Hotel loyalty programs may seem ubiquitous today, but nearly 60% of guests still don’t belong to one – meaning hoteliers are missing a key opportunity to generate repeat business and nurture relationships, according to a just-released Oracle Hospitality study.
Oracle Hospitality conducted the global consumer survey to help hoteliers develop more successful loyalty programs and better understand their value. Loyalty programs strengthen ties with guests and engender guest loyalty by providing recognition, rewards, and options to redeem rewards. What is even more critical today is the deep understanding of guests that hoteliers need to deliver individualized service that consumers demand today. Loyalty programs offer a structured framework for hotels to develop rich guest profiles based on input from guests and transaction data from their hotel stays and loyalty program interactions.
Several major findings in the research study underscore loyalty’s underutilization and its effectiveness as a marketing tool:
• Ample opportunity remains to recruit consumers to loyalty programs: 58.7% of survey participants said they do not belong to any hotel program. By comparison, a mere 3.2% reported that they are members of five or more.
• Loyalty initiatives are “sticky” – once customers enroll in a program, they demonstrate loyalty to the host brand: Repeat business was evident among members, ranging from 33.6% of Australians to 53.8% of Mexicans who said they often stay in hotels that offer their loyalty programs.
The survey – which polled which polled 8000 consumers from Australia, Brazil, Mexico, France, Germany, Japan, United Kingdom, and United States - also identifies key attributes of successful programs and benefits that members most value. The importance of individualization clearly was evident in consumers’ preferences for rewards: 61.2% said they are “interested or very interested” in being able to choose their rewards. Likewise, 56.5% want to be able to customize their hotel experience – for example, select a newspaper or set their own check-out time – and 54.3% want to be able to upgrade their room.
But no matter how attractive rewards might be, if a loyalty program is confusing to navigate or requires complex registration it’s almost certain to fail. To help lower the barriers to participation, the report’s findings highlight the importance of loyalty’s three “Rs” – Be relevant, redeemable and reliable. Nearly one-third (29%) of survey participants said they don’t join programs because it takes too long to earn rewards. One of the most important takeaways: Hoteliers need to clearly and simply explain the path to earning rewards and dispense them early, often, and in a variety of ways. Guests could gain additional reward eligibility, for example, for expenditures on hotel services such as spa treatments or dining at on-property restaurants.
The study also touches upon loyalty’s potential influence on other major trends affecting the hotel industry. Considering the rising share of travel attributable to millennials (and their fascination with social media), hoteliers could consider rewarding them for sharing their guest experience on digital platforms. Indeed, 43.2% of millennials worldwide expressed interest in such an option, and it was received with even greater popularity in Mexico, Brazil and U.S.
More than a majority of respondents (52%) also reported that they have not used an Airbnb-type service. The emergence of such industry disrupters has caused much trepidation in the industry, but also has given rise to a solution: Loyalty is the best defense. By delivering first-rate loyalty programs that expand and enhance the definition of exceptional guest experiences, hoteliers can defend against further inroads by new competitors.
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