Exploring Current Loyalty Programs From Industry Leaders

By Mark Johnson President, Loyalty 360 - The Loyalty Marketer's Association | July 10, 2011

While most hotels have loyalty programs, research is showing that many are not living up to their potential. Loyalty Lab reports that on average, only 20 to 40% of program members regularly accrue points toward award redemption. That means hotels are losing out on significant opportunities to encourage at least 60% of their customers to become repeat and loyal customers, and repeat customers can be the most profitable ones.

So what do customers look for today in a hotel loyalty program? Which rewards will be most popular in 2011? What should hotels do to make sure that their loyalty programs appeal to the widest segment of travelers?

According to a new survey from the Chief Marketing Officer (CMO) Council, customers are craving the notion that hotel operators understand them and their needs. More and more customers are expecting highly personalized content with offers that feel as if they were designed specifically for them. And this revelation means that the days of mass blasts with general offers are no longer acceptable.

Loylogic's 2010 Frequent Traveler Survey echoes these findings. The survey of over nearly 40,000 people representing more than 140 loyalty programs worldwide was undertaken to better understand frequent travelers' opinions towards their current loyalty programs and reward redemption. The research found that with almost 2 billion travel loyalty program memberships in the U.S. and more worldwide, the "one-size-fits- all" loyalty program will no longer suffice. Consumers have more options and more control than ever, and to keep customers (especially frequent travelers) engaged, excited and loyal, brands need to offer rewards they want. The next generation of reward programs should, according to the research, offer unique, desirable and, importantly, attainable reward options.

Programs should also offer more value and simpler reward redemption to remain attractive to today's consumer. Ease of redemption is key; guests can become more excited and loyal to a hotel or chain after their first redemption, facilitating their transition from dipping their toe in the loyalty program waters to profitable, consistent members who keep coming back.

Taking a look at what some industry leaders are doing to engage their customers will also give great insights into how to drive ongoing participation in your loyalty programs.

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.