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Is Blockchain The Future of Hotel Loyalty?

The guest is evolving, and therefore so too must their digital customer journey. New technologies, such as blockchain, could hold the answer to unlocking true 1:1 communication with customers, enabling hotels to offer personalized offers that convert and drive both revenue and profitability. 

For more insight on industry trends & predictions for 2023 read our latest eBook: Targeting Greater Profitability In 2023. Download your free copy today:

However, before we consider what is to come, we need to look at where the hotel business is today. There has been this huge recovery period post-COVID, and hotel companies have been planning and coming up with recovery strategies. Some have been very successful, others less so.

3 Challenges From 2022

This was the state of play at the end of 2022:

1. Corporate has not fully returned

Corporate business has not come back to the level it was at in 2019. And it is widely agreed that between 20-25% of that 2019 corporate business will never return. This is because big corporations have new travel rules. There has been a huge cut in travel budgets, with global firms cutting corporate travel by as much as 35% - spurred by both sustainability and rising costs. Hotels need to find new business to replace this.

2. Leisure has increased significantly

We’ve seen a lot of pent-up demand as people were unable to travel for a couple of years. Leisure has bounced back. That’s great because it has covered some of that loss from corporate – but I stress on the ‘some’ – this is not a like-for-like swap.

And there are caveats with the return of leisure:

  • The booking behaviors of those customers are different; they are staying in different properties, for longer, but booking closer to the stay date.
  • There was a lot of pent-up demand, which will start normalizing. Summer 2022 saw leisure about 30% above 2019 levels, but by December 2022 that had leveled off to just 1-2% above 2019.


3. Meetings and events remain reduced

This greatly impacts larger hotel companies, where up to 35% of their total business can be meetings and events. This sector has reduced by about 30%.

Summer headlines may have been very positive, but when you look at the real numbers, 2022 closed about 20% behind 2019. Add in the fact that operating costs are high, and so too are room rates, this presents challenges for 2023. But as with any challenge, there are solutions.

3 Solutions For 2023

In 2023, what you know about your customer will be what helps you gain market share. It is about the way you collect and manage that data. And, of course, technology drives the collection of that data.

1. Retention over acquisition

The first customers to return after the pandemic were loyal customers. The value of your membership has become greater. Hotels are now realizing that their loyalty programs drive demand without expensive acquisition costs, whether that is PPC, PPA, OTA commission, or any other third-party cost. Loyalty members spend more money on property and they stay longer, so there is a huge benefit in focusing your marketing efforts on this segment.

2. Conversion rate optimization

The conversion rate of direct digital business for hotels is very low at 3.5%. Hotels are paying a lot of money to attract people to their own channels and then they do a very poor job at converting them. As a comparison, the average conversion rate on an OTA is 6-10%. Hoteliers need to spend more on conversion rate optimization (CRO) than on acquisition costs. The incremental gains of pushing a conversion rate up, even by just 1%, can be huge for a hotel business. And that is direct revenue, without a commission.

Here are two quick wins to this digital optimization: make your website mobile-friendly and make your email mobile-friendly. The customer wants to be able to book on their mobile device; don’t make that a barrier to conversion. 

3. Digital journey optimization

If you have an app, loyal customers will often book via the app, but only if it’s a seamless experience. Your app should give you the opportunity to push tailored offers to your members. These are effectively gated prices that the OTAs and competitor shopping tools cannot pick up. Make the most of this and build attractive offers tailored to your loyalty program members.

The Future Of Loyalty

Current hotel loyalty programs are built on ‘earn and burn’. But today’s travelers, specifically Millennials and Gen Z, don't care about earning points because they don't use them. This is not an incentive to rebook. As such, we need to reboot how we build loyalty programs.

Data and, more specifically, blockchain, can help us to do that.

By putting customer databases into the blockchain, which then anonymizes the data, a 1:1 relationship with the customer becomes possible.

On average, customers have 14-16 preferred brands, across retail, travel, banking, technology, etc… Using blockchain, the customer has one digital profile. They choose which brands to share that with, but the brand only sees what is relevant to them.

Marketing becomes personalized. The offer is bespoke to that one client, through a 1:1 relationship. You are no longer trying to find a product that will suit the average 20-30-year-old European traveler, for example.

In addition, your customer is more qualified, and because the consumer trusts that their data is safe, your brand becomes even more trusted. The whole relationship is strengthened.

We are on the cusp of a real paradigm shift in digital marketing, as we move closer to 1:1 marketing. And at the same time, we are giving the customer back control of their own data.

This is happening across many industries right now. The danger is that the hotel industry will, once again, come late to the party.

We need to work together to build a system that can benefit all the hotels in the world by driving incremental business onto their own digital platforms through the blockchain.

eClerx Digital helps clients maximize the results of their digital activities across the customer journey. For more information, visit: 

Discover more trends & predictions from industry leaders in our latest eBook: Targeting Greater Profitability In 2023. Download your FREE copy today:

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Remy Merckx, Senior Advisor - Head of Travel & Hospitality, eClerx Digital

Senior Advisor - Head of Travel & Hospitality, eClerx Digital

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