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Service, Profit or Both? It’s All About the Balance

Prioritizing Service Excellence, Profit, or Both? 

Here’s how to balance that fine line between customer satisfaction and making money.

Most commentary on hotel service excellence expresses some or all of these themes: Exceeding customer expectations, anticipating guests’ needs, being responsive, creating the impression that someone cares, memorable moments, the difference is service, and so on. I couldn’t agree more, but it is very difficult to measure the impact of these themes in a vacuum. Yet at times it seems that it is all about the service and that other priorities will take care of themselves.

In the past, I discussed service expectations vary by hotel and customer as well as by other conflicting priorities. Let’s examine a few facts regarding hotel types and available resources:

  • Select-Service: A rooms product with limited F&B and other amenities. These properties typically operate with .5 of a Full-Time Equivalent (FTE) per available room and a handful of managers/supervisors.
  • Full-Service Commercial: Guestrooms, restaurants, lounges, function space and so on. These properties typically operate with .8 to 1.0 FTEs per available room and, depending on size, 20 to 30 managers/supervisors.
  • Resort: Depending on the level of amenities – mainly F&B, Golf and Spa – these properties will typically operate with 1.2 to 1.4 FTEs per available room and 30 to 40 managers/supervisors.
  • Luxury: Potentially all of the above plus a Guest Services Department with management staff. These properties will typically operate with 1.5 or more FTEs per available room and 40 to 50 managers/supervisors.

(Please don’t hold me to the numbers or exacting product descriptions, but for the purposes of this discussion they are in the ball park.)

The other reality is the level of experience and seniority of the personnel at these different types of properties. The higher you go up the food chain the more seasoned and capable the team is. The point is you simply can’t deliver similar styles and levels of service across all hotel types. Nor do you want to; you simply won’t have the same resources or experience levels.

Secondly, in this asset-light environment the operator is charged with balancing the priorities of the brand and the ownership, which in simple terms are:

  1. Brand: The brand company wants to maintain the integrity of the brand, maintain loyalty of the brand’s customers, maximize their fees and continue growth.
  2. Ownership: Ownership is more interested in cash flow from operations and return on investment. The question is: do they want sustained profitability or a short-term boost so they can flip the asset?

To be successful, the operator must understand his or her customer expectations, consistently meeting and slightly exceeding those expectations – never below and never too high. Operators must balance the conflicting goals of ownership and the brand by providing just the right level of service so guests continue to come back and provide good cash flow to ownership, which should therein encourage owner’s to reinvest in the property and the brand.

Picture the select-service hotel that decides to add room service to compete with the full-service hotel down the block. How about the full-service hotel that cuts back on the bell staff to improve short-term profitability? Or the luxury-tier operator who is so focused on being an ‘hotelier’ that they miss the profit motive.

In the early days of brand segmentation, this type of behavior was prevalent and it still exists today, though in more subtle forms. This is also why an up-and-coming manager in a full-service hotel may not transition well to a select-service hotel or vice versa – at times they have difficulty leaving the values they learned growing up behind.

The reality is the customer you brought over from the select-service to the full-service model by manipulating service offerings and reducing prices is not really your customer. Sooner rather than later you will need to go back to the status quo and you will quickly lose that customer who was there on false promises that weren’t true to the brand. You are far better off focusing on the consumer segment attracted to your hotel type, building a strong foundation of loyal customers as a result of consistently staying true to the brand promise and meeting expectations.

No matter what type of hotel we operate, we have to deliver the basics well and add to the service delivery relative to the customer expectation and brand promise. You really can’t expect the select-service staff to anticipate guest needs or create memorable moments – just the basics please. At the full-service commercial hotel, you have a few more facilities available, but in reality your prime customer – likely the business traveler – wants the basics and responsiveness to special requests. At a resort or luxury-tier hotel, customized service delivery to individual needs and making the customer feel special are the factors that will create value.

We all need to remember we are running a business. For the business to run successfully over the long-term and for you to stay employed, you need to meet customer expectations, keep the brand integrity in line and maintain strong cash flow to ownership. The operator’s job is the most difficult; it’s a balancing act and it can be a steep drop in either direction if you step the wrong way. Service excellence is an integral part of your success and it can be the differentiating factor. The point is that you can’t win with service alone; you have to get the other parts right as well.

This article originally appeared in Hotel Interactive

Chuck KelleyChuck Kelley is a Partner with Cayuga Hospitality Consultants a network of independent consultants specializing in hospitality/lodging https://cayugahospitality.com/consultants/chuck-kelley/. He spent 32 years with Marriott International, beginning as an Assistant Restaurant Manager and worked his way up to Executive Vice President responsible for Marriott’s Caribbean/Latin America Region. Along the way he held positions as Director of Restaurants, Director of Marketing, Regional Director of Sales and Marketing, General Manager and Country Manager Australia. A graduate of the University of Hawaii, with a BS in Travel and Tourism Management. He is an active member of the Baptist Health South International Advisory Board and previously served as Chairman of the Caribbean Hotel and Airline Forum for the Caribbean Hotel and Tourism Association. He served with distinction in the US Army in Vietnam having earned a Purple Heart and Bronze Star for valor in combat.

Hospitality CapEx Math 101 – Useful Life

Highest and Best Use – CapEx – Part II

CapEx Math 101 – Useful Life

There are four important concepts that hotel owners and operators need to know about CapEx useful life.  Applying these concepts is crucial to good CapEx decisions and achieving highest and best use of owner’s capital.

The four important concepts of CapEx useful life: 

  • Maximize Useful Life
  • Match the Investment Horizon
  • Consider Risk, Obsolescence, Technology, and Taxes
  • Do the Math

 

Useful Life

Many hotel capital assets just do their job year after year, with minimal inputs of operating expense.  Examples of these assets include roofs, exterior walls and windows, water distribution systems, and fire and life safety systems.  These assets are great examples of the most basic rule of CapEx useful life:

Maximum Actual Useful Life = Maximum Return on CapEx $

The longer the actual useful life of a capital asset, the lower the costs become per unit of use.  In simple terms, a $900,000 roof that must be replaced after 15 years costs about twice as much per year than if the roof’s life is extended to 30 years.

Although it is easier to think about reducing CapEx costs “per year”, extending useful life is beneficial only in delaying the capital expense required to replace the asset.  There is really no “per year” benefit; only a delay in expenditure of the total replacement cost.

Here is a simple cash flow analysis:

thumbnail of TR1

This analysis is oversimplified to illustrate the point, but clearly demonstrates that there is an advantage to maximizing the useful life of this roof.  The 15 year roof costs $1,972K ÷ 30 yrs. = $66K/yr.  The 30 year roof costs $1,072K ÷ 30 yrs. = $36K/yr.

 

Maximizing Useful Life

How do you maximize the useful life of capital assets?  The concepts are pretty simple, and can be applied to most capital assets.

  • Buy the right capital asset to begin with, and
  • Take good care of it.

Here are some ideas for the roof example:

Design, Specification, and Installation – For both the initial investment, and any subsequent replacements, it is the owner’s responsibility to ensure that the roof is properly designed, specified, and installed.  This is the opportunity to make good decisions about expected useful life, warranties, maintenance requirements, price, and value.

thumbnail of TR3

Inspection, Maintenance, and Repair – Roof warranties generally require documentation of inspections, maintenance, and repair before the warranty will be honored.  Although it is the operator’s responsibility to ensure that the roof is properly inspected, maintained, and repaired, it is in the owner’s best interest to confirm that this work is being done, and that systems are in place to track and document the work.

The obvious intent of the warranty’s inspection, maintenance, and repair requirements is to extend the useful life of the roof at least until the end of the warranty term.  These same measures will continue to help extend the life of the roof beyond the warranty term.  It is absolutely possible to extend the actual useful life of a roof 5 to 15 years beyond the warranty period with regular inspection, maintenance, and repair.

There is also the “maintenance paradox” to consider.  Well maintained assets are less likely to require repair, and are less costly to maintain over the life of the asset.  Poorly maintained assets require more repair work, are more expensive to maintain, typically have a shorter useful life, and are more likely to fail catastrophically.

Finally, it is important to note that extending useful life only applies to existing capital assets, and is almost entirely under the control of the hotel’s operator.

Buy right, and insist that capital assets are well maintained.

 

Operating Expenses

Capital assets often require ongoing labor, energy, water, maintenance, and repair expenses.  In some cases, these annual operating expenses approach or exceed the cost of the capital asset itself.

Capital asset operating expenses typically increase over time.  As assets age, they often operate less efficiently and require more maintenance and repair.  While operating expenses complicate the analysis of maximized useful life, they do not alter the basic math.  For major capital assets, it is important that owners quantify these operating costs, and balance them against the capital replacement costs.  Well-functioning capital assets should only be retired when the operating expense balance tips in favor of replacement.

Extend Useful Life until replacement life cycle costs are below current operating costs.

 

Investment Horizon

Would you replace the $900K roof in the earlier example if you were planning to sell the property in two years?  Probably not.

Say the roof had failed, and there was no choice about replacing it.  Most owners would choose the least expensive replacement they could find, with the only requirement that it last at least until after the expected sale date of the property.  Let the new owner worry about the roof!

Conversely, if this hotel was a “core asset”, and you intended to hold the property for the next twenty or thirty years, you would be well advised to purchase a premium quality new roof with the lowest total life cycle costs.

Coordinating capital asset useful life with the owner’s investment horizon requires good judgement about how these decisions will be factored into the sales price.

  • Will the prospective buyer discount the purchase price by the full cost of replacing the worn out roof?
  • Should you replace the 30 year old chillers two years before sale, and get the value of the increased operating cash flow from energy and maintenance savings?
  • Will the full revenue benefit of a guestroom renovation be reflected in the sale price?
  • Will a deferred renovation be discounted in the purchase price by the buyer?

Balance CapEx useful life with owner’s investment plans.

 

Risk

Operating risk is an important consideration in useful life decisions.  Fire suppression, life safety, and security system replacement decisions all carry a substantial element of risk.  Failure of one of these systems in an emergency can potentially put a hotel out of business, but replacement is expensive, and has no positive affect on revenue.

Some capital assets also carry regulatory risk.  For example, although smoke detectors may continue to function for 15 or 20 years, they have a regulatory useful life of only ten years.  They “must” be replaced after ten years by regulation.  The regulatory risk penalty is a fine or injunction.  The safety risk is a guest or employee death or injury in the event of a fire.

Certain mechanical and electrical systems are critical to the operation of the hotel, and their failure can have a profound effect on the business.  For example, a full service Marriott hotel in Virginia suffered the failure of all three of its heating and domestic hot water boilers at the same time.  Unfortunately, the failure occurred during the winter, and during a period of high group occupancy.

Had the boilers been replaced in a planned fashion, they would have cost the owner only $275K.

Because of the failure, the owner paid a premium for the replacement boilers, expediting fees, overtime expense for installation, fees for temporary boilers, and substantial rebates to groups using the hotel.  The hotel’s reputation was also damaged in a very competitive market, reducing future revenues.

The additional one-time costs associated with the failure were roughly twice the cost of a planned boiler replacement.

Consider operating and regulatory risk.

 

Obsolescence

While extending the life of some capital assets indefinitely would be ideal (e.g. a hotel’s roof), maximizing the useful life of obsolete assets may require replacing them before the end of their functional life.

For example, 30+ year old chillers in perfect operating condition are not at all unusual in well-maintained hotels, but these machines may be as much as 25% less energy efficient than current technology.  Energy savings alone can often justify early replacement of this equipment.

Replace obsolete equipment.

 

Technology

New technology can eclipse the useful life of a capital asset.

In the early ‘80’s, hotels still had electro-mechanical telephone systems that required an operator to place long distance telephone calls.  The charges for the long distance call were printed out by the phone company on a dedicated “HOBIC” teletype machine located in the hotel’s front office, and then manually posted to the guest folio (an actual printed piece of heavy paper or cardstock) using another electro-mechanical machine.

Regulatory changes, and advances in computer technology completely replaced all of this equipment, required no direct labor expense, and improved accuracy and timeliness of transactions.  Computerized telephone systems, call accounting systems, and integrated hotel property management systems reduced operating expense and increased revenues.  Front office staffing requirements were halved.  System “maintenance” was handled remotely at substantially less expense.

New technology completely changed the operation of the telephone department and front office of the hotel, and also required significant new capital asset investments.  Of course, all of the old telephone equipment was still perfectly functional, and could have continued to operate for years had its useful life not been eclipsed by new technology.

New technology has driven similar changes in customer relationship management, property management, lighting, lock systems, energy management, accounting, and maintenance management.

Embrace new technology.

 

Depreciation and Taxes

There are three depreciation and tax questions related to useful life.

One: What happens if you replace a capital asset before it is fully depreciated?

  • EBITDA is not affected.
  • Owner’s capital is required to purchase the replacement capital asset.
  • The owner’s P&L must reflect for both the undepreciated costs of the retired asset, as well as the first year’s depreciation of the replacement asset.
  • Owner’s profit goes down by the excess depreciation expense.
  • The owner avoids income tax on the decreased profit.

Two: What happens if you replace a capital asset when useful life equals depreciation life?

  • EBITDA is not affected.
  • Owner’s capital is required to purchase the replacement capital asset.
  • Depending on the exact details of the replacement timing, there may be two depreciation payments in a single tax year (one for the old asset, one for the new), or one for the old asset one year, and one for the new asset the following year.
  • Profit goes up or down by the change in depreciation expenses.
  • The owner pays more or less income tax on the change in profit.

Three: What happens if you extend the useful life of a fully depreciated capital asset?

  • EBITDA is not affected.
  • Cash is not required to fund purchase of the replacement capital asset.
  • Since there is no longer a depreciation expense for the asset on the owner’s P&L, profit goes up by the amount of the avoided depreciation expense.
  • The owner pays income tax on the increased profit.

Note that in all three cases, cash flow from operations does not change, owner’s capital cash requirements change in timing but not amount, and depreciation expense changes in timing but not amount.

Any resultant changes in taxable profit will change the timing of taxes paid, as well as the amount of taxes paid due to changes in tax rates or bracket.

Changes in useful life affect the timing of depreciation, taxes, and capital investment, but generally not the amount.

 

Doing the Math

See how you do on this quick math test:

Which would you pick (actual prices on Amazon)?

 

☐  Palmolive Dishwashing Liquid, Original (1.32 Gallon) @ $20.49

 

                    ☐  Palmolive Dishwashing Liquid, Original – 32.5 fluid ounce (Twin Pack) @ $5.66

 

My mother-in-law can do this math in her head faster than I can pull up a calculator on my phone.  Although I can estimate the unit costs for each container in my head, it takes a calculator to bring the answer to 4 decimal places of precision.

  • The big container costs ……………………………………. $0.1227 per ounce
  • The Twin Pack costs ………………………………………… $0.0871 per ounce

Even though there is a 40% per ounce price difference between the big jug and the twin pack, it doesn’t really matter which container of soap you buy; it isn’t a material expense.  However, while overspending on a bottle of soap is no big deal, choosing the wrong capital asset, or paying more than you need for CapEx may affect the financial success of the hotel.  The larger the CapEx, the more material the effect on the owner’s financial success.

Once you start considering useful life, inflation rates, revenue effects, energy costs, labor expense, tax effects, and so forth in your CapEx analysis, the math quickly becomes too complex for even my mother-in-law’s capable brain.

  • Simplify and state your assumptions and alternatives
  • Quantify and include all cash flows
  • Itemize other decision factors; risk, obsolescence, etc.

Incorporating these factors in a flexible analysis spreadsheet will allow you to test your assumptions about useful life, operating costs, and timing, and to directly compare the costs of alternative CapEx investment strategies.  An example analysis is attached.

Do the Math, test your assumptions.

 

Summary

Understanding how useful life affects CapEx costs and decisions will help owners achieve highest and best use of their capital dollars.

  • Extend useful life

  • Maintain & repair

  • Keep an eye on operating expense

  • Consider risk

  • Retire obsolete assets

  • Embrace new technology

  • Don’t worry about taxes & depreciation

  • Do the math and test your assumptions


About the Author:

Thomas Riegelman offers an extraordinary range of expertise in facility and asset management, with over 30 years enterprise level executive experience managing multi-unit hotel, resort, and military housing operations.

His 19 years with Hyatt Hotels Corporation as VP of Technical Services and VP of Engineering provided him with broad experience in all phases of hotel and resort planning, CapEx management, construction, engineering, and facility operations. Tom also served as the General Manager for The Prudential Realty Group’s northeast hotel portfolio, giving him a strong owner’s perspective on real estate development and asset management.

After graduating from the Cornell University School of Hotel Administration with a concentration in hotel planning and design, he earned an MBA in Finance from the University of Chicago Booth School of Business. Tom also attended the Ecole Cordon Bleu in Paris.

Tom is the principal in charge, and personally supervises all consulting engagements by RA Associates.

R-A Associates provides management consulting services focused on creating and sustaining the long term value of hospitality real estate assets.

  • Property Planning and Design,
  • Facilities Operations, and
  • CAPEX.

Contact Thomas Riegelman

The Relationship Between LEED Hotel Design and Guest Satisfaction

An approach of environmental design in LEED hotels by comparing visual and verbal experiences.

By Alvarez Leon, Ivan

A study in emotional design and its relationship to LEED certified hotel design and guest experience.

For: Department of Design and Environmental Analysis, Cornell University. 3423 Martha Van Rensselaer Hall, Ithaca, New York

Abstract

The goal of this paper is to highlight those actions that can change the experience of the customer during their stay by the design in the guestroom. The research carried out choice hotels located in the United States and Europe in order to find out and compare strategies of each one.

The research covered ten case studies, which were chosen by obtaining LEED certification. Once we obtained their design actions developed for getting indoor air quality, the research compared which of them were influential on the customer experiences during their stay by reviewing TripAdvisor reviews and pictures of customers.

The results show us how the LEED certified hotels have a relation between the design action of LEED and the customer’s experience in rooms. In addition, the paper reveals a group of emotional codes in terms of comfort, relaxing and visual relations between built and natural environments.

Introduction

The hotel’s rooms represent almost 70% of the total built surface of the hotel (Forster Associate, 1993). This percentage may change depending of the type of hotel (skyscraper, hotel of 4-7 floors or tourist resorts). 10% of customer purchases are driven by guestroom design (Dubé L. & Renaghan L.M., 1999) and 9% were driven by the following attributes: HVCA, aesthetics, overall size, cleanliness, comfort, kitchenette, work equipment and entertainment. In Dubè`s research, the customer gave their opinion during the stay or at the point of purchase decision. That means that the experience was not finished, leaving the possibility to change their opinion during the rest of stay. In any case, some of the attributes defined in 1999 by Dubè continue to be useful for defending the hypothesis that emotional guestroom design is more important than functional guestroom design, such as, size, comfort and entertainment.

During the last decades, architects and interior designers have been studying the guestroom through functional design features (Rutes, W.A., Penner R.H., &, Adams, L., 2001). The relation between optimal dimension, amenities and room types is the goal for architects to design a guestroom. Technical and constructive aspects are important too for designing, interchangeably the type and room’s dimension (Rutes W.A., FAIA, & Penner R., 1985).

On this line of spatial and technical aspects, U.S. Green Building Council organization is promoting sustainable actions to offer professionals a guideline, in order to get a sustainable certification for the building. Leadership in Energy and Environmental Design (LEED) is the title of the certificate and is becoming a kind of marketing brand in the hospitality industry. We still do not know how the LEED certificate may impact on the business benefits (Walsman M., Verma R. & Muthulingam S., 2014). However, LEED certification continues to be the most proper certificate for sustainable designing in the U.S. hospitality industry. Some of the most important chain hotels in the world, such as, Marriott, are promoting the LEED certification in their hotel by creating the first LEED Volume Program. So far, this company has thirty hotels with awards and has introduced the first LEED green Hotel Prototype.

LEED certification is based in point schedule by six categories (sustainable sites, water efficiency, energy & atmosphere, material & resources, indoor environmental quality and innovation. In this research, we will put the focus on the indoor environmental quality aspect because by studying its parameters of design, the researcher can understand that this is the more related category regarding the design and customer’s experience inside the guest room. These parameters are increasing ventilation, thermal comfort-design, and daylight and views, among others.

If LEED certification gives us the benefit and certainty during and after the hotel’s construction for being a sustainable hotel, that benefit is opening new lines of research for knowing the customer’s experience in a LEED certification hotel. Could a LEED hotel increase the customer experience? Or does a green hotel not always mean a successful experience for the customer? Professionals in the hospitality industry are convinced that the most important thing is the customer experience. Three of the head officers of the most important chain hotel in the world defended that idea during the lecture series in the fall semester of 2014 at the School of Hotel Administration at Cornell University. Mr. Ronald T. Harrison said, “the most important for Marritot is people; Mr. Kevin Jacobs said during his lecture, “we are passionate about delivering the best experience to our guest; and Samantha Sugarman showed the goals for facilities and design analysis in Four Seasons hotels, which are “specific style of design, don’t dictate a style, every hotel has their style and want great experience.” All of them considered the customer experience as the principal concern in the hospitality industry.

So far, we know that LEED certification has become a metric for sustainable hotels in the U.S. and the chain hotels are focusing on the customer experience for improving their benefits. The scientific researchers conducted studies about the customer experience and its impact in the hospitality industry; in addition they applied different methodological approaches.

The volume of customer reviews on the TripAdvisor website for the final purchasing decision, represents an important tool for potential customers (Melián González S., Bulchand Gidumal J., & López Valcárcel B., 2014). The electronic word-of-mouth called eWOM (Cantallops A.S., Salvi F., 2014) is more effective than communication marketing in the hotel sector (Litvin S.W., Goldsmith R.E., & Pam B., 2008; Gretzel, U., & Kyung Hyan Y., 2008).

The eWOM can be manipulated for anyone, and the authenticity of the comments can be false (Mayzlin D., Dover Y., & Chevarlier J., 2012). The impact of the TripAdvisor reviews directly affects the reputation of the hotel and changes the booking of hotels (Anderson K., 2012). Due the possibility for false reviews and a decrease in the percentage of real reviews, the researcher applied a methodology for increasing the indicator about the truthfulness of costumer’s reviews. Thus, the study continues using the impact of reviews on TripAdvisor as a source.

TripAdvisor gives the customer the possibility to insert their reviews and upload pictures of their travel before or after their stay at the hotel. The pictures taken inside the guestroom become irrevocable proof that the customer stayed at the hotel and give us information of their behaviors and memories (Harper D., 2002). In addition, it is a form of evidence that the reviews were written after the stay. Pictures in the form of postcards have been used in tourism for representing an ideological discourse in modern tourism (Albers P.C., & W.R. James, 1988) representing icons, customs or landscapes of the places to visit. The new technologic trends in smartphones and cameras give the customer the possibility to capture any moment during the stay. Often, customers use photography to spark strong memories, among others reasons (Pullman M., & Robson S., 2007). Thus, the researcher studied the pictures taken inside the room, knowing that the pictures uploaded represent positive or negative memories from the customer’s experience. Regarding what kind of pictures the customer takes during the stay, the research concluded those highlight important design elements. In other research where a photographic approach was applied through websites, researchers discovered the subject of the pictures reflecting the customer’s behavior (Donaire J.A., Camprubí R., & Galí N., 2014; Chalfen R.M., 1979). This research is focused on what they captured and not how they were made.

The current research is carrying out a new approach based on emotive design for the hospitality industry, putting in evidence the customer’s comments and pictures as the new approach for the hospitality design. Often, architects and interior designers are able to design hotels without any background knowledge about the customer’s experience. The hospitality industry, based in the guest experience, must focus more on the emotive design in hotels and public spaces (Lo K.P.Y., 2009, 2011; Masoudi A., Cudney E., and Paryani K., 2013; Pullman M., & Robson S., 2007; Jüttner U., Windler K., Schaffner D., and Maklan S., 2013).

The emotional design in guest rooms means working on designing for emotive status, such as, functional, satisfactory or memorable experience (Lo K.P.Y., 2007). Each status is defined by different emphases on its design (Barsky J., & Nash, L., 2002). It is, therefore, how we can achieve a memorable experience in LEED hotels. LEED certificate represents the top level for sustainable actions for buildings in U.S. That means that the hotel or chain of hotels wants to communicate a clear message to its guests. Having a message or theme is one of the conditions to achieve a memorable experience.

The research analyzed those designs that the customers emphasized through comments and pictures on TripAdvisor’s website. Using this approach we will be able to recognize positive or negative design aspects in LEED hotels.

The emotional design has been studied and put into practice by other disciplines that use object or symbols (Norman D.A., 2002, 2004; kim H., & Lee w., 2014). The hospitality industry is becoming a trend sector for applying new methodologies in interaction with the human behaviors. Recently, researchers are searching new approaches for understanding the customers’ behaviors using eye tracking (Robson S., & Noone B., 2014).

This research highlights the opportunity for using the emotional design in the hospitality industry because it is a sector based in human experiences. The success of guestroom design must be understood as those spaces are able to offer many experiences to the customers. The idea of designing many rooms within a room (Siguaw A.J., & Enz C.A., 1999) is the basis for thinking that a guestroom is not only a functional space or a satisfactory experience. The real loyalty of customers in a guestroom of a hotel is when the expectation of the room design is exceeded and memorable experiences are reached through it (Skogland, I., & Siguaw, J. A. 2004). If that emotional guest room is applied in LEED hotels improving its commitment with the environment and energy, we can break old concepts in the hospitality industry and add value to guestroom experience in hotels.

Material and methods

In order to obtain results that can be used or put into practices by professionals in the hospitality industry, the material and methods applied were collected directly from resources used by professionals or real customers.

The stages used to obtain material and the methodologies applied in this study were mainly based in two phases. In every one of them, the goals were different, which means each phase used different methodologies. The first stage of the study was representative, collecting data from different sources. The second stage focused on creating groups of emotional design codes in LEED hotels.

Discerning visual design codes.

All the photographs in bathrooms and bedrooms were codified according to the parameters of tangible or intangible elements and their spatial relation (visual and physical). The total of elements coded in bathrooms and bedrooms were 32.

According to this study of the customers’ visual impact, we could identify three types of user experiences. Those experiences are based on the tangible element of bed as a “sleeping” experience, the bathtub jet/shower sauna as a “relaxing /spa” experience, and the physical space of living room as a “living / welcoming” experience.

If we think in experiences (sleeping, relaxing/spa and living) and not just in spaces or elements distributed in a functional way, we are actually changing the traditional concept of hotels. A hotel room design geared towards an emotional design would improve the current strategies of many hotels that only use technology (free wifi or tv flat screen) as added value in rooms. (Gilmore J. H., & Pine II B. J., 2002).

The research highlighted the importance of getting a memorable experience while the sleeping, relaxing in the living area and taking a shower.

Verbal codes in memorable experiences.

The next phase was to figure out which customer’s comments made reference to those elements identified as keys to getting a memorable experience in the previous step, and which comments represented a positive emotion.

We studied the comments of 217 TripAdvisor users, obtaining a total of 291 codes between bathrooms and bedrooms. These codes gave us more information about the elements studied previously by the visual impact, and others features which were not photographed. In order to discover how positive the experience was, the study was able to detect those memorable experiences by identifying related adjectives with the elements studied.

If we compare the results between the elements of visual impact method and customers’ comments, we can conclude that the bathtub or soaking tub and the views to outside are the elements to consider in the design of the bathroom that will most likely result in a memorable customer experience.

A visual connection between the bathtub and the bed, an outdoor bathtub, a flat shower separated from the bathtub, or a vanity with two sinks are some of the elements in bathrooms that increase positive emotions (see table 9).

Comparatively, the elements in the bedrooms were beds, views to the outside, furniture and the living room area. The artificial light and natural light were not analyzed due the low percentage of customers’ comments. Nevertheless, the results of the elements studied were high enough to find out how customers achieve memorable experiences in bedrooms.

In the living area of bedrooms, the fireplace element was the most commented by customers with 5.5% of customer’s positive emotions, using adjectives like excellent, fantastic or lovely. 5% of customers appreciated décor or a modern style as a way to make them feel like they were far away or made them feel at home.

Conclusions

The study analyzed LEED hotels in Europe and in the U.S. to figure out if the design of sustainable actions and customer’s satisfaction had a relation between them. The room was the space chosen to study the correspondence between sustainable design and satisfaction. Using a method based on the photographs taken by real customers we coded all the elements with a visual impact in bathrooms and bedrooms. Once we categorized them, we could find out which of them had higher visual impacts. In the bathrooms, the bathtub or jetted tub, the mirror and the vanity, which had 14.6 %, 14.6% and 14% respectively, were the elements highlighted by customers.

In addition, the design of the bathroom with a bathtub beside a window facing the outside with a wonderful landscape, garden, or urban scene was considered by customer as a positive emotion, making it a memorable experience in almost 20% of clients. In bedrooms, high visual impact was mainly concentrated on four elements: the bed, furniture, natural light and views with 13.7%, 20.3%, 20.4% and 15.65% respectively. A comfortable bed and an attractive view to the outside were the most rated by customers.  All these elements were coded in order to identify and categorize them according their own features, such as, tangibility, intangibility, visual relation, physical relation or technology.

Once the results were studied, we discovered that there was a correspondence between sustainable design criteria and customer satisfaction. The data suggested than a customer’s experience may change in the hotel if some of these criteria are not present. The natural light and views are those two essential elements for obtaining a LEED certificate in IEQ category with high visual impact.  The views to the outside in bathrooms represented 9.1% and natural light represented 9.7%. These percentages in bedrooms are higher, in which the view was 15.65% and natural light was 20.4% of customers. The IEQ category in LEED certification establishes two criteria regarding views and natural light, which are EQc8.1 Daylight and views – daylight 75% of spaces and EQc8.2 Daylight and views – views for 90% of spaces. Both criteria provide building occupants with a connection between indoors spaces and the outdoors through the introduction of daylight and views.

If the photographs show what elements have a visual impact to the customers in the guestroom during their stay, the second aim was to find out if a sustainable design has the ability to make customers feel positive emotions in rooms. The research suggested that design in rooms could produce positive emotions in customers. In addition, according the study, the customers could get a memorable experience through the design (Lo, K.P.Y., 2007).

To get information about the positive customer emotion and design, we studied all comments posted on TripAdvisor website. All comments with positive adjectives were classified and put in relation with the design’s elements studied previously. A main outcome of this method was that customers experienced most of the positive emotions and memorable experiences in three different elements of the room (one in bathroom and two in the bedroom). These elements were the bathtub, bed and fireplace.

However, the study also discovered that without comfort and views to outside, the customers did not achieve a memorable experience. 19.6% of customers described their experiences in the bathtub with views to outside as an amazing moment. More than 45% of customers thought that the size and comfort of the bed was very important to get a memorable experience. This percentage increased when the room offered views to the landscape, representing 38.6% of positive emotion in bedrooms and 19.6% in bathrooms .

The strong correspondence between the customer rating in rooms of LEED hotels on TripAdvisor website reinforces the hypothesis that sustainable actions are related to customer satisfaction. This result and the outcomes previously shown highlight the possibility of considering a new indicator of sustainable design that is able to measure positive emotion in hotels.

Moreover, this study shows a code series that compares elements of design and the emotional charge of customers in hotels. The challenge of this research is discovering all emotional codes through the design in hotels, in order to build an indicator and emotional guidelines of design able to predict the customer’s experience. In this study, we focused on visual impact and comments codes of design and customer experience. Nevertheless, we realized during the process that a code series related with human well-being, physical perception of spaces and use of technology also existed., It would be interesting to study these elements as well, in order to be able to predict memorable experiences in hotels by using an emotional design.

To view the paper in its entirety, including illustrations, tables and references, please click below .

 

This paper originally appeared in ARA Journal of Tourism Research 6-1, (2016).


About the Author:

Ivan Leon AlvarezIvan Alvarez Leon is a Professor of “Design and tourist facilities” at CETT (School of Tourism, Hospitality and Gastronomy).

Ph.D. Architect – MSc Urban planner by the Department of Urban Planning and Planning of the Territory at the Polytechnic University of Catalunya. He was a researcher Marie Curie International Outgoing Fellowship under the program Framework Program 7 promoted by the European Union during 2014 and 2016 as Postdoc Fellow at Cornell University. As consultor all his projects are focus on how your experience may increase from an emotional and wellbeing design. Ivan Alvarez Leon is a member of Cayuga Hospitality Consultants.