As consumers become more and more savvy about making sure they get rewarded for virtually all of their purchases, loyalty programs have become an increasingly important point of differentiation for companies, particularly those in the hospitality space.
As such, simply having a loyalty program is no longer enough for hotel companies, according to Brian Kelly, founder and CEO, The Points Guy, who spoke in a session entitled “Loyalty Pointers: What Frequent Guests Want From Hotel Owners” during last week’s ALIS Conference. “Consumers don’t just want loyalty programs they demand them,” said Kelly.
He provided some statistical evidence of the growing impact of loyalty programs citing the 2019 Bond Brand Loyalty Report, which is based on a survey of more than 55,000 consumers across some 900 loyalty programs. For example, the report found that 73 percent of members are more likely to recommend brands that have good loyalty programs, while 79 percent said that loyalty programs made them more likely to continue doing business with brands. Additionally, 66 percent said they would modify their actual spend to maximize loyalty program benefits.
Kelly elaborated on what’s most important to guests when it comes to loyalty programs. “Consumers want personalization. They want a more personalized, individualized approach when it comes to loyalty. When companies do it right it pays off,” he said.
To drive home the point, Kelly indicated that consumers were 6.4 times more satisfied with the loyalty program when personalization was done right, according to the aforementioned survey.
Kelly noted there are benefits to the hotel as well when it comes to personalization. “The value for loyalty goes beyond just filling heads in beds but it’s getting to know your customers more and personalizing your experiences so that they become basically free brand ambassadors for you. That is just good business,” he said.
Technology can be a key factor as well. As an example, Kelly touted Hilton’s technology platform which allows guests to check in remotely and select the specific room they want as a prime example.
“Especially in the hotel industry where the hotel room is an extension of your at-home experience, having technology drive your personalization is what matters,” he said.
According to Kelly, the mega hotel companies such as Marriott and Hilton have made great strides with their respective programs. Marriott, for example, last year saw its rebranded Bonvoy program surpass 137 million members, while Hilton’s Honors program crossed the 100 million member threshold this past October. In addition, in the second quarter of last year Hilton experienced 20 percent year-over-year growth in membership and reported a 60 percent increase in members staying more than 100 nights a year.
Meanwhile, the next big trend in loyalty programs is “enhanced partnerships across the board” that extend beyond hospitality into other industries, according to Kelly.
“The goal here is to take two or three valuable brands and leverage the loyalty programs across multiple touch points so that you touch the traveler at all parts of their journey,” he said.
Kelly cited a few specific examples, including the American Express platinum card, which offers consumers Uber benefits and TSA pre-check to get them through security.
Within hospitality, Marriott and United Airlines--which forged a partnership back in 2013--recently started doing reciprocal Elite status benefits as well. “Instead of just being able to earn points you’re actually taking care of each other’s best customers,” he said.
Furthermore, Kelly noted that World of Hyatt and American Airlines invigorated their combined program this past year. He also referenced Lyft--which has multiple partners, including Hilton, Delta, MasterCard and Chase—as an example that “you don’t just have to get into bed with one person these days.”
Kelly stressed he was particularly intrigued by a trial program with Marriott and United Airlines where passengers who fly from New York to London will have their bags automatically checked through to their hotel.
Kelly detailed some other critical elements to having a successful loyalty program pointing out that consumers demand consistency and value. In addition, he noted they don’t want complicated benefits and urged hoteliers to make redeeming points easier.
Kelly went on to urge hotel operators not to “have one size fits all perks” and he later added “let members tell you what’s important to them.”
He also emphasized the benefits of doing something extra for guests. “The hotels that go above and beyond that creates tremendous loyalty down the line,” said Kelly.
According to Kelly, loyalty programs can also be a differentiator for hotel companies as they continue to their battle against companies like Airbnb. “Strong loyalty programs can serve as a defense against home sharing sites,” he said, calling the platform “one of the biggest threats to hotels and operators.”
Referencing the study, Kelly summarized what today’s programs need to accomplish. “One of the key takeaways was that the role of the loyalty program can not be emphasized enough. Loyalty programs must move beyond programmatic levels to being able to leverage data from guest history, their social media and other marketing sources and get predictive analytics for personalizing and individualizing the guest experience of the brand,” he said.
Kelly concluded by referring to a quote from a senior hotel executive who commented, “Loyal members stay more, pay more and cost less.”
Kelly continued, “while you’re looking at the cost of loyalty programs it can be an instant hit on the bottom line but you’ve got to think big picture and if you want to win and fill your hotels with the right guests you’ve got to be playing in the loyalty space.”