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. That's because hotel loyalty programs are designed to build relationships with road warriors rather than vacationers.

Here's the problem: Whether it's frequent business travelers, like me, or infrequent travelers focused on leisure, the business travel formula doesn't 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 OTA's enjoying a significant head start in leisure travel loyalty, how can hotel brands hope to recapture those relationships? There's 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 – and take back some of that booking share from the OTAs.

The Growth of the Leisure Economy

It's 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.

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Coming up in February 2019...

Social Media: Getting Personal

There Social media platforms have revolutionized the hotel industry. Popular sites such as Facebook, Twitter, Pinterest, Instagram, Snapchat, YouTube and Tumblr now account for 2.3 billion active users, and this phenomenon has forever transformed how businesses interact with consumers. Given that social media allows for two-way communication between businesses and consumers, the emphasis of any marketing strategy must be to positively and personally engage the customer, and there are innumerable ways to accomplish that goal. One popular strategy is to encourage hotel guests to create their own personal content - typically videos and photos -which can be shared via their personal social media networks, reaching a sizeable audience. In addition, geo-locational tags and brand hashtags can be embedded in such posts which allow them to be found via metadata searches, substantially enlarging their scope. Influencer marketing is another prevalent social media strategy. Some hotels are paying popular social media stars and bloggers to endorse their brand on social media platforms. These kinds of endorsements generally elicit a strong response because the influencers are perceived as being trustworthy by their followers, and because an influencer's followers are likely to share similar psychographic and demographic traits. Travel review sites have also become vitally important in reputation management. Travelers consistently use social media to express pleasure or frustration about their guest experiences, so it is essential that every review be attended to personally. Assuming the responsibility to address and correct customer service concerns quickly is a way to mitigate complaints and to build brand loyalty. Plus, whether reviews are favorable or unfavorable, they are a vital source of information to managers about a hotel's operational performance.  The February Hotel Business Review will document what some hotels are doing to effectively incorporate social media strategies into their businesses.