A customer-centric approach to business is generally regarded as a winning formula. For years, however, it seemed that some travel industry marketers put more energy into spinning how corporate self-interest could be positioned as being customer-focused than they did on actual customer focus. What has changed as the new year dawns is that they're not bothering with the spin anymore.
For a manufacturer of hard goods, the paths to customer satisfaction are pretty straightforward: create products that reduce friction. Use high-quality materials. Provide increased utility. Invest in superior design.
It's a bit squishier for service industries, which can be further divided into discretionary or nondiscretionary. Medical services are nondiscretionary; if you need to go to the emergency room, you don't shop around or even ask about pricing before services are rendered. Hospitals take advantage of this, resulting in $7 Band-Aids and confused, angry and frustrated customers.
Travel is a discretionary service and often must define and frame value for customers. But interestingly, the travel industry sometimes behaves like a blend of discretionary and nondiscretionary services. In many instances, pricing is straightforward and the desire to please customers is alive and well, but there are times when pricing logic is so convoluted it appears customers are taken for granted.
At a New Year's Day party last week, two friends separately approached me and asked if I could explain something that had happened to them during an interaction with the travel industry.
The first had rented a car for a week for approximately $700. Though he initially thought he'd need it for seven days, he returned it after only five. The attendant at the rental agency told him he might be getting a refund, so he kept an eye on his credit card statement. To his surprise, he saw he had been charged an extra $200 above the $700. He called to ask why and was told it was because he had turned it in early. There was no further rationale offered.
I told him it was likely that he had originally gotten a weekly rate, which he no longer qualified for once he returned it early. "But," he said, "I was prepared to pay for the full week. I wasn't arguing for a refund for the two days. But as far as I could tell, they didn't suffer any monetary loss as a result of my turning the car in early. In fact, they could rent it out sooner and make more money. There's absolutely no logic to it."
Other than travel industry logic.
In normal logic, I think most fair-minded consumers could understand why a car rental company would ask no-show customers to pay for a car they reserved, one that had been pulled from inventory and could have been rented to someone else. It could even be justified to expect people to pay for the full length of the rental contract, even if they return a car early. But to penalize them for returning it early?
Later, another friend came up and simply said, "What's with resort fees?" She had been charged one, and the clerk couldn't explain to her satisfaction why she had to pay for things she didn't ask for or use.
I previously did an analysis of all the resort fees in Las Vegas and their justifications. It was completely inconsistent from one brand to another, and there was a huge disconnect between prices and value. Some of the fees were justified by listing services that were already provided prior to the imposition of resort fees (an in-room safe, a television, toiletries and turndown service). Some really strained credulity, listing (straight-faced) "security guards" and "24-hour manned front desk."
The irony of resort fees is that they make airline ancillary fees seem logical and valid. If I don't check a bag, I don't pay for a checked bag. (And if I'm flying customer-centric Southwest, I never pay for bags!) But if I stay in a hotel and don't use the fitness center, don't ask for USA Today, don't put things in the safe or make myself coffee, why do I still need to pay the resort fee?
I say "irony" because the origins of travel industry logic can be found in the airline industry. I'm not talking about straightforward yield management. It's still possible -- and may be infuriating -- to pay hundreds more for a middle seat than the passenger who sits next to you on the aisle, but it can be explained as a sophisticated approach to supply and demand.
No, I'm talking about the myriad penalties and fees that result in airlines collecting money out of proportion for the services rendered. These were lampooned in the classic essay, "If airlines sold paint," written by travel agent Al Hess and published in Travel Weekly in 1998. It demonstrated how absurd travel industry logic would be if it were applied to any other product.
He initially wrote it, he said, to show corporate clients "why things are so weird in the travel business."
A new year is upon us, and it seems that what's changed since 1998 is that an update of Hess' essay would expand well beyond airlines.