Nearly forty years. That’s how long guests have been accruing points, statuses, and upgrades with hotel loyalty programs. The hotel programs spun off of the airline programs (the first was AA Advantage in 1981), which were the marketing brainchild of airlines in a post-deregulation world. For the most part, hotel loyalty programs still work the same way they always did, except over time, it seems that guests receive less and less.
The Problem with Loyalty Today
As Skift’s Wouter Geerts notes, “Not so long ago, hotel loyalty programs were front-runners in design and innovation. Today, many programs have gone stale, commoditization has wreaked havoc on the perceived benefits and rewards of these programs, and the epicenter of innovation has shifted to industries like retail” (Skift). Hotels have used the benefits of the rewards programs—robust marketing platforms with a better ability to personalize—without always rewarding the guest in ways that speak volumes. Many hotel brands have tinkered with moving hotels into higher points categories and making it more difficult to earn free nights, and even though these programs can drive room bookings, sometimes they impact RevPAR growth. While the direct bookings push of the last several years has made some programs more desirable, the truth is that most guests don’t know what’s what with the programs anymore and, as a result of so much supply and so many different options, fewer and fewer guests are brand loyal.
According to Maria Matim’s article Have Millennials Killed Hotel Loyalty Programs?, “Loyalty programs have more hip and happening competition in online travel agency websites that do not belong to any hotel loyalty program” (SocialTables). Hudson Crossing and Adara released a white paper which reports that 92% of people who book through one of these sites do not belong to any loyalty program, and nearly half (47%) of people who do use direct booking are not members of the loyalty program, suggesting that these programs are not making a significant impact on bookings (Adara).
Go searching, and you’ll also find anecdotal evidence that rewards programs are working for hotels, specifically to drive direct bookings, but most signs point toward a system that is outdated and in need of some reconsideration.
How to Evolve Loyalty
Evolving loyalty efforts requires looking deeper than points and upgrades. It requires looking at the whole hotel system and how it supports guest engagement, superior guest service, and longevity. Sizing up millennials (the most significant spending group in the country right now, whatever you may think of the emphasis on them in the last few years), Kelli Haemmelmann notes that “What they want from brands is clear—they want loyalty programs that transcend the transaction, genuine experiences, customer engagement, and convenience” (ChiefMarketer).
The place to start is with technology. Not just with hotel loyalty technology but having a hard look at all technology. The way technologies integrate to support the guest experience, the way data is captured, and the way that technologies simplify the experience, creating the ultimate convenience for the guest. I believe loyalty programs can still work, but I don’t believe they can work in the absence of conscientious decisions about how technology underpins the experience and, further, allows hotels to create lasting, personalized communication that isn’t just spun out of transactions.
Beyond Loyalty Programs: What Hotel Technology Needs In Order to Support Customer Longevity
Put simply, guests will return because they had the experience they were after, not so much because they’ve won points in a rewards program. Look at Airbnb. The company has grown explosively, but last year, they put the brakes on their Superguest Loyalty Program saying, “It wasn’t differentiated enough, we didn’t have enough community involvement for us to launch it,” (Skift). The company is still taking suggestions on their website for the Superguest program, as a matter of fact. However, that doesn’t stop travelers from loyally using Airbnb to book vacation rentals. In fact, what Airbnb has done in the interim is to improve the search experience, creating a fresh way of searching for well-designed, quality accommodations with Airbnb Plus. Airbnb Plus boils down to a combination of technology and vetting; Airbnb is, after all, at its heart a tech company.
Using technology to generate loyalty involves both looking at what the technology offers as well as how it offers it. There is no one-size-fits-all technology that will solve the loyalty dilemma. However, there are core elements hotels can require of all their technologies that will take the experience beyond a transaction and generate “genuine experiences, customer engagement, and convenience.”
Among the core requirements that support loyalty:
- Data capture and integration across the enterprise. In terms of personalizing guest communications and experience, data is the bottom line. All technologies should integrate with as much as possible. Data should be consistent and shared widely. Hotels are currently working through this conundrum—for instance, doing away with legacy technologies, moving to the cloud, and generally asking for integrative data from vendors—but until the problem is solved, it warrants mention again and again. To reach guests and personalize their communications across applications, hotels must have accessible, un-siloed data.
- Consistent data access across departments (front desk, housekeeping, food, and beverage, etc.). If the front desk sees something different from the spa, and housekeeping sees something different from the marketing department; there will inevitably be inconsistencies in the guest experience. Guest data (profiles, preferences, and so forth) should be accessible to all guest-facing staff as well as behind the scenes in order to create a singular service experience.
- Omnichannel guest solutions. All guest-facing functionalities (whether ordering, making reservations, researching activities, and so forth) should be available across all channels—mobile, web, tablet—with a uniform presentation. Guests expect to be able to pick up any device and reach the property. Moreover, they want the capability of doing just about anything—reservations, concierge services, beverage orders, etc. Loyalty begins by giving them the experience they want, when they want it, on the device they have nearest.
- Understand when to use native applications and when third-party apps are ideal. For instance, with out-of-room ordering (meaning a guest can order food and beverage anywhere on property via any device), a native app is required. Native apps offer superior control over data and experience, such as two-way chat, but third-party app stores can offer hotels a range of technologies that they wouldn’t otherwise have access to, albeit sometimes with data risks. In terms of loyalty, consider data and service priorities when choosing native or third-party applications.
- Ease, simplicity, efficiency. For millennials, especially, these are paramount. Technologies that make the mundane aspects of travel disappear will go the farthest toward creating a long-term customer.
Revamping decades-old notions of loyalty necessitates going below the surface, excavating the transactional rewards programs that are frequently complicated and rarely return compelling-enough offers. There’s nothing inherently wrong with rewards offers and upgrades are appreciated, but these things are rarely the foundation of a long-term relationship. Hotels that shift the focus from the surface programs toward all the technological underpinnings—making the complex processes simpler, ensuring the availability of data that will allow for personalization, giving guests the ability to communicate directly and quickly with the property, and so on—will find the loyalty comes naturally without necessarily undercutting rates or managing complicated programs.
About the Author
LinkedIn profile: https://www.linkedin.com/in/david-millili/
Seasoned business leader, David Millili, is the CEO of Runtriz™, a leading developer of innovative mobile software solutions for hotels, resorts, and casinos. He has more than 25 years of experience in the hospitality industry with practical experience in all aspects of hotel operations and management. As the GM of two iconic New York City Times Square hotels, his experience ranges from managing pre-opening operations to spearheading multi-million budgets. As co-founder of Timeless Hospitality, Millili was directly responsible for the successful launch of a startup company that generated impressive profits within six months of launch. Timeless Hospitality provided hotels with internet reservations, marketing, and management products and was one of the first e-commerce platforms developed for the exclusive purpose of generating web reservations for independent hotels.
David Millili served as the chief executive officer and board member of Pegasus Solutions, a global leader in providing technology and services to hotels and travel distributors. In this position, he was responsible for the company’s global operations, technology and shared services as well as the company’s reservation and distribution service lines. Millili assisted in the sale of all three business units. Millili also founded and led Open Hospitality to become a recognized industry leader in providing innovative hotel internet marketing services including web design, development, and hosting, mobile platforms, online search, and marketing. Open was sold to Pegasus in October 2011. He currently sits on a number of boards and as a former hotel general manager, he has valuable experience in all aspects of hotel operations and management.
Runtriz delivers magic moments utilizing an open guest service platform that enables guest service amplification. We strive to enhance both the staff and guest service experience to optimize their time. With over 2000 hotels in 120 countries covering 50 + languages, Runtriz has the knowledge and experience to support your hotels’ digital and guest engagement goals. We help our partners increase guest service results be delivering what today’s guests want.