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?
The Hotel Business Review articles are free to read on a weekly basis, but you must purchase a subscription to access
our library archives. We have more than 5000 best practice articles on hotel management and operations, so our
knowledge bank is an excellent investment! Subscribe today and access the articles in our archives.