Hotel loyalty programs are more beneficial than new guest acquisitions

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Jan 15, 2020 | Guest Experience | Reading Time: 5 minutes

To sell more is the right way to grow a business, right? After all, to attract new clients is the goal of any enterprise. However, the industry is starting to realize that hotel loyalty programs can be even more advantageous than acquisition.

These programs, besides encouraging guests to always come back, also attract new clients, boost hotel occupancy rate during off-peak periods and work as an efficient Marketing strategy when well planned. To the guest, they bring a sense of exclusivity and recognition that are key to their experience.

If you, hotelier, are not investing in the relationship with your clients yet, stop and think before spending all your budget in strategies to win over new hearts. Maybe to turn new clients into habitués is more clever and more profitable.

In this article, you will find how to invest in loyalty programs that can bring you a significant return of investment. Get inspired by the examples and build your own strategy to gain the guests’ loyalty.

Big hotel chains and their loyalty programs

Loyalty programs are expected in different sectors. The hotel industry got inspired by famous airline travel points. But, instead of accumulate miles, in the hotel loyalty programs, members accumulate points.

The idea is very simple: daily rates and extras that are not included in the daily rate, like mini bar expenses, are converted into points which, in turn, can be turned into discounts, special services or free nights in the upcoming stays of the guest.

Each brand has its own score rating and hotel awards. Like other programs, there are different status level and the more points you have, the better are the awards.

Aware of the fact that the new luxury is the quality of the clients’ experiences, and not necessarily expensive rooms, the big hotel chains are betting high on loyalty programs as a way to enchant their guests.

This is what the largest international hotel brands have done, such as Le Club AccorHotels, Hilton Honors, and IHG Reward Club.

Marriott Hotels deserve a special mention. They won the Freddie Awards 2019 ( the Oscars of travel points) for best Program of the Year with the Marriott Bonvoy.

But don’t forget to keep the standard in the programs. The VIP experience needs to be accessed in all units of the chain, to keep guests’ satisfaction and loyalty to the brand.

Loyalty strategies for independent hotels

However, don’t think that loyalty programs only work for big hotel chains. Independent hotels are also recognizing the value in loyalty strategies and are seeking ways to compete against the billionaire budget of OTAs, even though their resources are very limit.

One of the ways they found is to be associated with a bigger loyalty system, such as Allpoints Hotel Rewards, to turn their own hotel rewards more attractive. Allpoints is a Brazilian startup that innovated by creating this system for lodgings.

With over 550,000 hotels, inns and resorts in the portfolio, the startup supplies the demand for more accommodation options to travelers who want to stay in an independent hotel or a small chain.

Another alternative adopted by independent hotels is the partnership with lodgings that have the same audience profile but are located in different towns. Again, the intention here is to give more options for the guest to accumulate and use their points, making the program more attractive.

Know your audience and make your hotel rewards more attractive

To retain clients it’s a challenge. The competition is fearless and today is very easy for travelers to compare and choose prices and services between lodgings.

According to a survey by Oracle in 2017, travelers from different countries expect that the program’s rewards in hospitality to be personalized according to their preferences.

Another interesting aspect that the survey pointed out is the guest expectation of being rewarded for sharing their hotel experiences in social media. Indeed, 43.2% of millennials worldwide expressed interest in such an option, and it was received with even greater popularity in Mexico, Brazil, and the U.S.

This is something extremely relevant especially to small hotels, that don’t have a big budget for marketing or much money to invest in a wider program.

I remember a time, when I worked at a hostel as front-desk agent, that we promoted a simple act of offering free beer to toast the pictures that tagged us on Instagram. Each guest who has tagged the hostel would pick up a beer on the house for the first shared picture.

woman holding a mobile with instagram

It was a success. People had fun, cheered and we got free publicity. Some acts like these ones can be included in the hotel loyalty program. Simple, effective and cheap.

So get off from your comfort zone and offer, besides free nights, tours with local partners, room upgrades, free night for guest’s travel companion or even some exclusive services.

For example, a hotel/hostel/inn that doesn’t usually offer room service may give as a hotel courtesy to their loyal guests an amazing breakfast in bed.

As I said before, special rates and service create a sense of exclusivity and will encourage the guest to become an ambassador of your brand.

The benefits of a hotel loyalty program

There are some benefits for the hotel that is investing in the strategy of a loyalty program.

The main benefits

  • According to Rock Content, to sell to a regular customer is cheaper than to sell to someone who has never purchased (or stayed) from you. To be more precise, the American Philip Kotler stated that to acquire a new client coats 5 to 7 times more than to keep a customer. That means that to retain clients is more cost-effective than to acquire.
  • A loyal guest is a guest who will recommend you to family and friends and even share your brand on social media. Including the feared Trip Advisor reviews. The loyal and satisfied guest becomes an ambassador for your brand. So besides saving in Marketing campaigns, you have for your disposal the most efficient strategy of all: word-of-mouth advertising. A loyal guest is your better marketer and it’s for free.one happy customer referrals to nine people
  • A loyal guest usually spends more than a new guest. This happens because of the trust that has been built between customer and hotel that encourages the loyal guest to book all services with you instead of buying from some unknown. So when the guest is hungry, for example, he/she will definitely think of your restaurant first before looking for another option. A loyal guest tends to spend more with your services.
  • Loyalty programs also help hotels to get to know better their clients by collecting customer’s data. Guests’ enchantment might be your competitive differential in the fierce competition for travelers. And to captivate them, you need to know them. Loyal programs in the hotel industry can be a source of enchantment.
  • Habitué guests allow hotels to predict better their revenue, especially during the dreaded off-peak periods. To build loyalty is extremely important for independent hotels and small businesses, which struggle in the battle against OTAs to increase direct booking. With a non-traditional model of loyalty programs, these lodgings are using creativity to bond with guests, despite their limited financial resources. Loyalty can be a revenue source during rough times.

And they lived happily ever after. Or not.

Don’t get caught in the routine: surprise the guests. The client’s engagement is vital for any hotel loyalty program to keep bringing revenue. Therefore, be always aware of the guest’s requests and wishes to keep them loyal to your brand.

Pay attention to the return rate of your guests. Do customer satisfaction surveys and find out how is the retention rate of your customers. Listen to constructive critics and suggestions. It will help you in the quest of meeting guests’ demands and desires.

Moreover, partnerships can boost the guest’s experience beyond the limits of the hotel’s walls.

So, hoteliers, get together right now! In the battle of guest loyalty, oddly enough another hotel might be your ally and partner. It sounds crazy but it might work!

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