Chapter 1 Notes: The Basics of Wow! The Guest Knows Best
The Hospitality Service Strategy
A business plan is essential for success, similar to having a road map.
Without a plan, a business is like shooting a rifle in the forest and hoping for dinner.
Chapter 1: The Basics of Wow! The Guest Knows Best
Hospitality Principle: Provide the service quality and value that guests expect.
Treat all customers as if your world revolves around them.
You don’t know what you aren’t going to get until you don’t get it.
Learning Objectives:
Understand the differences between making products and serving guests.
Recognize the importance of meeting guest expectations.
Understand the significance of the guest experience and its components.
Define service quality and service value in the hospitality field.
Understand why "it all starts with the guest."
Key Terms and Concepts:
Hospitality
Service Quality
Service Value
Guest Experience
Moment of Truth
Guestology
Service Product
Service Setting
Service Environment
Servicescape
Service Delivery
Expectations
Guestologist
Internal Customers
Service KSAs (Knowledge, Skills, and Abilities)
Service Delivery System
Service Package
Service Encounter
Critical Incident
Benchmark Organizations
Quality
Value
Cost
Serving Guests vs. Making Products
Serving guests and making products require different management principles.
In manufacturing, defects can be corrected before the customer sees them.
In hospitality, there is often no buffer between the service provider and the dissatisfied guest.
Defining the Hospitality Industry
The hospitality industry includes organizations that offer courteous, professional food, drink, and lodging services.
An expanded definition includes theme parks, airlines, gaming centers, cruise ships, trade shows, and meeting planning organizations.
The challenge is to ensure personnel provide the level of service guests want and expect, every time.
Guest-Defined Service Quality and Value
Service quality and value are defined by the guest, not by managers or rating organizations.
Organizations like J.D. Power and TripAdvisor rate service quality, but individual guests make their own decisions.
Each guest makes a new decision about quality and value in every transaction.
A single negative incident can negatively influence a guest’s opinion and be spread through word-of-mouth and social media.
Hospitality vs. Traditional Management
Hospitality organizations are different from traditional businesses.
The success or failure of the guest experience depends on how a single moment of truth is handled.
Management must prepare for and manage each moment of truth effectively.
The shift to a service economy requires reorganizing traditional management models to meet the unique challenges of hospitality.
Guestology: Understanding the Guest
Guestology involves scientifically studying customer-guests to understand their behaviors, wants, needs, capabilities, and expectations.
The service product is tailored to meet guest demands.
All employees must treat customers like guests and manage the organization from the guest’s point of view, while also keeping an eye on the bottom line.
Guestology increases guest satisfaction, leading to repeat visits and higher revenues.
The organization’s strategy, staff, and systems are aligned to meet or exceed customer expectations regarding service product, service setting, and service delivery.
Guestology turns traditional management thinking around, focusing on the guest experience first, rather than organizational efficiency.
Meeting Customer Expectations
Guests have certain expectations when they come to a service provider.
First-time guests may have general expectations, while repeat guests have specific expectations based on past experiences.
Olive Garden researches customer key drivers like food quality, service speed, cleanliness, and atmosphere.
A guestologist plans for customer expectations before they enter the service setting.
Disney Example: Guestology in Practice
Disney carefully studied guest behavior and discovered that when people were otherwise indifferent as to which direction to go, they tended to go in the direction of their handedness.
Since there are more right-handed than left-handed guests, Disney made the road to the right wider than the other roads off the main hub anticipating that more people would go in that direction.
Disney encourages guests to dispose of their trash to help maintain cleanliness.
Cast members model the desired behavior of keeping the parks clean.
Trash cans are conveniently located to encourage guests to throw away trash.
Managing the Total Dining Experience
Guestology involves systematically determining factors that influence the guest experience, modeling them for study, measuring their impact, and testing strategies to improve the quality of that experience.
Serving Internal Customers
The principles for providing an outstanding service experience for external customers also apply to internal customers.
Smart hospitality organizations treat employees with the same care and consideration that they want their employees to extend to their guests.
The way an organization treats its employees will spill over onto how employees treat guests.
Southwest Airlines' mission statement emphasizes providing employees the same concern, respect, and caring attitude that they are expected to share with customers.
Meeting Increased Competition
The competition for guest loyalty and dollars is intense.
Both large and small hospitality organizations need to master and practice the principles of guestology to survive and prosper.
Service Defined
Service is the intangible part of a transaction relationship that creates value between a provider organization and its customer, client, or guest.
A service is something that is done for us, either directly or for the customer.
Services can be provided by a person or via technology, or a combination of both.
Service Product Defined
Service Product refers to the entire bundle of tangibles and intangibles in a transaction with a significant service component. Also referred to as a service package or service product.
Most services include a tangible physical product or tangible materials and equipment in the transaction.
The service product does not refer specifically to the tangible items that may accompany the transaction, though it can include them.
Olive Garden sells the tangible meal product with its rooms themed and the feeling that "you’re family."
Both the organization and the guest define the service product, and the definitions may not be the same.
The hospitality organization needs to define its service product in terms of what its guests want and expect.
Charles Revson: “In the factory we make cosmetics; in the store we sell hope.”
Service Industries
Theodore Levitt: “There are no such things as service industries. There are only industries whose service components are greater or less than those of other industries. Everybody is in service.”
Goods to Services to Experiences
Consumers want their goods and services packaged as part of a memorable experience that has an emotional impact.
The most successful organizations provide carefully designed experiences that unfold over a period of time.
B. Joseph Pine and James H. Gilmore noted that we have transitioned to an experience economy.
Understanding the Guest
Well-managed hospitality organizations understand that each guest is an individual with unique needs, wants, capabilities, and expectations.
The organization must strive to satisfy each guest and adapt to changes in expectations.
Understanding includes:
Demographic breakdowns (age, race, gender, location)
Psychographic breakdowns (feelings, attitudes, beliefs, values)
Capabilities (knowledge, skills, and abilities [KSAs])
It is more challenging to meet guest expectation when the guest requires the service begrudgingly, or under duress.
The guest-focused organization designs each guest experience from the guest’s point of view, offering a personalized experience.
The Guest Experience
The guest experience is the sum total of the experiences that the guest has with the service provider on a given occasion or set of occasions.
Hospitality organizations divide the total experience into convenient units or components for planning and execution.
Neu and Brown suggest that even manufacturing organizations are increasingly interested in the service component of the manufactured product.
Product, Setting, and Delivery
Benchmark hospitality organizations use their strategy, staff, and systems to provide each guest with a seamless three-part guest experience:
Service product
Service setting
Service delivery
This equation captures that the sum of these parts lead to the overall guest experience = service product + service setting + service delivery system
Unique, Yet Similar
No two guest experiences are exactly alike.
The uniqueness provides the primary challenge to the hospitality service provider.
Guests do respond to many experiences in similar ways.
Probabilistic statistics is a major tool for identifying how hospitality organizations can best respond to guest needs.
Successful organizations spend considerable time and effort studying their guests to ensure that each part of the experience adds something positive.
Components of the Guest Experience
The three elements of the guest experience are:
The service product
The service setting
The service delivery system
The Service Product
The service product is why the customer comes to the organization in the first place.
The basic product can be tangible or intangible, or both.
The Service Setting
The service setting is the environment in which the experience takes place.
The term servicescape describes the physical aspects of the setting that contribute to the guest’s overall feel of the experience.
Las Vegas casinos use their hotels’ designs to focus on gambling.
The servicescape is important to themed restaurants like Bahama Breeze, Hard Rock Cafe, and Rainforest Cafe.
The Service Delivery System
The service delivery system includes the human components and the physical production processes.
Unlike a factory's assembly line system, which is generally distant from and unobservable to consumers, many parts of service delivery systems must necessarily be open to consumers who can avail themselves of the services directly and coproduce the experience.
People interacting with customers make the biggest difference in how customers feel about the value and quality of the experience.
Customer contact employees determine both the value and the quality of the experience for the guest.
The less tangible the service product, the more important the server becomes in defining the quality and value of the guest experience.
Service Encounters and Moments of Truth
The term service encounter refers to the person-to-person interaction between the customer and the person delivering the service or automated systems.
An encounter is the period of time during which the organization and the guest interact.
Service encounters are of crucial importance to the guest’s evaluation of service quality.
Jan Carlzon coined the term moments of truth to refer to the key moments during these interactions.
The distinguishing characteristic of most guest experiences is how the people providing the service did it.
The original definition of moment of truth was Carlzon’s, but other writers have expanded the term to include any significant or memorable interaction point between server and guest or, if no server is present as at an ATM or a Web site, between organization and guest.
At the moment of truth, a server is typically present and attempting to provide service.
The best organizations identify when and where these moments of truth occur and ensure they are managed well.
Another term often used in the services literature is critical incident.
Many hospitality organizations have asked their employees to identify such moments of truth or critical incidents and record them in a database.
The Nature of Services
Services and manufactured products have different characteristics.
Characteristics of Services:
Intangibility: Services are partly or wholly intangible, making it impossible to assess the product’s quality or value accurately or objectively, to inventory it, or to repair it. Because all or part of the service product is intangible, every guest experience is unique.
Simultaneous Production and Consumption: Services are consumed at the moment or during the period of production or delivery.Organizational systems must be carefully designed to ensure that the service is consistently produced so that each guest has a high-quality experience that both meets expectations and is nearly equal to that experienced by every other guest
Interaction: Services usually require interaction between the service provider and the customer, client, or guest.When the interaction is face to face, customers and employees must be taught how to coproduce the experience in some systematic way.
Guest Expectations
Guests arrive with a set of expectations as to what that chosen hotel or restaurant can and should do, how it should do it, how the people providing the service should behave, how the physical setting should appear, what capabilities guests should have to perform their roles or responsibilities in coproducing the experience, how the guest should dress and act, and what the cost and value of the successfully delivered service should be.
If what guests experience falls short of what they have been led to expect, they will be unhappy.
To preserve its reputation and customer base, the hospitality organization must meet or exceed the expectations of its guests.
With easy access to the World Wide Web, happy and unhappy guests are no longer restricted to talking with friends and neighbors. With sites like TripAdvisor, customers can convey their opinions about any hospitality organization almost instantly to thousands of strangers all over the world.
Do Not Provide More Hospitality Than Guests Want
Organizations must be careful not to over-deliver to the point of making guests feel uncomfortable or unpleasantly surprised.
The excellent hospitality organization will spend the time and money to train its employees to be alert to customer cues, signals, and body language so they can fine-tune their interaction with their customers.
Just What Does the Guest Expect?
Most guests have the same general expectations when they go to a hospitality organization for service, such as cleanliness, courtesy, responsiveness, reliability, and friendliness.
Len Berry’s Ten Most Common Customer Complaints:
Lying, dishonesty, unfairness.
Harsh, disrespectful treatment by employees.
Carelessness, mistakes, broken promises.
Employees without the desire or authority to solve problems.
Waiting in line because some service lanes or counters are closed.
Impersonal service.
Inadequate communication after problems arise.
Employees unwilling to make extra effort or who seem annoyed by requests for assistance.
Employees who don’t know what’s happening.
Employees who put their own interests first, conduct personal business, or chat with each other while the customers wait.
Quality, Value, and Cost Defined
In the hospitality industry, the terms quality, value, and cost have specialized meanings to fit the guest-focused orientation of the benchmark firms.
Quality
Quality can be calculated with the following equation:
Where:
= Quality of the guest experience
= Quality of the experience as delivered
= Quality expected
Quality is independent of cost or value.
Value
Value can be calculated with the following equation:
Cost
In addition to price, costs include opportunity costs, time, and risks.
Cost of Quality
The cost of not providing quality includes fixing errors, compensating guests, lost customers, low employee morale, and negative word of mouth.
Who Defines Quality and Value?
Only the guest can define quality and value.
Importance of Guestology
Guestology is most helpful in organizing knowledge about the management of hospitality businesses.
The growing literature on hospitality management and the experience of successful hospitality organizations indicate that hospitality management is different from traditional management.
If they understand you and give you what you seek in that experience, you will like them, ascribe high value to the guest experience they provide, return when you need that service, and tell your friends and neighbors what a terrific place that hospitality organization is.
Lessons Learned
Treat each customer like a guest, and always start with the guest.
Your guest defines the value and the quality of your service, so you had better know what your guest wants.
Ask, ask, ask your guests.
Provide memorable experiences that exceed guest expectations when possible, but know when enough is enough; deliver more than the guest expects, but not more than the guest wants.
Manage all three parts of the guest experience: the service product, the service environment, and the service delivery system (both the processes and the people).
The less tangible the guest experience, the more important are the frontline people delivering the service to the guest’s perception of quality and value.
You may under-promise, but always try to over-deliver.
The cost of providing quality is low compared to the potential cost of not providing quality.
Service product + service environment + service delivery system = guest experience
Experiences that evoke a guest’s emotions are more memorable.
Review Questions:
Guest Experience Components: Consider the formula presented in the chapter: service product + service environment + service delivery system = guest experience
Although all parts are important, do you think these three types of organizations—a hotel, a restaurant, and an airline—would tend to place a different emphasis on the three parts in providing the total guest experience?
If product + environment + delivery system = 100%, how would the hotel, restaurant, and airline divide up their emphasis? Or, how would these organization types rank the three parts of the guest experience in order of emphasis?
Quality Ranking: Imagine that a Rolex watch, a RadioShack watch, an Eagle Mirado #2 pencil, and a Cross fountain pen are sitting on a table in front of you. Which item is highest in quality, and which is lowest in quality?
Room Quality Ranking: These standard rooms are available in your locality: the Ritz-Carlton Hotel ($450 per night), a Holiday Inn ($150), a No-Tell Motel ($59.95), and a YMCA or YWCA. Which room is highest in quality, and which is lowest in quality?
Value vs. Quality: Consider the examples in questions 2 and 3 in terms of value. Under what circumstances can quality be high and value low? Value high and quality low?
Tangible Experience Analysis: A guest experience is a service, and this chapter explained that services are largely intangible. Think of a somewhat expensive guest experience you have had. What tangibles did the organization use to make you feel that your intangible experience was worth the money you paid?
Moment of Truth: Reflect on a recent, enjoyable guest experience and on a disappointing guest experience.
What were the significant events, the moments of truth, during each experience?
How did they contribute to your enjoyment or disappointment?
How do they relate to managing the guest experience in hospitality organizations?
Guest Expectation Formation: This chapter makes some general statements about how people form their expectations for guest experiences.
How do those statements match up with the way you personally form your expectations for a new upcoming experience?
If you are going for a repeat experience, would your expectations be based totally on previous experiences?
If you were a hospitality manager, what level and type of expectations would you want to create in your guests, and how would you try to create them?
How would you take into account the fact that some guests are new, some are repeaters, and you may not know which are which?
Over-Delivering Service: You are probably familiar with the expression “too much of a good thing.” In the hospitality setting, that would describe over-delivering the service guests have come to receive.
How much service is too much service? Have you ever experienced excessive service?
How does a hospitality manager ensure that guest expectations are met or exceeded without going overboard?
Factors Affecting Guest Return: From an article in a guest services magazine: “What brings hotel guests back? A fluffy robe hanging on a padded hanger? Creamy chocolate reposing on the pillow? The jungle safari bedroom decor? Or plain vanilla, old-fashioned service?” What do you say?
Satisfaction vs. Service: How is service quality related to guest satisfaction?
Activities
Pick two service organizations, in the same service field, you have patronized recently or can visit conveniently. Compare them in terms of the service quality and value you received.
Think about the last business establishment of any kind you visited. What were the tangibles of its service product? What were the intangibles?
Divide up into groups. On the basis of the group’s collective experience, discuss what is good service. Mention some organizations that deliver good service. Compare notes with other groups.
Ethics in Business
A guest leaves a message that he will be interviewing job candidates in his suite at noon, and so needs the room made up immediately, while he is out for breakfast. The housekeeper sent to the room reports that some illegal drugs were left in the bathroom, and she refuses to make up the room.
A long-time customer has drunk a bit too much in your hotel bar. He is staying at the hotel that evening, he is not driving, and he insists on one more drink. He says that if the hotel refuses to serve him, he will take his business elsewhere.
You are working at a fancy restaurant and serving a family. The family orders a 1996 Chateau Margeaux (a bottle of wine that costs roughly $$1200). They want you to pour “just a taste” for their child, so that he may share in the experience of trying this exceptional wine. You are unsure what the local laws are, but you think that you are not allowed to serve alcohol to a minor, even with the parents’ consent. They, however, insist it is just a taste, and there is no harm.
Case Study: Eastern States Air
Background
Gloria Rooney became president of Eastern States Air in the early 2000s and aimed to improve service.
She believed the key was "how" the service was delivered, not "what" was delivered.
Eastern States Air became known as “the airline that put the Frills back into Flying.”
Initial Strategy
Added a small lounge to planes.
Offered two complimentary drinks per passenger per flight.
Hired an internationally known chef for food service.
Surveyed passengers after each flight to measure satisfaction.
Early results showed high passenger satisfaction.
Problem
The airline’s fares had to be raised considerably to provide the better level of service, and ridership plummeted as a result. While passengers stayed loyal at the higher airfare cost, there was not enough to be financially solvent.
Eastern States Air changed strategy.
New Strategy
Cut back on first-class seats but enhanced their size and service.
Reduced services in the rest of the plane, like smaller seats and fewer flight attendants.
They not only added a fee for luggage, they even charged for carry ons.
Results
Financially, Eastern States Air made a comeback, but they failed on the guest service side as comments and complaints about airline service skyrocketed.
The low ridership and high fares had solved one problem, but they had introduced another problem by damaging morale.
Flight crews came under fire, and as a result, pilots and flight attendants became less cheerful and helpful.
Discussion Questions for the Case Study:
What is the service product of the airline industry?
What were Rooney’s mistakes?
How could they have been avoided?
What now?