In Focus

The changing hotel loyalty landscape

Eliot Hamlisch writes on how hotel loyalty programmes have undergone transformation over the years from just redeeming free nights to the guests to providing them with tailor-made intimate experiences

Eliot Hamlisch

Free nights. Experiential rewards. Personalisation. These are just a few of the buzz words you’ll frequently hear when discussing today’s loyalty landscape, which is changing at a rapid pace. Driven by those looking to capitalise on increased scale and distribution – often the result of recent mergers and acquisitions – hotel companies across the globe are seeking new and innovative ways to not only foster deeper customer loyalty but drive greater returns. It’s a scenario that has created a new reality around the value of hotel loyalty programmes, one in which simply having a programme has become table-stakes and where the focus has shifted to accelerated innovation and a heightened need to not only understand guests at a personal level, but also cater to those preferences at every step of the customer journey.
Moreover, “hotel loyalty programmes” are no longer just about hotels; many have branched out to offer accommodations and experiences in related travel arenas, including home rentals, timeshares, car rentals and more. This evolution has forced hotel loyalty programmes to compete not only with one another, but to an increasing extent with programmes of other major travel providers, not to mention online travel agencies, among others.
It’s an increasingly crowded field and the stakes are high.

Challenges and opportunities: Industry consolidation and loyalty fatigue
Loyalty programmes were once a straightforward concept, in which hotels offered guests points for their stays which could in turn be exchanged for free nights. For the most part, this remains a key structural element of most programmes; however, the landscape is shifting. Multiple brands, increasing redemption tiers, shifting room availability, blackout dates and status dependent benefits have driven increased complexity among most programmes. What’s more, continuous mergers within the space have only compounded the effects. These trends have introduced real challenges for myriad travellers, many of whom aren’t able to keep up with details across each programme. In turn, how a programme educates customers about its offerings and more importantly, how it’s differentiated in the marketplace, has become vital to success.
Loyalty fatigue has also set in for many travellers. Nowadays, loyalty programmes are everywhere, from grocery stores and pharmacies to cell phone providers, vehicle manufacturers and more. This raises the question – can one individual really be loyal to every programme of which they’re a member? The short answer: Probably not.
A recent study by BOND suggested that on average, an individual belongs to roughly 15 different rewards programmes yet actively engages in fewer than half. Translation: An effective rewards programme is only as strong as the desirability of its currency and offerings.
Companies with programmes that individuals actively use will very likely be among those reaping the benefits. According to US-based conversion rate optimisation experts, Invesp, loyal guests not only help the bottom line when it comes to managing customer acquisition costs, but are also 50 per cent more likely to try new products and on an average, willing to spend 31 per cent more than new customers.

The value of experiences and the need for personalisation
A direct result of the above challenges is the increased need for hotel companies to find new ways to leverage their programmes to drive higher engagement and ultimately, greater returns. To a greater extent than ever before, this means moving away from simply offering points for free nights and evolving programmes to be more customer-centric and offer a greater breadth of redemption options.
Looking back 10 to 15 years ago, the top reward for which a guest might be able to redeem may have been a free night in a hotel’s nicest room, perhaps even a suite with a stellar view. Today, those rewards are still appreciated, but it’s the experiential aspects of travel that are valued even more and the extent to which a hotel’s team members create a personal connection with the guest. So, instead of a free night, the preferred reward might be free tickets to see their favourite performer while in Las Vegas or a hands-on cooking lesson to learn how to make authentic dumplings while visiting Shanghai. It’s about acknowledging not just how guests like to travel, but why they travel.
Equally important to experiences are finding ways to embed a loyalty programme in members’ daily lives, again with the goal of creating a deeper guest connection. This is especially important for leisure based programmes and members, who may only have the opportunity to travel once or twice a year. As such, enabling members to earn and redeem their points on everyday transactions, with or without carrying a co-branded credit card, helps make rewards more attainable and gives those members a personal reason to stay engaged.
Lastly, how these offerings are presented to members and the ease with which they can be redeemed are in large part what ultimately determines their success. Technology has opened incredible doors, vastly improving the speed and ease with which members can earn and redeem. At the same time, programme operators have greater access to data and are able to track and respond to member behaviour at a speed unlike ever before, allowing them to create personalised offers that better connect and in turn, drive the desired response. The loyalty landscape will only continue to shift from here and likely, with increasing speed. At the end of the day, the winning programmes will be those that create the strongest bonds with their guests, that seamlessly weave themselves into their guests’ daily lives, and that find new and innovative ways to deliver real, tangible value for guests, both during their stays and beyond.
Hamlisch oversees Wyndham Rewards, the company’s award-winning loyalty programme, which spans more than 30,000 hotels, vacation club resorts and vacation rentals worldwide. Earlier this year, the programme welcomed 900 new La Quinta by Wyndham hotels to its global portfolio while simultaneously adding innovative new ways for members to earn and redeem points, including on shopping, food delivery, tours, experiences and more.

(The author is senior VP of Worldwide Loyalty and
Partnerships at Wyndham Hotels & Resorts)

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