Hotel Loyalty

With the end of 2016 the evolution of hotel loyalty programs continues. We’ve seen all the major brands like Hilton, Hyatt, IHG, Marriot, Starwood and Wyndham push out special “member only” rates for their loyalty members. Hilton spent millions on their “stop clicking around” campaign to encourage travellers to book directly instead of through an Online Travel Agency (OTA).

Generally, loyalty member-only rates are anywhere from about 3-10% off the BAR (best available rate). When one factors in the additional cost of issuing loyalty reward points to a guest – anywhere from 5-10% per booking – loyalty is an increasingly expensive proposition (with the brands at least).

But the alternatives are costly too. There is a wide body of research that demonstrates how important loyalty is to a company’s growth and profitability. In fact, Harvard Business Review and Bain & Company conducted research that indicates that when a company increases customer retention by only 5%, profits increase by a range of 25% -95%. The industries used in the research were apparel, books, groceries and consumer electronics. So, does this research crossover to the hotel & resort market?

terrace-mediterraneanYes. We don’t have access to the brands’ data on their loyalty programs, but we do know strong guest loyalty is one of the most important items to all the brands. How about independent hotels? Most independents have either no guest loyalty program or their programs are rudimentary ‘punch card’ style.

However, Cornell School of Hotel Administration in New York did complete a study on hotel loyalty with two independent hotels that had loyalty a loyalty program. The researchers found that guests who were part of the hotel’s loyalty program spent 50% more money at the hotel each year than guests who were considered equal profiles, that were not part of the loyalty program. This is truly remarkable.

It’s no wonder the brands are battling it out for supreme loyalty with guests. If only 5% of guests are issued loyalty rewards, and those same 5% come back 50% more often, for an average 100 room resort or hotel at 70% occupancy, with $150 ADR, this translates into about $90,000 a year in extra revenue, which is nearly all profit. Can you imagine if you issued loyalty rewards to 50% of your guests? With IndyKey you can.

Find out more about IndyKey’s loyalty program and how it can help drive loyalty at your Hotel or Resort, for a low monthly flat fee.