Be Worthy of Loyalty

By Naomi Stark President, Stark Service Solutions, LLC | October 23, 2011

How would you answer: Are loyalty programs about rewards or recognition?

Is there even a difference? YES! There is a significant difference. The birth of the loyalty program was a significant milestone in the history of the industry and one that originally rewarded and recognized guests for their loyalty. Yet, over the past decade we've seen a shift towards a separation in rewards and recognition. This separation has had a significant role in programs not living up to their full potential. Research has shown on average, less than 40% of program members regularly accrue points toward award redemption. That means missed opportunities for hotels to capture an even larger market share of repeat and loyal guests. Another dynamic which plays into the success of loyalty programs is the rapidly evolving world of technology which necessitates loyalty programs to also rapidly evolve to keep pace.

Rewards vs. Recognition

I recently spoke with Jacob Wright, Director of Guest Services at the Wyndham Phoenix Hotel. Jacob ponders the future of loyalty programs, "I wonder if customer loyalty is a thing of the past. At least, as we know it today." Now how can that be? Everyone wants to be rewarded for spending their money and recognized for their loyalty – that never changes. Well, it is an intriguing notion. Change in our culture has led travelers to want more than points and a welcome fruit plate which at one time was considered the tops. Jacob continues, "Today's travelers demand hotels to be worthy of loyalty. They want to know who we are. They want to connect with us on an emotional level. Really, that's what we are in now, the emotional delivery business."

Can it be that social media has altered the motivating force behind how guests decide which hotel and brand they will grant their loyalty? Thereby actually altering the course of loyalty programs? It certainly appears that way. So just what do loyalty programs have to do today to achieve guest loyalty tomorrow?

One answer is revealed from Jacob's comment that many guests are becoming more concept loyal than brand loyal. No doubt one of the hottest concepts today is fitness and wellness. Yoga has recently been described as being "as important as Wi-Fi and on-demand movies" and a "must-have amenity". Hotels are discovering that technology can be the missing link that brings together brand loyalty perks with the wellness concept. A new App on the market is by Yo-Fi Wellness. Jeff Croy, President of Yo-Fi Wellness, tells us about it: "We've combined world-class production with world-class talent in the areas of yoga, fitness, nutrition, and meditation with current technology to create the most engaging media product of its type. It's been specifically tailored to be the on-demand, on-the-go solution for travelers and hotels. Hotels are particularly showing interest in leveraging the App as a value-add for brand loyalty members as it ties guests to the brand even beyond checkout." Today's brand loyalty programs must be social and app centric. Yet, when it comes to sustaining a brand loyalty program there is one element that will always remain "on-demand".

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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.