Ms. Utley

Sales & Marketing

Exploring the Rise of Additional Incentives

By Teri Utley, Senior Account Manager, Range Online Media

Hotel loyalty programs or “guest recognition programs” have been a staple of the hospitality industry since the inception in the early 1980s when Intercontinental introduced their Priority Club Rewards program. Since then, all major hotel companies have built their own versions of loyalty or incentive campaigns. In an effort to position their brands as offering the best values, the hospitality industry had created their own social offering by rewarding loyal customers with special benefits and privileges that are designed to reflect the travel preferences of their clientele. Choices of beds, snacks and other amenities are standard offerings to members of loyalty programs.

Through the years these programs have evolved into well designed and structured marketing plans that reward consumers and as a result encourage brand loyalty to specific hotel chains. Unfortunately for many chains, these frequent travelers may be members of as many as five to 10 hotel loyalty programs. Consumers are well trained to want as much as they can get for as little as possible and they are demanding that rewards of real value be gained from their participation in these programs.

Currently registered members are in the millions with InterContinental and Marriott having the largest numbers of loyalists. While not all of these millions are active, most chains see their active members to be around 30 percent. For this group, the incentives offered are the defining value of the program. With chains vying for the available booking, additional incentives are now being added in an effort to keep consumers loyal to a specific brand. Currently, loyalty programs account for 40-55 percent of total room reservations. Loyalty programs are a marketing arm that is directly related to a large portion of the hotel’s business. The volume of travel reservations that come from these programs is impressive. However, as they become larger and more competitive the value of the bookings is not as great as in years past as a result of the increased costs the hotels are incurring to administer their loyalty programs.

While initially designed to provide guests with an incentive to return, in turn creating brand loyalty, these programs have evolved into a staple for doing business within the hotel industry. Most programs are similar in their makeup with members receiving points for their stay at a hotel, although now most are evolving by providing alternative options for point redemptions. In some programs guests may now receive their airline points as an alternative to the hotel points. Other options include room upgrades, no blackout dates, priority check-in and what else? More bonus points!

Successful hotel marketers are now evaluating just how important these programs are to their overall business and most are struggling with how to evolve and differentiate their product to their consumers. With hotel chains still reeling from the 2009 recession, the push for customer retention is at the forefront of future plans. Let’s examine some basic principles that focus on design of ongoing loyalty programs that will grow customer retention.

Connect on an emotional level with your guests

True loyalty is more than just a repeat booking. Programs must be designed to offer a real benefit and a true value to the consumer. Customers are away from their families and their own bed and are expecting a certain baseline from their hotel of choice while traveling. Whether it is a complimentary breakfast or a well designed fitness center, make sure that the amenities are conveyed to your guests and express to them the importance of having their needs met while during their stay. Repeated positive interaction with your guests resonates well and creates a positive experience with your brand. Execution of this principle is the cornerstone of successful incentive programs.

Create the program as a win-win offer

What can you offer that is truly of value during their stay? Free internet is a staple for a business traveler. Complimentary morning coffee or breakfast can entice some overnight guests. A well equipped fitness center is a priority for many travelers. Complimentary snacks and drinks are always crowd pleasers. How does your program measure in tangible offers? Low cost offerings that are perceived high value will increase the likelihood of repeat bookings.

Using data from signups to define your customer

To grow membership in programs, hotel chains will need to be smarter in using the data they already have on their current members. By using data from program signups, hotels gain information that they can use to better serve their guests. Coke or water upon arrival? What is their preference on bed size? Designing this focus can be challenging and compiling the available data on preferences can be daunting, but the value gained will be in having the knowledge as to what customers perceive to be valuable to them during their stay.

Developing tiered rewards

Rather than continuing the current points system, hotels can form a tiered reward program that focuses on the consumer’s profiles and patterns of previous spending levels. Complimentary breakfast may be available to all, but by using their profile information an offer for spa credits or resort credits may be more enticing to those in the more affluent customer segment. A program to assist customers in managing their points can also be implemented and companies may offer to help customers in setting goals for upgraded purchases to premium properties.

Differentiate your hotel by offering options

Make your reward offerings broad to appeal to a wide variety of consumers. Hotel guests still want to be in control and have the ability to customize available incentives. Allow them the flexibility to choose how and where to redeem their reward points – airline miles, discounted offers to local venues or options that will allow them to save reward points for accommodations on their dream vacation. Use technology to your advantage

Repeat travelers that are loyal to your brand are equipped with the latest in devices that enable them to manage their business and leisure travel while on the go. Consider adding mobile as an additional touch point in loyalty programs to offer special incentives, notice of promotional rates for specific properties or a coupon for redemption during their next stay. This instant contact with the customer deepens the relationship and gives the loyalist a feeling of distinction due to receiving these offers. These real time rewards give each consumer a customized service that is relevant to their current travel itinerary.

Develop partnerships for increased value

Local venues are usually open to increased traffic and what better way to increase numbers than to offer discounts to the guests of a nearby hotel. Museums, local restaurants, salons and spas are all potential partnerships that would be of value to the hotel consumer. Partnerships with local retailers that would allow loyalty point redemption would also be of added value.

Teri Utley is Senior Account Manager for Range Online Media, a leading search and interactive marketing agency that delivers measurable success through comprehensive, online marketing services, including paid search marketing, search engine optimization (SEO), online media placement and social media, strategic planning, performance optimization and more. Having worked with travel and hospitality clients over the last seven years, Ms. Utley has had the opportunity to participate and lead strategy in both search and media campaigns on a national level. Ms. Utley can be contacted at 817-509-0350 or teri.utley@rangeonlinemedia.com Extended Bio...

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