The Importance of Hotel Loyalty Programs

By Jennifer Nagy President, jlnpr | March 04, 2012

Everyone in the hotel and hospitality industry knows that, more often than not, travelers book a hotel room based on two factors: price and location. Of course, there are travelers that would choose amenities over price any day, or those who are willing to drive a bit further to their destination to save a buck or two. But one factor that many hotels disregard is the importance of their customer loyalty program - also know as the frequent guest program (FGP) - in motivating customers’ purchasing decisions.

We are all familiar with the basics of a hotel frequent guest program: customers earn points for staying with a particular property or chain, which are redeemable for anything from discounts, upgrades, to a free stay. While most hotels have loyalty programs, most place very little importance on their loyalty programs as a driving factor for increasing consumer bookings. But the truth is that loyalty programs can be a very important decision-maker, especially for frequent travelers, often hotels’ highest-earning customers.

Don’t believe me? Let’s look at the stats:

In 2010, Epsilon Strategic & Analytic Consulting Group conducted a study of 400 travelers asking about their recent hotel bookings and found that, in addition to price, location, good reviews and recommendations from others, loyalty programs were absolutely a motivating factor in booking. In fact, the study showed that more than eight in ten program loyalty members consider the hotel’s loyalty program and rewards before booking their hotel(1).

A more recent study by Market Metrix has proven that hotel loyalty programs now rank fourth in the top deciding factors when booking a hotel. In 2009, 32.7% of customers said a hotel’s loyalty program influenced their decision on where to stay and that number has increased by almost 2% in the past two years(2).

What Makes Hotel Loyalty Programs Effective?

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.