While hotels cannot compete with the limitless selection of online travel agencies (OTAs), travel experts at the ITB Convention in Berlin say they have a chance to keep customers off of search aggregators by using strategic loyalty programs. 

“OTAs are spending billions of dollars to steal your guests,” Shayne Paddocks, CIO of hospitality consultant company, TravelClick. “But simply recognizing when people are returning guests can tip the odds in your favor."

Paddocks says that guest recognition is where a lot of loyalty programs and guest data collection fails. Instead of knowing that the same person has returned five times, many hotels systems will create five different profiles for the same person.

“It doesn’t have to be a fancy points system, but it should acknowledge and value repeat customers.” Paddocks added.

But contrary to older loyalty systems, which mainly identify and target customers who have already spent a lot of money, hotels should invest in new clients with the potential to become repeat customers.

“You want to see who will spend the next million with you, rather than who has spent the last million with you,” Paddocks said. “The 26 year old business traveler will be a lifetime customer if you give him a few upgrades at the beginning."

By creating a good relationship with clients early on, even at the lower levels of their careers, there is a chance that hotels can retain that client when they are older and can afford to spend more.

Loyalty also means that the client is more likely to opt for a direct booking with a trusted hotel, rather than going through an aggregator.

“Direct bookings are especially important as costs for working with OTAs rise far more quickly than hotel profits,” Paddocks said.

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