions -- $8.9 billion in 1997 and $32.2 billion in the first quarter of 1998 -- many hotel companies have focused on the issues of acquiring and being acquired, rather than on improving the guest experience. In addition, a wide range of choices, minimal differentiation between properties, competitive marketing programs and current occupancy issues provide consumers with many options and little incentive to remain loyal to a particular hotel company. 

"Fortunately, for the hotel industry, the last two years have been a seller's market," said McNair. "Even though distractions such as mergers and acquisitions took the emphasis off of building customer satisfaction and loyalty, the industry turned a tremendous profit. But markets do change and room supply will, once again, meet demand. Hotels that start now to refocus on building customer loyalty will out perform their competitors when that shift occurs." 

In addition to customer satisfaction and loyalty scores, the ACSI lodging industry report also found that: 

• Customer expectations and perceived quality of the lodging experience which, this year, received ACSI scores of 80 -- have remained relatively flat over the past five years.
• Perceived value -- what guests receive for what they pay -- earned its lowest mark in five years, an ACSI score of 73.

Customer Complaints 

Approximately 22 percent of consumers surveyed for the ACSI said that as hotel guests, they voice complaints about their stay -- from the arrival and departure process, to the cleanliness and decor of the rooms to room service. How well a hotel employee responds to a service failure often determines whether a guest returns.  "The tight labor market is creating a lack of employees who are trained to handle guest complaints quickly and effectively," said McNair.  "So many guests resolve their issues by simply choosing another hotel on their next trip." 

As part of an overall customer equity solution, Arthur Andersen has helped several hospitality companies value their "equity" with individual customers. Tracking complaints is one key component of managing the entire customer relationship. 

McNair said it is important to track and analyze customer complaints and suggestions so that recurring issues can be addressed. "By developing best practices for handling complaints and sharing those practices throughout the company, employees can be empowered to resolve customer issues quickly and effectively," he offered. "That kind of response may be the difference between a one-time visitor or a returning guest." 

Developed by a team of research scientists at the University of Michigan Business School's National Quality Research Center (NQRC), the ACSI has been produced annually since 1994 as both a trend measure and a benchmark for companies, industries and sectors of the economy. It is the only uniform, cross-industry measure of consumers' perceptions of goods and services in the United States and the first to link customer satisfaction to bottom-line, financial results. The ACSI measures customer satisfaction levels of seven sectors of the economy, including retail, finance and insurance, services, nondurable goods manufacturing, durable goods manufacturing, transportation / communication and utilities, and public administration and government. It includes approximately 200 U.S. companies and government agencies in 33 industries with revenues totaling almost 40 percent of the Gross Domestic Product. Arthur Andersen is a partner with the University of Michigan Business School and the American Society for Quality in the production and expansion of the ACSI methodology worldwide. 

Arthur Andersen's business consulting practice assists leading organizations in improving their decision making, business operations and organizational capability through a broad range of process improvement, performance enhancement and middle market technology implementation services. Using proprietary tools such as the Arthur Andersen KnowledgeSpace(SM) and Global Best Practices(SM) knowledge base, Arthur Andersen Business Consulting provides creative insights and implements practical business solutions to help clients worldwide achieve measurable performance improvement and lasting change. Arthur Andersen is a global multidisciplinary professional services firm that helps clients improve their business performance through assurance business advisory services, business consulting, economic and financial consulting, and tax business advisory services. With more than $5 billion in revenues, Arthur Andersen serves clients in more than 363 locations in 78 countries.