Hilton’s CEO said there’s one surefire way to build loyalty with a customer.
Christopher Nassetta, the executive who has held the hotel chain’s reins since 2007, said solving problems for his guests is the key to customer retention.
“People have studied problems and resolution, and it turns out that historically — and it’s true to this day — that you build more loyalty with a customer when you have a problem, and you solve it well, than if you never had a problem,” he said on a Saturday episode of Yahoo Finance’s “Opening Bid” podcast.
“It sounds crazy, but it’s true,” he added.
Nassetta said that customers who don’t face any problems with the service don’t think much about it.
But he added, “If I had a problem and you’ve managed it really well, you think, ‘Hey, wow, they care about me. They’re really good at this.'”
The executive said that solving problems for customers is more effective than “begging forgiveness” and rewarding “a million honor points.”
To that end, he said AI integration into the Hilton Honors app has been “the biggest game changer,” helping the company resolve customer problems quickly.
When reached for comment, a Hilton representative directed Business Insider to a January 2024 news release about Hilton allowing its customers to text properties via its Honors app, SMS, WhatsApp, and other channels.
Hilton has over 9,000 properties in 141 countries, consisting of more than 1.3 million rooms. The company plans to add more than 515,000 rooms, per its October earnings report.
The company’s stock has risen about 15% this year.
Nassetta’s comments come shortly after another American hospitality giant, Marriott, made headlines in November for abruptly terminating its licensing agreement with short-term rental company Sonder.
Marriott guests staying in Sonder facilities received an eleventh-hour notice to vacate the properties, resulting in travel chaos. Previously loyal Marriott guests told Business Insider that the hotel’s poor customer service had upended their trip and broken their trust with the brand.
Evan Nierman, the founder of Florida-based crisis public relations firm Red Banyan, told Business Insider last month that Marriott should have solved problems for affected customers rather than making them deal with rebookings and processing refunds themselves.
“The lesson is that hospitality companies earn goodwill when they take the burden off the customer,” Nierman said. “Relocation, refunds, and clear guidance are essentials, not perks, during a crisis.”
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