Is there such a thing as a loyal hotel guest? In an age of globalised competition, in which tech-savvy travellers are swamped by countless promotions and marketing campaigns, notions of single-brand affinity are increasingly under assault. In addition, it is hard to gauge how accurate loyalty schemes are as barometers of customer devotion. According to Deloitte’s 2013 report, ‘A Restoration in Hotel Loyalty: Developing a Blueprint for Reinventing Loyalty Programs’, 80% of "high-frequency hotel travellers" held two or more such cards.
The report also found that just under a third of hotel loyalty members were "at risk" of switching their preferred brand, while the hotel spend of nearly half of those surveyed was not with their preferred group.
If true loyalty – in the business sense of the word – is defined as customers’ willingness to resist pressure to switch between brands, the aforementioned figures make for sobering reading.
This time it’s personal
However, the conventional wisdom that once underscored hotel loyalty membership schemes is undergoing a makeover. The days of simply rewarding repeat purchases with points-based markdowns are at an end, with today’s guests demanding a more diverse and personalised set of incentives for their custom.
"As an industry, we are aware that many people carry more than one card," says John Muehlbauer, director of InterContinental Hotels Group’s flagship loyalty scheme, IHG Rewards Club. "We have reached a crossroads in terms of trying to find a way of transforming transactional relationships with guests to something deeper, more emotional and built on trust."
IHG Rewards Club was introduced in July 2013, replacing the group’s previous programme, Priority Club Rewards, which was launched 30 years earlier. The new scheme offers its members – of which there are more than 80 million – the chance to rack up points at more than 4,600 hotels across IHG’s global portfolio.
Based on three levels of membership (Club, Gold Elite and Platinum Elite), perks include free internet worldwide, redemption for flights with more than 400 airlines and complimentary room upgrades.
According to Muehlbauer, the main priority during the rollout of IHG Rewards Club was to communicate its advantages clearly to programme members, while assuaging fears that existing benefits might be eliminated.
"Changing a programme is really about getting that name out and communicating it to the members, so they are aware of what’s happening," he says, "so it was important that we communicated to our members that no benefits were being taken away during the rollout of IHG Rewards Club. In fact, just the opposite was happening: we added some benefits, such as free internet to every member around the world."
Response to the new scheme has so far been overwhelmingly positive. In April 2014, it scooped five honours, including Programme of the Year and Best Customer Service in Europe and Africa at the Freddie Awards (the ‘Oscars’ of the travel reward programme industry).
"The Freddie Awards are a big yardstick within the industry, so to win five was a very proud moment for us," explains Muehlbauer. "IHG Rewards Club has allowed us to tie together all IHG hotel brands under one umbrella, which wasn’t the case with the Priority Club Rewards. This has led to a noticeable increase in awareness of our portfolio among consumers and has subsequently driven more multibrand stays."
What appears to be unanimous across the hospitality sector is the notion of more personalised rewards programmes for guests, as opposed to the one-size-fits-all, transactional approach of yesteryear.
The role of technology in this area cannot be underestimated. As a result of thorough data mining of loyalty member databases, as well as monitoring websites, operators can offer more relevant benefits to guests.
Different guests have different priorities; for some, the possibility of redeeming points may be a chief benefit, while others, such as business travellers on expenses, might be keener on free Wi-Fi.
Similarly, loyalty members with young families might appreciate complimentary children’s television programming rather more than a free drink at the hotel bar.
"Technology is vital in developing more personalised relationships with members," says Muehlbauer. "This also applies to marketing. At IHG, we have sought to do this through our current, multibrand promotion that contains more tailored offers, based on individuals’ needs. The next part is how we make that part of the customer experience."
Social media is arguably the most critical platform for promoting loyalty schemes, particularly among younger travellers. In 2012, Accor’s acclaimed Discovery Tour campaign used a Facebook game to reach out to the ten million members of its Le Club Accorhotel loyalty programme.
Marriott Hotels – recipient of four accolades at the recent Freddie Awards for its Americas services – has also made notable technological investments. Its loyalty programme, Marriott Rewards, is the first of its kind to offer guests geo-targeted mobile offers for on-property deals.
Through the group’s PlusPoints scheme, members can also collect points through tweeting, retweeting and checking in on Facebook.
Clear winner
In terms of metrics for gauging success, the most obvious measure would appear to be increased market share. Muehlbauer reiterates that guest feedback and industry acknowledgement are imperative: "You can judge the success of a loyalty programme from a couple of different lenses. First and foremost is revenue contribution. We also try to look at the overall satisfaction and preference of our programmes – syndicated research in the marketplace can keep us better informed with regards to this. Recognition is also vital. For all the different kinds of reports and surveys, the Freddie Awards can pretty much tell you how things are going."
As indentified by Muehlbauer, the hotel industry has arrived at a clear ideological intersection where the exploitation of loyalty schemes is concerned. While investments in programmes waned during the global financial downturn, as operators gave greater priority to cutting costs, there appears to be a clear consensus within the sector that reward initiatives must be fine-tuned.
Rich rewards
We should therefore expect more competition. For instance, Starwood recently announced plans to launch a new scheme, Starwood Preferred Guest (SPG) Pro, which will be aimed specifically at travel professionals. Set to be introduced in October of this year, any SPG member who books a group stay, or corporate event, at a Starwood property can expect to receive Starpoints in return for the business they generate. According to a recent press release, the group hopes this will further drive its B2B transactions, which account for roughly 70% of its room revenue.
"We are definitely seeing a willingness among operators to improve their rewards programmes," says Muehlbauer. "They can do a couple of great things, such as increase revenue and create better economics from the owner’s perspective. They are also a great way to create relationships between brands and guests who, with a bit of luck, will go onto social media and say more. You cannot put a price tag on advocacy: to me, it is the main value of loyalty programmes to owners."
Challenges ahead
That is not to say that operators can expect brand-switching to cease entirely. Travel, by its very definition, is underpinned by the idea of new experiences. With the wealth of information and choice available to travellers via the web, creating undivided, unswerving brand affinity among guests is a tall order.
However, with technology and data at their disposal, operators have a golden opportunity to be more creative in terms of what they offer their guests. Consequently, we should expect to see more brands redefining their loyalty programmes in the coming months and years.
