The Importance of Hotel Loyalty Programs
By Jennifer Nagy President, JLNPR Inc. | 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?