Timing the market for service

The broader service industry, particularly hotels and airlines, have seen cuts that contrast starkly with the last several years of expansion in all segments. Some well known international chains went so far as to "reduce their level of service — and number of stars — until the industry begins to recover." One respected former CEO went so far as to offer a seeming non-sequitur saying that "Ratings aren't based on making good returns on your investment". Some individual hotels in unlikely destinations like Dushanbe improbably raised their stars only to offer service that would make one almost yearn for Basil Fawlty's Torquay Hotel.

Airlines, almost always the last in service innovation or customer satisfaction, have gone overboard with their cost-cutting. These include ill-thought through initiatives such as BA's meal slashing to handing a lemon to customers as in cutting them out by Southwest. The New York Times recently ran a story on gloomily headlined "Fewer choose to pay for Front-of-the-Plane" only to contradict it with a wire story on the same day about how "Airlines have been upgrading their premium cabins to appeal to business travelers and other customers who pay higher fares.". Separately, July statistics from the International Air Transport Association indicate that "there
are signs of an upturn for first and business-class airline travel." That rosier perspective stems from a drop in the ratio of declining premium class travelers as compared for the same month in '08. 

Meanwhile, those who deemed luxury to be a four-letter word a mere two-months ago may need to come up with a different adjective as in a different, but not entirely unrelated industry, the FT reports on how "Stirring demand starts to refill sails". Timing in service offerings, as in real-estate, is everything but knowing when to do so in advance remains a challenge. Hotels may well be wise to not pare down to the bones just yet.

Published by

Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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