Cookie-Cutter Loyalty Betrays Hotels’ Lack of Strategy

The largest hotel brands have been amassing thousands of new members in their hotel loyalty programs, but engagement in these clubs hasn’t necessarily risen. That’s a problem for the industry, but it’s also a major opportunity for both hotel companies and their guests.

The swelling of hotel loyalty program rosters began last year, before this year’s debut of direct-booking marketing campaigns from Hilton, Marriott and Hyatt. But a recent report in Skift found that, even while most of the biggest brands’ loyalty clubs grew membership by double-digit percentages in 2015, room nights booked through those programs did not rise as much and in some cases actually decreased.

The data suggest that many of the millions of travelers enrolled in these hotel loyalty programs are either disengaged or inactive.

Common sense could explain this problem of lapsed users as well. If hotel loyalty programs are commoditized, they’re not really serving guests, even if they’re successfully enrolling thousands more people. For the most part, programs are set up for either hoarding tons of points to redeem for free room nights, or for reaching new loyalty tiers the more a guest stays, qualifying that person for perks like free parking or free Wi-Fi.

As I’ve said repeatedly in this heightened competition for hotel loyalty, your brand needs to differentiate its rewards program by showing it can differentiate one guest from another. Personalized pricing and tailored rewards that resonate are the goal, not some static discount off the best available rate given to everybody.

Why offer more discounts to already “loyal” customers? Because it’s critical to make sure your most valuable customers remain loyal so you can fill your hotel with your most valuable guests.

By better serving guests, hoteliers are subsequently making more money.

[bctt tweet="Is it Time to Renovate Your Hotel Loyalty Strategy? @ptbosworth of @optimizedemand thinks so. #hotelloyalty"]

Break Through with Big Data, Not More Bodies

Hotel loyalty programs shouldn’t be monolithic. Instead of platforms that are rigidly devoted just to points for free room nights, hotels should have a basket of different offers that create value for all the different guest segments they serve.

To be responsible to your guests is to know why they’re traveling and staying with you.

In the case of the business traveler, she might be less price-sensitive, but she might care about early check-in and late check-out, or complimentary breakfast or the hours of your gym. The family booking a room for their vacation would place a premium on rooms with multiple beds and would be open to receiving information you have on attractions in the area.

More sophisticated hotel loyalty programs will track these guests’ on-property spending from previous visits, which lets your property calculate a value for those customers’ worth to your bottom line. From there, your revenue managers can decide what percentage of that worth to reinvest into individual loyalty club members, yielding dynamic prices for each guest who logs in and books a room directly with you.

Smart loyalty is knowing how rich a discount you can give to a guest, how far along the extra mile you can go with service and perks, and which kinds of offers and content will resonate with a guest.

Hotel Loyalty Matters to Everyone, Not Just Road Warriors

A concern I hear hoteliers and industry watchers raise about this approach to loyalty is, “Won’t this alienate my road warrior guest, who I see more often than casual travelers?” Let’s set aside the question I mentioned already about giving discounts to people already “loyal” to your hotel — or at least already choosing to visit your property often.

If anybody can sign up for the loyalty program and begin seeing personalized rates on subsequent stays, what’s going to make the frequent traveler feel special? Also, if heavy users care about racking up points, won’t they want higher room rates so that they get to their point thresholds sooner, usually on their bosses’ dime?

For one thing, road warriors care about their expenses and what they charge back to their companies more than we give them credit for. Secondly, catering to the heaviest users of a hotel loyalty club, however it’s set up, is no better than signing up thousands of new members without a plan to engage with them over the long term. Sticking just to a points-based system effectively says to hotel guests, “We only care about you if you stay with us a lot.”

That’s why a data-driven loyalty program is crucial. Always strive to know your guests and know what they want.

Lastly, the goal is not to simply replace points with a static discount. If you boil it down that way, you’ll fail as in the past. Guests recognize cookie-cutter solutions and can see if a hotel is putting its own expedience above offering something of real value to its customers.


Patrick Bosworth, Co-Founder and Chief Executive Officer

As CEO, Patrick spearheads the firm’s strategy and vision, while also championing a new approach to revenue management. Under his leadership, Duetto has grown to more than 100 employees supporting nearly 3,000 hotel and casino properties around the world. Before founding Duetto, Patrick was Director of Yielding and Business Strategy for Wynn Las Vegas.

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