Why You Need to Rethink Your Hotel’s Loyalty Program

There’s no question that guest loyalty is still important to the health of hospitality brands in 2017. One might argue that it’s more important than ever, now that travelers can base their booking decisions on the millions of reviews that populate TripAdvisor and choose alternate accommodation models such as Airbnb.

But what does loyalty mean, exactly, in the hospitality environment of today? Are points and free nights enough anymore to entice travelers who can, with the help of the internet and online travel agents, find the best deals around? After all, why pay $300 per night in exchange for the possibility of getting a free night sometime in the future when they can get a room for $100 (or less, if they’re browsing on Airbnb) every time they travel, guaranteed?

The Millennial Problem

In theory, points are a great idea. Who doesn’t love getting a free night at a hotel? But in practice, many travelers — especially Millennials, who will soon become the largest demographic both in the workforce and in travel — will choose the accommodation that offers them the most value. Increasingly, that accommodation looks more like Airbnb than a hotel. Besides the price, the technology used by brands in the sharing economy makes it much easier to browse properties, book travel, and communicate with hosts through a single platform.

Correspondingly, Millennials are the most likely demographic to download a hotel’s mobile app. According to a Deloitte report, 64 percent of Millennials have downloaded one, versus 50 percent of Generation X and 30 percent of Baby Boomers. What does this suggest? That Millennial expectations of travel and accommodations are inherently tied to technology. The lodging provider that makes travel convenient and mobile-accessible from start to finish is the one most likely to win the loyalty of Millennials.

Points Are No Longer Enough

The points system has long been the loyalty go-to for most retailers and service providers, but what worked in the past won’t necessarily work now. Hotels will have to go further than offer points if they really want to win the loyalty of emerging demographics.

Value for money is only half the loyalty equation; the other half is giving guests an emotional connection with the brand. Many guests, but Millennials in particular, value authenticity and uniqueness, and they don’t want to feel like they’re just another dollar in the hotel’s piggy bank. They want to feel that the hotel values them personally and will offer them a unique experience while they’re on property. As the Deloitte report points out, “Convince a Millennial you really care, and you may have a customer for life.

The Costs of Loyalty

Another reason to cool it with the loyalty program? A study by Deutsche Bank Research found that some loyalty programs in fact cost more than OTA commission rates. For some hotels, it may not be worth it to pour resources into creating and promoting a points-based loyalty program when it costs less to attract guests through OTA portals.

Instead, hoteliers should focus on the experience they create for their guests, be it the atmosphere of the property, the way front-line staff interact with guests, or the personalization of amenities and services guests receive. These things don’t cost much beyond the expenses that already exist to keep the hotel running.

What to Do Instead

  • Use technology to collect and log as much data as you can about each of your guests. This will enable you to delight them on subsequent stays. Not sure how to go about doing this? Take note of any requests your guests make, and include them in their profiles in the PMS. That way, staff can consult the profile before the guest arrives on their next stay and use the information to surprise and delight the guest — with their favorite newspaper waiting for them in their room, for example.
  • Build a connection with your guests on an emotional level. This can’t necessarily be achieved through points and rewards. It involves learning as much as possible about guest preferences, anticipating their needs, and going the extra mile to acknowledge and resolve their problems.
  • Don’t just push offers at your guests. Give them a way to reach out to you, whether by email, text, or another digital avenue. The hotel-guest relationship should be a two-way street, and your guests will appreciate your efforts to engage them in a dialogue.


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