Exploring the Rise of Additional Incentives

By Teri Utley Senior Account Manager, Range Online Media | September 25, 2011

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.

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Guest Service: A Culture of YES

In a recent global consumers report, 97% of the participants said that customer service is a major factor in their loyalty to a brand, and 76% said they view customer service as the true test of how much a company values them. And since there is no industry more reliant on customer satisfaction than the hotel industry, managers must be unrelenting in their determination to hire, train and empower the very best people, and to create a culture of exceptional customer service within their organization. Of course, this begins with hiring the right people. There are people who are naturally service-oriented; people who are warm, empathetic, enthusiastic, pleasant, thoughtful and optimistic; people who take pride in their ability to solve problems for the hotel guests they are serving. Then, those same employees must be empowered to solve problems using their own judgment, without having to track down a manager to do it. This is how seamless problem solving and conflict resolution are achieved in guest service. This willingness to empower employees is part of creating a Culture of Yes within an organization.  The goal is to create an environment in which everyone is striving to say “Yes”, rather than figuring out ways to say, “No”. It is essential that this attitude be instilled in all frontline, customer-facing, employees. Finally, in order to ensure that the hotel can generate a consistent level of performance across a wide variety of situations, management must also put in place well-defined systems and standards, and then educate their employees about them. Every employee must be aware of and responsible for every standard that applies in their department. The April issue of the Hotel Business Review will document what some leading hotels are doing to cultivate and manage guest satisfaction in their operations.