In the highly competitive lodging industry, where consumers often can choose from among a dozen or more hotels and motels clustered within a few blocks of each other, considerable effort goes into getting and keeping an edge. There are free shuttles, happy-hour drinks, in-room Internet connections, on-demand movies.
And then there’s the question of customer service. Achieving and maintaining good service is especially difficult in an industry with notoriously high turnover rates and legions of low-skilled workers.
"Quite frankly, whatever product we have, a competitor can copy," says Jim Hartigan, senior vice president for customer quality and performance for Hilton Hotels Corp. "A certain kind of bed, a television, a shower head--that can be copied. What can’t be copied is the genuine, personal service."
Hilton Hotels these days is a lodging company that others strive to beat when it comes to customer service. In the latest American Customer Satisfaction Index survey, Hilton won top honors in the hotel-industry sector, edging out rival Marriott International Inc. The ACSI randomly samples consumers to measure their level of satisfaction with and valuation of products and services. Hilton has been at or near the top of the hotel list for the last few years.
"Clearly there is something going on here," says David Van Amburg, managing director of ACSI. "Hilton, more years than not, is significantly ahead of the industry."
Hartigan says it should come as no surprise that Hilton lands at the top of the ACSI list because the company spends millions of dollars each year training and rewarding employees in customer service and then surveying customers to measure how well it all works. The company is convinced that the investment pays off in better performance at its family of brands, which include Embassy Suites, Homewood Suites, Hilton Garden Inns, Hampton Inns and Doubletree.
Hilton also scores high in the J.D. Power & Associates customer-satisfaction survey. Its Embassy Suites has topped the upscale-hotel segment for three straight years, while the latest survey listed Hilton Garden Inns as number one in the mid-priced segment. Homewood Suites won top honors in the extended-stay segment.
Hilton’s position on these lists stems from a combination of hiring and training systems, regular feedback and customer polling to track satisfaction. The company has an extra challenge in spreading its service culture across its properties because so many are owned by franchisees. Of its 140,000 employees, half work for franchisees. Hilton requires franchisees to use some of its procedures, encourages the use of others and provides guidance in various customer-service techniques.
In hiring, Hilton relies heavily on referrals from existing employees. The interview process includesbehavioral screening--in which, for example, prospective employees are asked how they dealt with a confrontational situation. Managers are trained in using and assessing behavioral screening.
Hilton is testing a new screening system at its Hilton Garden Inns that tries to clone its best employees by mapping their desirable qualities. Last year, employees rated as top performers were given a written test designed to assess their aptitudes and preferences. The answers were used to produce a snapshot of the model employee. Starting in January, prospective new hires are being given similar tests and evaluated according to how close they come to the model. If the process indeed succeeds in pointing managers to service-oriented recruits, it will be rolled out system-wide.
Once hired, new employees across the Hilton chain must go through 1.5 hours of customer-service training before they start. New managers, including those at franchised hotels, must undergo 40 hours of training in customer service designed not only to drill into them the basics of customer service but also to give them the means to encourage and promote it with their staffs.
There are also periodic updates of customer-service training, including some sent around the chain in film format. One uses the character of Norm from the old TV sitcom Cheers as an example of how to build a relationship with a repeat customer. (Norm, you may recall, was so well known at the fictional bar that he was always greeted by name the moment he entered, and by the time he reached his favorite bar stool, there was a cold mug of his favorite beer waiting.)
To reinforce the idea that good service is important, Hilton regularly rewards employees through two programs used at both owned and franchised hotels. One, called "Catch Me at My Best," gives customers the opportunity to nominate employees who provide especially good service. Winners get cash awards and merchandise. The cost to Hilton: more than $1 million a year.
A second program, called "Spirit of Pride," has employees nominating other employees for customer-service recognition. Winners get a $350 check and a celebration in their honor, complete with banners, music, cards and a congratulatory call from the corporate office. The company selected 350 winners this year and expects to increase that total to 700 next year. The cost is split with franchisees. Hilton’s corporate contribution, now at $500,000 annually, will rise to more than $1 million.
Finally, Hilton runs its own customer-satisfaction tracking to keep tabs on whether its efforts are producing results as reflected in what customers say. Hilton surveys about 60,000 customers each month by mail and e-mail, then makes the results available online to its managers so they can see exactly what customers have to say on a variety of customer-service issues. Hilton spends more than $1.5 million each year conducting the surveys.
Hartigan says Hilton believes that the focus on customer service pays dividends in the form of profits, and he points to something called RevPAR figures as proof.
The "real measurement"
RevPAR stands for revenue per available room. It is derived by multiplying a hotel’s average room rate by its occupancy rate. The better the RevPAR, the more money a hotel is likely to make (although other factors such as restaurants, golf courses and casinos can also affect the bottom line).
Companies are rated on a RevPAR index, with 100 being the norm. Hotels with under 100 are losing out to hotels with over 100. Hilton reported that as of February, all of its brands except Doubletree had RevPAR indexes above 100, led by Embassy Suites with 123.9. (The statistics are from Smith Travel Research.)
Van Amburg says that Hilton’s business performance is typical of companies with strong customer-service ratings. In the ACSI rankings, companies in the top half far outperform those in the bottom half. He has also found that companies with high ACSI scores tend to provide higher returns to shareholders. "There is a very strong connection between firms that do a good job of satisfying customers and their performance in the stock market," Van Amburg says.
Indeed, Wachovia Securities Inc. analysts recently named Hilton Hotels Corp. one of their top picks in the lodging sector, and several other analysts have been recommending Hilton stock as a good investment. While stock analysts tend to focus on more concrete factors such as Hilton’s strong cash flow and its positioning in key markets experiencing a lodging upswing, Hartigan points out that a large part of what draws customers--especially repeat customers--is how well they are served.
"At the end of the day, the real measurement is how you are doing in the marketplace," Hartigan says. "All of our brands command market-share premium."