Why hotel loyalty programmes need to evolve

Loyalty programmes are one of the most important marketing tools in a hotel brand’s arsenal, increasing – when successful – guest lifetime value and revenue. But how many are getting it right in 2022?

Guest preferences and behaviours have changed significantly in recent years, and hotels have been quick to adapt. On top of the cataclysmic impact of the pandemic, we’re seeing a new and unignorable market emerging; one with high expectations and greater savvy than any other preceding it. The next decade will belong to Gen-Z, so hotel brands should get to know them as part of their long-term loyalty strategy.

The power of hotel loyalty programmes

Loyalty programme members typically account for a high proportion of hotel website bookings; one in three Accor room nights is booked by an ALL member. A study by Cornell University’s The Center for Hospitality Research meanwhile found that loyalty programmes deliver a 57% increase in room revenue. 

But ‘stickiness’ is a challenge. As Condé Nast Traveler put it in their comprehensive guide to choosing a hotel loyalty programme, signing up to one is “a commitment”, often requiring guests to prove their brand fidelity before they see any rewards. PwC finds that the majority of guests belong to at least three different programmes, suggesting that few offer a compelling enough reason to enter into hotel-group monogamy.

Rewarding the modern consumer

Consequently, many of the big players in the industry have revamped their existing programmes to appeal more strongly to consumers in our shifting travel landscape.

Once the prototype, the transactional ‘earn and burn’ points model may no longer be sufficient to retain guests and dissuade them from seeking a lower loyalty rate elsewhere. Among the strongest trends in travel today is the pursuit of meaningful and memorable experiences, as reflected by the direction programmes by the likes of Marriott, Accor and IHG are taking. 

Smaller brands may not be able to mirror the new emphasis on money-can’t-buy rewards, but the move from travel to lifestyle programme is interesting. At the crux of it is personalisation and relevance; a relationship that isn’t about the hotel (as many that fall short on value seem to be), but about the guest.

Instant rewards

If these are increasingly brand-agnostic times, then delayed gratification is a problem. Instead of asking guests to patiently wait for the fruits of their points accumulation, instant rewards set a positive customer journey in motion from the start. 

Though many programmes feature a basic ‘free’ tier with no barrier to entry, the carrot on the stick is often an elite status that neither average earners or occasional travellers perceive to be within their reach. Some hotel brands will want to consider how to tackle membership abandonment by those who aren’t realistically incentivised to spend.

Simplicity

Consumers are spoilt with an overwhelming wealth of choice, so to capture interest, simplicity and transparency is key. If a loyalty programme is overly complicated or the value is unclear, streamlining the proposition and making improvements to the landing page are steps we would recommend. Our recent relaunch of Millennium Hotels and Resorts’ award-winning My Millennium programme included new editorial to clearly communicate specific benefits at a glance.

In the same vein, a prominent and enduring trend born out of restricted travel periods is the expectation of flexibility. As well as relaxed cancellation terms, customers want to book in the way that suits them best, using combined cash and points if desired, and with no black-out dates. Shangri-La’s recently premiered Shangri-La Circle emphasises these perks. Convenience is the other side of the same coin, and thus a notable number of hotel brands are creating or improving their loyalty apps to include useful features like contactless check-in and account management.

Differentiation

In these ever more competitive times, the biggest brands are exploring new ways of creating distinction. Marriott Bonvoy has launched the Good Travel with Marriott Bonvoy programme – a curation of sustainability-centred experiences in Asia-Pacific, where, according to an Expedia Group study, 95% of consumers in the region have indicated interest in sustainable travel options.

Making that emotional bond with guests begins with learning who they are. By segmenting customers and tailoring thoughtful rewards to their unique interests, a loyalty programme is more likely to achieve its purpose. Customers want more recognition, not only in terms of real, attainable benefits but of their choice to support one brand over a thousand others – gestures that say “we know you” will be a big part of that.