How to Create the Best Hotel Loyalty Program for Maximum Customer Retention?

A hotel’s sales and marketing team is crucial to increasing bookings. To attract and retain customers, it is essential to maintain a high quality of service and competitive rates, adjusted daily. Strategies such as rewards programs are used to offer the best rates. This blog looks at hotel loyalty programs, their benefits and how they work.

What is the Hotel Loyalty Program?

It’s a marketing strategy that offers rewards to build customer loyalty. Registration is usually free and rewards include discounts and vouchers.

Rewards include discounts on room rates, food and drink vouchers and much more. Some reward schemes are based on a points system, which customers can redeem according to their policy.

Let’s take a closer look at hotel loyalty programs, their benefits and types.

History of Hotel Loyalty Program  

It all goes back to 1981 when American Airlines introduced the frequent flyers program. The idea was a massive hit. 

Later on, two major brands introduced this idea in the hospitality industry. In February 1983, Holiday Inn launched the first-ever hotel loyalty program. Later on, in November 1983, Marriott rolled out its own program. 

Over time, these loyalty programs have evolved considerably. Today, existing customers can take full advantage of the benefits of hotel loyalty programs. These include reduced rates, discounts on food and drink, and much more.

What are the Types of Loyalty Programs in the Hotel Industry?

Ideally, loyalty programs don’t have any fixed guidelines or protocols. They are designed depending on how your property works. 

There are various types of programs you can run, based on factors like : 

• Frequency of stay (Like bronze, gold or silver, depending on the duration of stay)
• No. of points collected (Bookings have certain points associated with them)
• Use of program (Redeeming of membership or points in forms of services)

On the basis of the above points, hotel loyalty programs are classified into the following three categories :

• Partnership Rewards
• Points System
• Personalized Rewards

Partnership Rewards

Benefits offered by external suppliers. The operation of these partnership reward schemes is fairly straightforward. Customers are eligible for benefits (provided by your suppliers) when they reach the benchmark you have set. These benefits can include airport transfers, discounted pub rates, free spa treatments, etc.

Points System 

Points accumulated when booking, redeemable for free stays. When points reach the minimum threshold, customers can exchange them for free stays. When customers’ profiles are created, the system enrols them in this loyalty program by default. It also enables us to understand their behaviour, booking habits and service expectations.

Personalized Rewards

Offers based on the hotel’s ability to offer rewards. Some hotels offer referral-based rewards to attract guests. Under such a policy, if guests book the property through one of their referrals, the person who referred them is entitled to the rewards. These rewards can be free meals, a gift basket, a free night or whatever the hotel deems appropriate for its budget.

How to Create the Best Loyalty Program for Your Hotel?

The main motivation for hoteliers to set up these loyalty programs is to maximise customer retention. When creating a loyalty program, the following three points should be taken into account

• Voluntarily Acceptance : Hotels’ property management systems (PMS) automatically profile guests by collecting basic information such as contact details, business details and preferences. Once profiling is complete, the PMS automatically enrols the guest in the hotel’s loyalty program. It is important to monitor this process.

• Easy to understand : Loyalty program policies are often too complex and full of technical terms, which can make them difficult for customers to understand. It is therefore important that program rules and policies are simple and clear.

• Benefits  : The rewards in a loyalty program need to be attractive to capture the attention of guests, while being balanced so as not to damage the hotel’s revenue. It is crucial to offer attractive benefits without compromising the hotel’s profitability.

Do Loyalty Programs Impact Hotel Revenue?

As per Phocuswright’s October 2016 report,

“Loyalty program members account for three-quarters of hotel website bookings, compared to just 36% for airlines.”

Building customer loyalty costs less than acquiring new customers and significantly increases profits.

What are the Benefits of Hotel Rewards Program for Guests?

Members enjoy a range of benefits, including free Internet access and free stays in partner hotels.

Hotel brands often have establishments in several locations. That’s why they offer their privileged members the chance to stay for free at one of their hotels around the world as part of their reward programs.

Can You Make the Best Out of a Hotel Loyalty Program?

Once you have designed a loyalty program, you need to work hard to promote it to customers. The best way to do this is to follow the AIDA system.

Use the AIDA system (Attention, Interest, Desire, Action) to attract and engage customers.

In Conclusion

I would like to conclude by saying, a hotel loyalty program is one of the emerging trends in marketing. I would encourage you to take that first step towards devising your property’s reward programs to get maximum client retention.

Do let me know in the comment section below how this helps you.

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