Does Brand Loyalty Even Matter Anymore?

By Gary Isenberg President, LWHA Asset & Property Management Services | April 01, 2018

As popular OTAs such as Expedia, Booking.com, Trivago, and TripAdvisor syphon away significant numbers of guest bookings each day, brand executives ruefully wonder if brand loyalty even matters anymore. The answer is, well, yes and no.

In one significant aspect of the guest journey - the reservation process - the OTAs have overpowered any remnant of lodging brand loyalty. Most consumers no longer shop for hotel stays by visiting individual hotel brand websites. Instead, they log onto Expedia or Booking.com and compare hotels in a single market by price and customer service scores. When it comes to making a reservation, unfortunately, brand loyalty doesn't matter much anymore.

But hotels are fighting back by promoting brand loyalty through frequent traveler and rewards programs. Through these efforts, hotels deliver guest experiences and amenities the OTAs, for all their advantages, cannot. It's in this arena where hotels possess the power to convert travelers into brand loyalists.

Reservations: A Battle Already Lost

Hard as this must be for brand executives to hear, the OTAs now control the reservation process. They've essentially eliminated the brands at the point when most consumers book a hotel room. Since the OTAs have already won this war, hoteliers should stop trying to fight them on this battleground.

It wasn't always that way. Just 25 years ago, brands monopolized the reservation system through centralized call centers, toll free numbers, and global distribution system (GDS) access. But that all changed in the '90s when the Internet and the OTAs exploded on the scene. In fact, in the mid-1990s, the only place a consumer could book a hotel room online was via the OTAs. The brands, regrettably, lagged behind in offering booking links on their websites.

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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.