In Focus

Hotel loyalty programmes 2.0: A dynamic evolution

Seema Roy presents a viewpoint on how over the past 30 years, the nature of guest loyalty has seen a change that has significantly influenced the relationships between customers and brands

Seema Roy

We live in an era of instant gratification led by the consumer preferences and global citizenry of millennials who are increasingly well-connected and driving the latest trends in all aspects of consumerism. This has proliferated in all aspects in daily life, and hotel loyalty is no exception. With the burgeoning number of traditional, non-traditional, and alternative hospitality options coming to the fore, the efforts made to persuade the individual consumer to stay loyal to a single brand has never been greater.
Over the past 30 years, the nature of guest loyalty has seen a change that has significantly influenced the relationships between customers and brands. Initially, consumers adopted an “observant” attitude, making decisions based on what organisations offered, by seeking the best competitive value in the market. In the 2000s, consumers were invited to be involved in deciding which products and services hotels would create, a trend that gave rise to a “participatory” culture. Now we find ourselves in the “convergence” age, which alters the relationship between genres, markets, audiences, sectors and technologies. Guests are dictating what their needs are and how they want them satisfied.
As such, customer loyalty is more critical than ever, and hotels will need to create or reinvigorate the essence of loyalty that proves the value of a brand or ‘house of brands’. By delivering exceptional customer experiences, hotels can cut through the noise to drive trust, engagement, confidence, and commitment.
Be it retail or healthcare, most consumers receive loyalty programme benefits before they’ve actually demonstrated any loyalty to a brand. Consequently, loyalty programmes must work significantly harder to deliver on their true intent – brand loyalty – especially in the hotel space where the traditional “earn and burn points on hotel stays” model isn’t as effective as it once was. Loyalty is fast becoming a singular focus that necessitates a reward framework based around the needs ‘of one’ rather than ‘the loyal community’.
Over the years, global hospitality sector has spent millions in designing complex, multi-tiered membership programmes to increase their share of guest spend and enhance the overall customer experience. Win-win alliances, re-branding and collaborative partnerships are key in such a setting. For instance, Marriott International rebranded its multi-loyalty programme model to Marriott Bonvoy in 2019.
Independent hotel brands known for excellence in regional hospitality are well positioned to hugely benefit from the evolving trends in loyalty and consumer preference. In terms of a larger picture, guests increasingly want “more” in a non-traditionalist sense, by way of seeking unique properties that embody the true essence and authenticity of a destination. Hoteliers have seen a digression from traditional signifiers of luxury such as star ratings toward the bespoke. These brands allow members to get the best of both worlds – by tapping into the expertise and scaled support of a global brand – such as distribution, reservation management and inclusion in marketing campaigns – while still maintaining the autonomy that allures savvy travellers in the first place.
A traditional independent programme can leverage redemption opportunities and brand partnerships to support their approach. There is a great deal of variety in accommodation choices, breadth and depth of information, and full transparency in pricing. Members expect access to a range of offerings depending on the “when, where, and why” of their travel. The member who stays at a luxury hotel on one trip may stay at a shared apartment on the next trip, making like-minded partnerships critically important.
In a significant move that is bound to positively transform and enhance independent travel experiences for consumers by empowering participating partner hotels with the tools to reward guest loyalty – Preferred Hotels & Resorts launched the I Prefer Alliance in March 2019. This innovative loyalty platform allows independent hotels and regional hotel brands to extend full benefits of I Prefer Hotel Rewards to members of their distinctive guest benefit programmes. Utilising a point exchange structure, partner hotels will now be able to incentivise their respective loyalty members by extending access to more than 700 additional destinations across 85 countries where they can earn and redeem points along with receiving special benefits during every eligible stay. Serving as the inaugural partner – Tokyu Hotels, one of Japan’s leading hotel groups, joined the I Prefer Alliance with its 44 properties across the country.
More than three million consumer members have enrolled in I Prefer Hotel Rewards to date, making it the largest points-based global loyalty programme for independent hotels. The members can take advantage of its benefits across 700 hotels of their choice around the world, which include points that can be exchanged for cash-value I Prefer Reward Certificates, as well as elite status and additional benefits such as priority early check-in/late check-out, room upgrade based on availability, and complimentary internet upon every eligible stay.
The potential in these programmes is massive. While 75 per cent of luxury hotel loyalty programmes offer free-night stay rewards, only 35 per cent offer other experiences as rewards, according to a new report from Gartner. Moreover, it’s not just the “what” but even the “how” that is seeing innovation. First Hotels which has 60 hotels across Scandinavia, recently launched its own “First Member” loyalty programme which rewards members with “FirstCoins” to spend on future purchases at the hotel.
Guests are moving from a desire to join single brand driven specific programmes to becoming a “part of an established club,” hence demanding more personalised, individualistic offerings. This emergent demand is a result of liberalisation and more choice including independent hotel brands and Airbnb breaking into the top tier of competition. The rise of the millennial coupled with fast and accessible information as a result of the internet and real-time social media have restored parity to the adage, “the customer is king.” This mindset is increasingly relevant for the emerging world, and countries such as India are poster children for this movement. Millennials are also more interested in unexpected, instant, and personally relevant rewards vis-à-vis points. Simple innovations for easy redemption or conversion hold the key to unlocking the full potential in India, given that a recent IMRB Indian survey concluded that 50 per cent of participants claim they never convert their points, and 72 per cent of ‘in a hurry’ millennials believe that they should be able to earn rewards quickly. A report by Collinson Group shows 77 per cent of Indian respondents asserting that they valued the flexibility to choose the rewards they are offered. According to studies, loyalty members are three times more likely to book directly than non-members, implying that they’re relatively cost-efficient in comparison with other channels.
Given these trends, the hotel and hospitality sector can adapt to the loyalty dynamic to see a positive effect on their top line, in lieu of occupancy, ADR (Average Daily Rate) and RevPAR (Revenue per available room). The tipping point that converts erratic guests into committed ones is the instance wherein a loyalty programme transforms from a cost centre to a revenue engine. Research on Indian hotels by Millward Brown has proposed walk-ins as the major avenue for Indian bookings, accounting for more than one out of four hotel bookings across India. In this light, guest profiling becomes key to facilitating guest loyalty and using that member’s information regarding purchasing behaviour and travel affinities to improve future direct bookings. This intelligence can be leveraged to plan highly targeted and effective SEO (Search Engine Optimisation) that drives repetitive stays via the website.
Loyalty programmes can potentially be the single most important lever to differentiate hotel offerings. The database built from a loyalty programme provides invaluable insights into guests’ stay behaviour and preferences, enabling hotels to provide more personalised experiences. All while delivering positive results in terms of revenue and stay frequency – members stay longer, spend more, and return more often. In the case of independent hotels, it provides a steady flow of repeat business from past guests, and also attracts new guests from other hotels within the brand. For example, in the case of I Prefer, more than 500,000 new travellers signed up to gain access to the programme’s benefits in 2018, a 20 per cent growth in membership over 2017, helping to fuel a 24 per cent increase in total I Prefer reservations revenue for participating hotels, which included a 92 per cent increase in revenue booked through the I Prefer member rate, compared to 2017. The numbers speak for themselves. In the age of alternative hospitality options and dynamic consumer preferences, the only constant with respect to loyalty programmes is change, to constantly adapt to consumer’s ever-evolving perception of value to confirm a strong return on
investment.

(The author is the area MD, South Asia, Middle East & Africa, Preferred Hotels & Resorts)

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