skift.com - published September 19th 2022
To rebuild trust with leisure travelers and compete with larger chains, independent hotels need to rethink their core value proposition and reimagine loyalty. Joining a loyalty program network helps independent hotels capture repeat business, reduce operational strain, and drive topline revenue at minimal cost.
Global Hotel Alliance
With corporate travel continuing to lag behind as the leisure market rebounds, hospitality loyalty programs have shifted focus from business travelers to leisure customers who are looking for more flexibility on how they earn and spend rewards.
“Across industries, loyalty programs used to be very transactional,” said Kristi Gole, vice president, head of product at Global Hotel Alliance (GHA), the world’s largest association of independent hotel brands. “Hospitality loyalty programs focused on business travelers because they traveled more frequently, but these programs have broadened in recent years to capture more of the customer experience, with a focus on branding and engagement.”
While large hotel chains have recentered their loyalty programs on lifestyle rewards, providing customers with redemption opportunities outside of the main hotel product through ancillary spend or partnerships, many independent hotels have struggled to compete or underestimated the value of having a strong loyalty program.
“GHA is on a mission to help independent hotel brands compete globally,” Gole said. “That starts by educating independent hoteliers about the ways a loyalty solution gives them access, reach, and incremental profitable revenue.”
Reassessing the Value of Loyalty
According to Gole, the value of a loyalty program is largely recognized across three key areas: data, marketing, and profitability.
“Loyalty programs collect and store first-party data, which is a critical asset across all teams, particularly with the move to a cookie-less future,” Gole said. “Customer profiles are more complete and the data is higher quality because members are incentivized to keep their contact information up to date — they want to be recognized when they check in, receive credit for their stays, and notifications about their rewards.”
For hotel marketing teams, loyalty becomes the centerpiece of an effective customer relationship management (CRM) system. Loyalty programs engage customers with frequent communication and relevant content because they’re permission-based and deliver ongoing messaging — account summaries tracking toward status, updates showing rewards earned or expiring, new redemption options, and other personalized messages.
“It’s also a closed user group, which helps with rate parity contracts with online travel agencies (OTAs),” Gole added.
According to Skift Research, loyalty members are also more profitable than non-members, contributing 30 percent to 60 percent of room nights. “Compared to non-members, the average daily rate for loyalty members is often 10 to 15 percent higher, even with discounted member rates,” Gole said. “Loyalty programs give new and repeat customers a reason to book directly, with tier qualification and reward earn and burn limited largely to direct channels such as the hotel’s website and app, eliminating fees from third parties such as OTAs.”