ANN ARBOR, Michigan—Established in 1994, the American Customer Satisfaction Index is a national economic indicator of customer evaluations of the quality of goods and services with companies and government agencies that account for more than one-third of the U.S. gross domestic product, plus foreign companies with substantial market share in the United States. The ACSI measures customer satisfaction (through survey interviews of consumers) for 10 economic sectors, along with 47 industries, more than 235 companies, the U.S. Postal Service and a range of local and federal government services.
Released annually, ACSI scores are produced that measure consumer satisfaction at various levels of data aggregation, including company, industry and sector, along with a National ACSI score. A company-level ACSI score is derived from customers’ evaluations of their experiences with a particular company the respondent identifies. An industry ACSI score represents satisfaction with all of the companies within an economic industry (such as hotels, limited service restaurants, etc.). A sector ACSI score indicates satisfaction for all of the industries included within a particular economic sector (as defined by the North American Industry Classification System). And the National ACSI score indicates average satisfaction across the entire U.S. economy.
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| Forrest Morgeson | A.J. Singh |
This article provides a comparative analysis of customer satisfaction results and trends among select industries and sectors that have a travel experience component. The comparative analysis was conducted on customer satisfaction data from 1994 to 2011 for the hotel, limited-service restaurants (LSRs), full-service restaurants (FSRs) and airline industries.
Furthermore, comparisons were made to the National ACSI average for customer satisfaction across the U.S. economy.
As shown in the chart below, the hotel industry ACSI scores and the National ACSI scores appear to follow a similar pattern in terms of change, in that satisfaction for both declined from 1994 to 2002 and then generally recovered from 2003 to 2011.
The averages for the two measures are also quite similar. The 18-year average National ACSI score of 73.8 is slightly higher than the hotel industry ACSI score of 73.
In general, one might interpret these results to show that the hotel industry closely tracks customer satisfaction trends with the quality of goods and services provided by companies and government agencies across the entire U.S. economy.
A related interpretation of these comparisons is that if average satisfaction scores are high or trending upward for a national economy, customers of that market are generally satisfied with the quality of goods and services provided by firms across the entire economy. As such, customers of those countries will develop high standards and expectations of producers of goods and services, and new firms entering those markets or firms operating in various industries in the country will need to be cognizant of the high national quality expectations of the customers buying goods and services in the market.
Benchmarking against airlines
A comparison of the hotel ACSI scores with other travel-related industries, such as food-service (LSRs and FSRs) and airlines industries, reveals additional trends.
First, in general the hotel industry ACSI score has exceeded the airline industry’s scores by a considerable margin, with an 18-year average of 73 for hotels and 65.5 for the airline industry. Given that airlines are consistently one of the two lowest scoring industries in ACSI measurement (alongside cable and satellite TV), it is not surprising that hotels would outperform airlines.
In addition, while the hotel industry mostly has improved since 2002, the airline industry ACSI scores generally have been trending downward. The lower and more volatile satisfaction scores in the airline industry might be a function of several structural features unique to the industry, such as the tight security measures, increasing fuel surcharges (which impact prices and thus prices satisfaction), chronic unprofitability for the major airline companies (including bankruptcy and reorganization of several airline firms, which reduces competition) and restrictive work rules and guidelines due to strong employee unions.
However, there are also non-structural factors associated with the conduct of the airline firms that might be having a larger negative impact on customer satisfaction such as fees for bags, charges for meals, reduction of physical comforts (less leg room and smaller seat size) in cabin configuration, and rampant cost-cutting measures.
Furthermore, yield management or discriminatory pricing practices by airlines have the potential of creating perceptions of unfairness with the general traveling public—especially when a casual conversation reveals that one passenger has paid twice the amount for the same seat than the passenger sitting next him or her.
These factors, combined with the effect of increased expectations from customers who have experienced superior airline service returning from international trips or flying on one of the few American carriers with high satisfaction scores, such as Southwest, might have an adverse impact on customer satisfaction.
Previous research on customer satisfaction confirms that high satisfaction is associated with industries that have high levels of competition, offer clear differentiation in products and services, and provide value to their customers in terms of the value proposition. The low scores in the airline industry is a confirmation of this premise, where competition is limited due to increasing consolidation and differentiation is primarily based on price as airline seats are viewed as a commodity.
Facing off with food-service industries
Comparing hotels with the two food-service industries, the data shows that LSRs have experienced very strong growth in satisfaction over the past 18 years, from a low of 66 in 1996 to a high of 79 in 2011. The long-term average of 72.8 for LSRs is roughly the same as the hotel industry’s average for the same period.
The FSR scores indicate steadily high satisfaction scores over the past five years (where data is available), with an average score of 81.6 during that period. The long-term FSR average score is well above airlines, LSRs and the hotel industries averages.
Given perceptions of lower quality and reduced service, it is no surprise that LSRs score significantly below FSRs, where higher quality and fairly intensive service is expected. But the similarity in average scores between LSRs and the hotel industry should serve as a warning to hotels in that customers rate their experience with hotels more like “fast food” than a full-service restaurant experience.
When comparing the hotel ACSI for an extended period of 18 years across the National ACSI and related service industry ACSI scores, it is clear that the hotel industry:
- performs about on par with the National ACSI average and the LSRs average;
- performs much higher than the airline industry; but
- lags full service restaurants.
While structural differences in industries and sectors might explain some of the differences, the hotel industry would be well served to proactively research practices and business operating models of firms and industries with better customer satisfaction scores and be cautious about emulating practices from those with declining scores (such as airlines) despite similarities in industry structures.
The American Customer Satisfaction Index is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States. Data from interviews with approximately 70,000 customers annually are used as inputs into an econometric model to measure satisfaction with more than 225 companies in 47 industries and 10 economic sectors, along with over 200 services, programs, and websites of approximately 130 federal government agencies. The Index was founded at the University of Michigan’s Ross School of Business and is produced by ACSI LLC. ACSI can be found on the Web at www.theacsi.org.
Forrest V. Morgeson III (Ph.D., University of Pittsburgh) is Director of Research at the American Customer Satisfaction Index (ACSI) in Ann Arbor, Michigan.
A.J. Singh is the Professor of International Lodging, Finance and Real Estate Finance in The School of Hospitality Business. Dr. Singh's has more than 15 years of hospitality business experience in various management positions in the U.S. and India.
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