Just recently, Travel Tripper hosted a webinar about the evolving nature of guest loyalty and the ways independent hotels can win over guests.
During an in-depth discussion, we spoke with three experts from Stay Wanderful, Revinate, and Travel Tripper about a range of topics, including the shift from points-based loyalty to instant rewards and using guest data to personalize loyalty.
Click below to listen to a full recording of the webinar and read on to see a list of the top takeaways from our discussion.
The changing face of loyalty
Loyalty programs allow hotels to reward frequent guests with points that they can redeem to receive perks, benefits, and upgrades on their next trip.
But for those who take less than three leisure trips a year, is a points-based scheme really worth it? Arguably not. COLLOQUY’s biannual report found that U.S. households hold 29 loyalty programs, but are active with just 12 of them.
But when loyalty programs offer the right incentives, they’ve been shown to grow profit and revenues. Not only do they incentivize guests to book direct (helping a hotel avoid paying OTA commission fees), they offer a way to gain more data about guest preferences, enabling the creation of tailored offers that incentive repeat business.
When a hotel has a strong base of loyal guests, they require less third-party bookings, which means the average booking value increases. It’s also much cheaper to retain an existing customer rather than chase new ones.
So it’s clear that loyalty programs have merit. But competition is fierce. OTAs, last-minute booking sites, and sharing economy platforms such as Airbnb all have their own loyalty programs. Numerous hotel brands such as Marriott and Hilton also have sophisticated, data-driven schemes that they’ve spent millions of dollars promoting via high-profile marketing campaigns.
In this hyper-competitive space, it takes time, effort and planning to stand out.
Considerations when creating a loyalty program
Loyalty programs will play a major part in the future of driving direct bookings, but the nature of these programs has begun to change significantly. Whether you already have a loyalty scheme or you’re looking to create one, the following points are worth bearing in mind:
Loyalty is shifting from points-based systems to instant rewards
Today’s travelers are chasing immediate gratification and points-based loyalty programs have lost their appeal. As a result, scrapping points and level-based memberships in favor of instant rewards seems to be the best way to go.
As an example, your hotel could offer three free instant rewards to everyone who books direct with you. Imagine the following scenario: a guest is flying from San Francisco to New York and you’ve already emailed them a free Starbucks coffee, a free $10 Uber credit, and free in-flight Wi-Fi.
They could use their free Uber credit to reach the airport in San Francisco, grab their free Starbucks at the terminal, and then use the free Wi-Fi credit during the flight. So before even reaching New York, they would have already saved money on three essential items that they would have otherwise spent their own money on.
Building loyalty: the power of personalization
Above anything else, your staff are the key to driving loyalty. Guests love it when a hotel remembers their name, their likes and dislikes. And this exact same approach of recognition can be applied to your hotel website.
Today, companies such as Stay Wanderful enable hotels to track important information relating to a guest’s preferences and interactions on their own website. This data can be used to personalize content and loyalty messages to drive direct bookings.
In a fiercely competitive industry, providing tailored rewards helps you stand out and demonstrate a true understanding of what your guests really value.
Developing guest relationships
Only relationships create true loyalty. If a guest re-books with your hotel purely because of a great incentive, you can’t really hope to depend on their repeat business. Long-term loyalty is about preference without reward. It’s the willingness of a guest to freely recommend your hotel to others.
Building a relationship takes time, of course. But it comes down to something very simple: offering great service and taking the time to get to know your guests—both on and off property.
There’s also huge value in providing timely and relevant communication. This means making a distinction between what you want to say, and what your guests are interested in. As an example, instead of mass emailing your entire database with a blanket promotion, segment your audience and target them with relevant offers that appeal to their specific preferences.
How to segment your database
Your PMS will provide you with all the relevant data needed to build a portfolio of different guest profiles. But how best to segment your audience? Asking the following three questions is a great place to start:
Are you messaging a repeat guest? If so, the most important thing you can say is “welcome back.” Being recognized as a returning customer instantly builds rapport.
What channel did they book on? Rewarding those that book direct and incentivizing those that don’t is hugely important to drive direct bookings.
Are they a family? The images in your marketing can be a big conversion driver. Featuring images of families and your family-friendly facilities can significantly boost engagement levels.
Relationship building also relies on maintaining regular, timely communication. Consider implementing the following four-step email blueprint with every guest:
1. A pre-arrival campaign: Let your guests know what you have on property and mention any events in the local area.
2. A day of welcome message: This should be sent from the GM and reference themselves as a point of contact if service issues arise. This reduces the risk that a guest airs any grievances they might have on social media or TripAdvisor.
3. A post-stay email: 30 days after checking out, email your guests to stay relevant and top of mind.
4. A “we miss you” campaign: To target guests in an annual booking cycle, send them an email 300 days after their previous stay with a relevant message and booking incentive.
Integrating loyalty into the booking process
In the golden era of Las Vegas, casino hosts and dealers knew their customers inside out. They gave them complimentary drinks, meals, entertainment and lodgings, and made them feel like a VIP.
Today, customers still want to feel important and special. But technology has changed the speed and way they expect this kind of treatment. Compounding this issue, there’s now an intense level of competition for customer loyalty—not just between independent hotels, but from OTAs and major chains.
As a result, integrating loyalty into the booking process has become critical to attract a modern-day consumer expecting rewards for their repeat business.
The risk of ignoring loyalty in the booking process
A direct booking can be lost in a heartbeat if you don’t have a loyalty program. Consider a guest that can get the same room and rate by booking directly through your hotel or an OTA, but the OTA rewards them for making that booking. Who are they going to book with?
The immediate impact in this scenario is your hotel pays a hefty OTA commission fee. But long-term, that same customer will become habituated into booking with the OTA because they don’t expect you to offer them an incentive.
How independent hotels can compete
Independent hotels must now replicate similar loyalty strategies employed by the major chains. As mentioned, certain chains offer instant discounts to those who book direct and join the hotel’s loyalty program. But this isn’t the only option.
You could also offer value add-ons, discounts, and packages, or even provide elite status and VIP on-property treatment. For instance, a water park resort in Arizona gave direct bookers access to their water park one hour before the general public and anyone who booked through a third party.
Every hotel can implement similar kind of strategies to these, but first your booking engine has to be capable of deploying special offers that aren’t available elsewhere.
Loyalty relies on more than just a loyalty program
The hotel booking engine needs to make it clear that there’s value in booking direct, something that can be done in multiple ways. For instance, Travel Tripper’s Rate Match product displays a hotel’s own rates alongside the real-time rates of OTAs, giving guests’ confidence to book direct with the hotel. And if an OTA rate is found to be lower, Rate Match automatically matches the rate and makes it instantly bookable, saving the customer from shopping around.
The booking engine can also highlight promotions such as “save 10%,” and display value ads that promote free rewards. Both of these tactics add additional value to the guaranteed low rate the customer is already receiving.
If you’re creating offer-led email campaigns, you can also drive users to a specific landing page that makes it easy for them to book the promotion.
Collectively, each of these steps can generate loyalty and drive direct bookings.
The nature of customer loyalty is evolving, and winning over guests requires a fresh approach. The following points are each worth consideration:
Instant gratification is best: Scrap points-based memberships for instant rewards. Most travelers prefer immediate perks to long-term benefits.
Use guest data to personalize loyalty recognition: Platforms such as Stay Wanderful can spot customer choice trends, allowing you to provide relevant offers that drive direct bookings.
Integrate your loyalty program into the booking engine: An essential requirement to compete in an ever-evolving environment.
Provide value, exclusive packages and discounts: Elite status and on-property rewards are also a great way to reward direct bookers.
Relationships create true loyalty: Nurture meaningful relationships by offering great service and timely, relevant communication.
Combined, the strategies above can dramatically increase the effectiveness of your loyalty program, appealing to the tastes of modern travelers and helping you to truly stand out in an increasingly saturated marketplace.