How Hotel Brands Can Democratize Loyalty to Win

Beyond the Road Warrior

By Allison Ferguson Senior Strategist, Merkle Inc. | June 11, 2017

As a frequent business traveler, I get clear value from my hotel loyalty program membership. My room is ready, I have check in and out flexibility, and usually free breakfast and wifi. I get points on the room spend (paid by someone else) that allows me to accumulate points for free nights, which I usually use for leisure.

When traveling for a family vacation, however, the impact of my membership is less tangible. When I travel for business, the hotel loyalty program captures my interactions well and rewards me for my loyalty. When I travel for leisure, however, the program often does a poor job of capturing my total spend and delivering a differentiated experience. Thatís because hotel loyalty programs are designed to build relationships with road warriors rather than vacationers.

Hereís the problem: Whether itís frequent business travelers, like me, or infrequent travelers focused on leisure, the business travel formula doesnít work. Business travelers are often checking in late, checking out early, using the hotel only as a place to sleep after their business-sponsored meetings and meals. Leisure guests stay longer, order room service, watch movies on demand, and eat breakfast at the hotel restaurant. In other words, when traveling for business, my hotel stay is often peripheral to my travel experience; but when my family travels for leisure, the hotel stay is usually central to our travel experience.

That disconnect has left an opening for online travel agencies (OTAs) to build loyalty with leisure travelers left in the cold by most hotel loyalty programs. With OTAís enjoying a significant head start in leisure travel loyalty, how can hotel brands hope to recapture those relationships? Thereís good news: by democratizing hotel loyalty programs to appeal to members beyond the top 20 percent, hotel brands can form profitable and sustainable relationships with loyal leisure travelers Ė and take back some of that booking share from the OTAs.

The Growth of the Leisure Economy

Itís true that hotel brands built their loyalty programs by catering to business travelers. That singular focus may soon need to change. According to the US Travel Association, through October 2016, the market for leisure travel grew for 82 consecutive months. That trend will continue, driven by millennial consumers who, copious research studies have shown, prefer to spend their money on experiences over material goods. Even as the retail industry suffers, the travel industry will benefit from this shift in spend: a recent Mintel study revealed that consumer spending on vacations and dining out will increase by 27 percent by 2019.

Coming up in February 2018...

Social Media: Engagement is Key

There are currently 2.3 billion active users of social media networks and savvy hotel operators have incorporated social media into their marketing mix. There are a few Goliath channels on which one must have a presence (Facebook & Twitter) but there are also several newer upstart channels (Instagram, Snapchat &WeChat, for example) that merit consideration. With its 1.86 billion users, Facebook is a dominant platform where operators can drive brand awareness, facilitate bookings, offer incentives and collect sought-after reviews. Twitter's 284 million users generate 500 million tweets per day, and operators can use its platform for lead generation, building loyalty, and guest interaction. Instagram was originally a small photo-sharing site but it has blown up into a massive photo and video channel. The site can be used to post photos of the hotel property, as well as creating Instagram Stories - personal videos that disappear from the channel after 24 hours. In this regard, Instagram and Snapchat are now in direct competition. WeChat is a Chinese company whose aim is to be the App for Everything - instant messaging, social media, shopping and payment services - all in a single platform. In addition to these channels, blogging continues to be a popular method to establish leadership, enhance reputations, and engage with customers in a direct and personal way. The key to effective use of all social media is to find out where your customers are and then, to the fullest extent possible, engage with them on a personal level. This engagement is what creates a personal connection and sustains brand loyalty. The February Hotel Business Review will explore these issues and examine how some hotels are successfully integrating social media into their operations.