Star ratings under pressure as hotels struggle to fill rooms | Business| Economy and finance news from a German perspective | DW | 30.08.2010
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Star ratings under pressure as hotels struggle to fill rooms

As hotels grapple with dwindling bookings and increasingly thrifty customers, some major chains have started dropping star ratings in an effort to attract more guests, especially business travelers.

Hotel Frankfurter Hof

The Frankfurter Hof is holding on to its five star rating

Hotel managers worldwide are under pressure to come up with new ways to lure guests into their often pricey hotel rooms, especially since the industry took a hit during the global economic crisis.

Hotel occupancy levels in Germany dropped 5.8 percent in 2009 while prices fell 4.3 percent, according to the German Association of Hotels and Restaurants (Dehoga).

Five stars? No thanks

Big chains in urban areas are keen to attract as many business travelers as possible, but companies' budgets are tight and some chains find that a five star rating puts customers off.

"We've seen a change over the last one and a half years; that customers are being criticized by their company when booking accommodation, and obviously in the five star area, were encouraged not to book there anymore," Robert van der Ham, general manager at the InterContinental Hotel in Cologne told Deutsche Welle.

"We in the five star segment have lost quite a bit of business compared to hotels with three and four stars," he explained.

President's suite, InterContinental hotel in Cologne

The InterContinental in Cologne used to be a five star plus hotel

The InterContinental in Cologne, which used to be a five star plus hotel, is not the only example. The traditional Dom-Hotel, near Cologne's famous cathedral, has also decided to relinquish its star rating, as has the entire Marriott chain.

Other groups, like the InterContinental, Hilton Hotels and Germany's Steigenberger chain, have decided to mix and match official star ratings with their own systems.

"It is the decision of the individual hotel. It depends on what's going on in their market and their destination and whether it makes sense to be classified because competitors are classified, for example," Angelika Heyer, spokesperson for Steigenberger Hotels said.

No international standards

Steigenberger's flagship, the Frankfurter Hof in the heart of Germany's financial capital, has a five star rating, but Heyer says the lack of internationally recognized star standards means hotels nowadays often rely on a strong brand image instead.

"We have our own classification... We have comfort, first class and deluxe, and this is understood worldwide. The brand and the price is what counts today for the traveler," Heyer explained.

Room in the Frankfurter Hof

Hotel star ratings in Germany are valid for three years

Van der Ham from the InterContinental in Cologne could not agree more. "For us, it's important to see that guests still want service and quality, but at a lesser price and that is a challenge nowadays," he said.

Defending the stars

Prior to 1996 there were no binding rules for hotel stars in Germany or elsewhere, so hotels would simply devise their own system and award themselves stars. Now, there are standard criteria for each star category, with test and awards carried out by Dehoga, which represents the hotel industry in Germany.

Now a five star-rated hotel needs to provide, amongst other things, a 24-hour reception with multilingual staff, a one hour ironing service and every guest has to be met in person with fresh flowers or an equivalent in every room.

Dehoga is in the process of harmonizing standards for star ratings across Europe. The association insists that stars are of particular importance to smaller, independent hotels.

Robert van der Ham, General Manager, InterContinental Köln

Van der Ham says business has picked up since he gave up the star rating

So far, Germany, Sweden, the Netherlands, Austria, Hungary, Switzerland and the Czech Republic have joined the scheme.

"If you don't have a brand, the message is clear from our point of view. You should ask for voluntary stars. It gives a clear message to the consumer," Dehoga general manager Markus Luthe told Deutsche Welle.

Of the roughly 22,000 hotels in Germany, 8,000 are star-rated. Most of them are hotels that are not part of a well-known chain and thus do not have a strong brand image.

Impact of social media

One of the factors driving hotels away from star ratings is the growing popularity of review websites, where guests are free to leave comments and rate hotels according to their own experience.

"At this moment, I think social media is taking a far more prominent position than Dehoga (and its star ratings system), van der Ham said.

"If we go to the various platforms there are for customers to go and have a look, it's quite amazing what is out there," he said, adding that the chain has a team that regularly scours review sites for comments to use on hotel-specific websites.

A waiter serving in a restaurant

Social media can help hotels assess how guests rate their service staff

But Dehoga thinks social media and star ratings do not have to be mutually exclusive and can, in fact, complement each other.

"We cannot check adequately, for instance, the friendliness of the staff, but the reviews (on the web) can give an additional image of the hotel and then you have the complete picture," Luthe said.

Dehoga even wants to go a step further and base star ratings partly on review comments by, for example, boosting a four star rating to a four star plus rating, which is between four and five stars, according to customers' evaluations .

Whichever system guests choose to rely on, service and price is at the heart of every hotel's business, especially in times of economic hardship.

Author: Nicole Goebel
Editor: Sam Edmonds

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