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BUILDING LOYALTY ATHOTELS THROUGH DIGITALCUSTOMER EXPERIENCEMAGNANI CARUSO DUTTON

IT’S A BRAND NEW STAYIt’s amazing how, in a few short years, smartphones have changed the waybusinesses interact with us— bringing us better service and more convenience inour everyday lives.At MCD, we’re interested in companies with significant opportunities to betterleverage digital (especially mobile devices) to increase customer satisfaction. Inthis report, we focused on one such industry: hotels.TRAVELING WITH A MOBILE DEVICEToday’s travelers are increasingly accustomed to using their smartphones to maketheir travel experiences better. A typical traveler may order a cab from an app, scanhis or her boarding pass on a smartphone at the airport, forgo the counter andhead straight to their pre-booked rental car, and then receive alerts to any itinerarychanges. It’s simple. It saves time. It works.By the time guests arrive at a hotel, they expect this standard to continue. But,many of these guests are disappointed when the hotel’s digital experience doesn’tmeasure up. In fact, we found that travelers rate the hotel industry below severalother major industries (including banking, retail, airlines and restaurants) when itcomes to leveraging smartphone capabilities to enhance their experiences.So, what’s to be done?2

CHECK-IN TIMEIn order to discover new opportunities to improve the current digital customerexperience at hotels, we did what we always do: asked the customers.We surveyed 1,000 travelers across the U.S. in order to learn:1How travelers’ needs differ when traveling for business,for leisure, or with family.2What types of digital experiences would be mostuseful to each of these segments.3How much these digital experiences really matter.Would an investment in digital customer experienceactually bolster sales for hotels?We found that not only is there deep interest in improved digital experiencesat hotels, but also that great digital experiences may actually foster loyalty.That’s great news! But before we dive in, let’s learn more about travelers.3

MEET TODAY’S TRAVELERSTo better understand what digital experiences are likely to resonate most withtravelers, we broke our population into three segments:FAMILY TRAVELERSLEISURE TRAVELERSBUSINESS TRAVELERSFamily travelers are oftenLeisure travelers fly solo, inBusinessmanaging chaos. In fact, 92%couples, or with a group instudy most tend to agreeof those surveyed identifiedorder to “Get away from thewith the statement “I take awith the statement “I enjoydaily grind” (84%). The leisurelot of business trips— hotelstaking my family on vacationstravelers we surveyed do thisare my second home.” In fact,even though it can be hectic.”quite frequently— half of ourthe majority we surveyedMost of the family travelers werespondents travel and stayhave traveled for business,surveyed travel with kids agesin hotels three or more timesincluding hotel stay, within the13 and under, two or more timesa year.last 60 days.travelersinourper year.LOYALTY AND TRAVELERSWe also looked closely at the interests of travelers across segments with the highest tendencyto be loyal to a hotel brand. These guests present especially powerful opportunities for hotels,so we wanted to make sure to find out what resonates with them (see “loyal travelers” furtherdefined in Appendix for more).4

SO, WHAT DO GUESTSWANT IN DIGITALEXPERIENCES AT HOTELS?5

finding 1QUALITY IS KINGFor 70% of travelers, a hotel’s website andapp impact their decision to book a stay.Travelers often feel that a hotel’s digitalofferings reflect what the experience willbe like at the hotel itself.THE IMPACT OF A QUALITY WEBSITE AND APPQ: Overall, how much of an impact does the quality of a hotel’s website, appor other digital tools have on your decision to stay?70%Family travelers in particular72%64%74%BUSINESSLEISURETotal travelers selected“moderate impact” or“strong impact”FAMILYbreakdown by segmentindicate that digital toolsaffect their hotel choice.One such traveler said “Ifthey take the time to have agreat website, it tells me theywill take the time to makesure I have a great travelexperience.”PEOPLE WHO CARE ABOUT CUSTOMER SERVICE CARE ABOUT DIGITALThe travelers who selected that a hotel’s website or app has a strong impact on their decisionto book are twice as likely to consider service/customer experience as their top priority whenchoosing a hotel. For them, these things go hand in hand.6

finding 2TIME FOR AN UPGRADE74% of travelers reported interest insubstantial proactive involvement fromhotels during their stay, in order to maketheir visits better.Travelers are quite interested in hotelsmaking use of personal information. Forexample, knowing a traveler’s dietarypreference based on a previous stay,a hotel may automatically deliver agluten free menu to his or her phone.Consumers are willing to relinquish abit of privacy in exchange for a morestreamlined experience.INTEREST IN DIGITAL INVOLVEMENTtravelers, who consistently seek efficienciesQ: How open are you to a hotelproactively enhancing your stay?7974%This concept resonated highest with businessin their stays. However, this proactive approachisn’t quite as important for: Leisure travelers, who may be looking to71 72%%%“disconnect” more than other segments. Family travelers, who may be less concernedwith proactive enhancement than having thetools to manage trips themselves.Total travelers selected3 or 4, on a 1–4 scale,with 4 being highest—“I’d love it: EnsureI’m having the bestexperience possible.”LOYAL TRAVELERS WANT PROACTIVITYProactivity resonated strongly with loyaltravelers (see Appendix) across segments, with79% selecting 3 or 4 (compared to 74% totalBUSINESS LEISUREFAMILYacross all respondents).breakdown by segment7

finding 3A HOME AWAY FROM HOME80% of all travelers consider it importantthat they are able to set and share theirpreferences, such as bed type, pillowtype, newspaper delivery, dietary needsand billing preferences, in order to havehotels personalize their stay accordingly.Preference-setting belongs on digitalplatforms, ensuring that travelers canset/update easily from anywhere at anytime and save for future reference.THE IMPORTANCE OF PERSONAL PREFERENCESQ: When traveling, how important is it to you thatyour hotel allows you to set personal preferences?80%Total travelers selected“somewhat important” or“very important”85%%7876%All traveler segments showedrising interest in settingpreferences compared to hotelsproactively doing it for them.Business travelers continued toshow the strongest interest.BUSINESS LEISUREFAMILYbreakdown by segmentLOYAL TRAVELERS ESPECIALLY WANT PERSONAL SETTINGSThis concept resonates strongly with loyal travelers (see appendix) across segments, with87% selecting somewhat or very important (compared to 80% total across all respondents).8

finding 4WHAT TRAVELERS WANTQ: How likely would you be to use your smartphone in the following ways?Numbers below indicate percentage of travelers who said they were somewhat or very likely to use each feature.HIGHEST INTERESTLESS INTERESTTravelers (especially families) want tools andFeatures that feel overly transactional are ofinformation to know what’s available nearbyless interest to leisure and family travelers.and to help them make plans.That said, business travelers still showed highinterest in these offerings.80%TotaltravelersTo easilysee offeredamenitiesand hours78%To engagewith mapsof the areasthey visitTotaltravelers83% of Family travelers73%Totaltravelers64As aroom keyForautomatedcheck-in tobypass thefront desk62%Totaltravelers71% of Business travelers%To orderroomservice/amenitiesTotaltravelers70% of Business travelersTo pay theirhotel bill61%Total travelers71% of Business travelersTorequesta latecheck-out73%Totaltravelers78% of Family travelers55Toschedulea taxipickup atthe hotel%Totaltravelers71% of Business travelers68%Total travelersGuests prefer direct access tothis information via mobile.To seeconciergetips aboutthe placesthey visitTo sync itup with thein-roomtelevision43%Totaltravelers9

WORK SMARTER,NOT HARDERTHE PAYOFF OF PLEASING THEBUSINESS TRAVELERWhen business travelers find something thatworks, they tend to stick with it. Specifically,business travelers tend to frequent the same hotelbrands more than leisure or family travelers. Whenasked, “How frequently do you tend to stay atthe following hotels?” (which included a list of 30major U.S. hotel brands), business travelers made1,768 selections of “often” or “always.” This figurewas significantly lower for family travelers (780selections) and leisure travelers (571 selections).Additionally, when selecting a hotel, businesstravelers rank past positive experience higher thanparticipation in their preferred rewards program.In other words, repeat business is earned throughgreat experiences— even moreso than rewards points.What’s more, compared tothe other segments, businesstravelers tend to put less priorityon price, again making themmore likely to select a hotelbased on other experience-Repeat businessis earnedthrough greatexperiences.centric factors. This can make them more likelyto order add-ons during their stay such as WiFiand room service.We see a very compelling opportunity with thistraveler type: give them the digital experiencesthey want and keep these loyal, frequent andvaluable travelers as your own.10

RISE AND SHINESOON ENOUGH, THE DIGITAL OFFERINGS DISCUSSED IN THISREPORT WILL BECOME PAR FOR THE COURSE FOR ALL HOTELSThe relationship between travelers and their smartphones presents powerful opportunities for hotelcompanies to further engage guests and cultivate their own relationships with them, though needs varyby traveler segment.FAMILY TRAVELERSLEISURE TRAVELERSBUSINESS TRAVELERSFor these team captains, a hotelThough disconnecting is aWe found that these roadthat helps them to efficientlypriority for leisure travelers,warriors appreciate a seamlessmanage and coordinate theirwe also found that most seekand efficient stay that allowstrip would likely be relevantout new experiences. Hotelsthem to be comfortable andand hugely appreciated.can engage these travelerssave time— so they can get thewith digital tools that helpjob done.facilitate their discovery ofnew things and places.Hotels looking to stand out to today’s travelers would be wise to take notice and offer their guests thesedigital experiences now. This is especially true for both loyal travelers and business travelers, who weknow can be quite loyal once they are impressed.Offering guests some convenience, personalized attention and enjoyment via digital customer experiencescan mean all the difference in seeing returns— both in the form of loyal guests and digital investment.11

ABOUT USMagnani Caruso Dutton (MCD) is a digital customer experienceagency that helps some of the world’s most recognizable brands makeprofitable and more meaningful connections with their MagnaniCarusoDuttonTWITTER@mcdpartnersFor new business inquiries, further information about this report,or further information about MCD and our services, please contact:Ian Magnaniimagnani@mcdpartners.com212.500.452112