When American Airlines launched its rewards program (AAdvantage) in the early 1980s, it gave rise to rampant loyalty programs in the hospitality industry, including the hotel industry. Since then, the hotel loyalty program has seen a meteoric rise because of its mammoth returns.
But fast forward 2020, and the world saw lockdowns on an unprecedented scale. The direct casualty of lockdowns was the hotel industry.
According to a McKinsey report, the hotel industry would take up to three years to recover to the pre-COVID levels. But with the right plans and strategies, the hotel industry could recover even faster. The right strategy now would be to implement hotel loyalty programs that help hoteliers to get out of the crisis and get the industry back on its foot.
A majority of hospitality operators believe that loyalty programs are critical because it offers high returns of investment. These programs offer optimistic results in terms of stay frequency, revenue, and guest spending.
A Cornell Hospitality Report says that the annual revenue grew by an average of 50% when customers joined the respective hotel reward programs. Direct booking surged by 25% after the implementation of the program. As stated, there is a northward climb in revenue sheets of many hotels.
Today, a hotel loyalty program is not just a ‘fancy option’ for high-end luxury hotels such as Hilton, Hyatt, or Marriot anymore. Hotels of all sizes and shapes – premium, budget, economy – are incorporating hotel loyalty programs to engage visitors and foster growth.
Independent hotels in small towns can get the best returns from the hotel loyalty programs. Since they are located away from the crowd of hotels in urban centers, their location and utility work to their advantage. Such hotels must design a program focused on their specialty, rather than the luxury. Loyalty will help small-town hotels establish themselves as reputed brands over the long run. This may take time but will happen eventually.
“Loyalty cannot be earned in a day, but day by day.”
– Jeffry Gitomer
Let us have a look at the important features of some of the best hotel rewards programs:
Just like any other loyalty program, engaging customers is the primary feature of hotel loyalty programs. If you can’t engage your target audience, in this case visiting guests, with your program, there is little use of the program.
You must engage with visitors even when they aren’t staying in the hotel. Whenever they want to book the hotel next time during their next travel or vacation, your hotel will be the go-to choice. This will not only ensure that they will be your repeat customers but also increases the chances of recommendation.
The hotel rewards program should be designed to have a good data collection system. Ample customer data provides rich, analytical insights. Many brand chains can use this rich customer data to iterate their existing programs and plan their future marketing strategies.
For example, Marriot hotels share the customer data point with all of its worldwide chains. The knowledge of customers’ likes and preferences helps the hotel to serve the customers better.
The tiered framework allows the segmentation of customers as per their spending habits. It also helps the company to evaluate the reward program at different tiers. Every tier is associated with an evaluation metric such as customer reaction, attitudes, behavioral change, ROI, and optimizations.
Online booking is a nuanced feature of the larger hotel loyalty program. It is the first touchpoint where the customer journey begins. If rewards are attached to online booking, the customer will book more assiduously.
Therefore, there is a huge competition at this point in customer acquisition. The competition among the hotels benefits the customer in terms of better pricing, service, and quality.
When a customer chooses you over the competition, you can repay their loyalty by making them happy. An impromptu reward or a special gift that they didn’t expect will cement their loyalty even further. A small discount for a high-spending customer won’t matter much, but it would make an average guest happy.
Complimentary services can be packed together and combined with the reward program. For example, access to an area or service. This may not be included in the price, but complements the other paid service.
Hotels are often booked for meetings, discussions, or programs where people socialize. A feature of the hotel loyalty program must be focused on promoting symposiums, gatherings, and get-togethers.
This is more an individualistic feature. This can be designed to redeem points by availing in-room perks which may include free internet, mobile keys, valet, food and beverages, blackout dates, and so on.
Travel is closely related to the hotel industry. People generally stay in hotels when they travel. Many other associate hospitality partners including airlines and tourism can come together to build a complete ecosystem for end-to-end delivery of customer experience.
The dining feature can be integrated with the redeeming of points or an exclusive membership to get access to a premium dining club can be created to foster exclusivity.
Any hotel with a decent number of footfalls must incorporate a hotel loyalty program, even if they haven’t given a thought about it. The obvious question for the first-timers would be: Why the hotel rewards program is required in the first place? What are the advantages of a hotel rewards program?
A hotel loyalty program is not just a ‘nice to have’ option that it once used to be. Today, it is an integral marketing element in the hotel industry. There are proven benefits of hotel loyalty programs in terms of increased visitor engagement and eventually better footfalls.
Here are the major takeaways from implementing the hotel rewards program:
Major hotel brands have their own successful loyalty program. All programs are usually designed in a similar manner, keeping in mind the best practices of hospitality.
To determine which hotel chain has the best loyalty program, here are the best examples of a few programs for you:
Offered by: Expedia
Reward point system: 2 points for every $1spent
Offered by: Intercontinental Hotel Group
Reward point system: 10 points for every $1 spent at IHG hotels
Redeemable: All IHG properties
Offered by: IHCL
Reward point system: 1 point for every 1 Indian Rupee spent for stay at Taj, Vivanta, and SeleQtions
Redeemable: All properties of IHCL
Offered by: Hyatt
Reward point system: 5 points for every $1 spent for stay at Hyatt hotels
Redeemable: All Hyatt properties
Offered by: Wyndham Group
Reward point system: 10 points for every $1 spent at Wyndham hotels
Redeemable: All Wyndham properties
Offered by: Marriott
Reward point system: 10 points for every $1 spent at most Marriott hotels
Redeemable: All Marriott Bonvoy properties
It is clear why to choose a hotel loyal program as it eventually grows the business. Customer experience is the key to designing and launching a loyalty program. As the hospitality industry is based on service and experience, customer-focused loyalty programs become even more valuable.
If you are looking to build a hotel rewards program, you must work with a loyalty partner. Discuss your requirements with our professionals specializing in hotel loyalty.