ITB 2019 Special Reporting
Points or Perks? 3 Ways Hotel Loyalty Programs Are Changing
By Jason Q. Freed
Friday, 7th September 2018

The traditional hotel loyalty program is losing its luster — and perhaps its effectiveness as well, so while frequent travelers carry around dozens of loyalty program cards, they’re rarely truly loyal to any of them and less-frequent leisure travelers see little to no benefit from joining a program, studies show.

So increasing access to loyalty perks for less frequent travelers is critical, as well as providing immediate gratification and tailored communication, according to a panel of hotel loyalty experts at the recent Hotel Data Conference.

Here are three ways the experts see hotel loyalty changing in the near future:

1. More Joint Programs

When will a major airline and a major hotel brand hook up to combine their loyalty programs and give travelers combined perks and discounts?

Sloan Dean, COO of Remington Hotels, doesn’t see two companies like Marriott and United combining their programs any time soon.

He does, however, see cryptocurrency making shared programs like that a lot easier to set up. Once companies are able to calculate and set a conversion rate where points can be converted to currency, those funds can be cashed in or spent with anyone who accepts that currency.

“Expedia will take Bitcoin, I’m surprised none of the brands have jumped on it,” Dean said. “I think in the next five years we’ll start to see some of that.”

Nicole Lundin, head of loyalty and social engagement at Viceroy Hotel Group, said for a small company like Viceroy, being part of a bigger loyalty membership collection has helped them compete in the loyalty space. The company has partnered with the Global Hotel Alliance to allow guests to collect and redeem rewards at more than 550 partner properties.

“There are 35 brands in the alliance, which provides more opportunity to maintain your status within the program,” she said.

2. Data: The Lock and the Key

So, when a guest books a branded hotel via a third-party booking engine on an OTA website, which of the three parties involved — tech company, brand, OTA — gets to access and store the data? That’s the crux of the “who owns the guest” question that’s been hovering over the industry for years.

“You have the stay brand, but the OTA often thinks they own the guest, often not even communicating full customer information to the hotel,” said Dean of Remington. “And the same goes for third-party operators. But if I’m meeting with Marriott, they often talk about it as their guest. You’ve got multiple entities claiming they own the data.

“People are fearful of losing control of the guest.”

Jamie Russo, VP of loyalty programs and customer engagement for Choice Hotels, said accessing and storing guest data comes with great responsibility.

“The second we start using it for bad, it’s not a movie that ends well,” he said.

Hilton and other companies have had issues with their guest loyalty information being hacked, particularly when they opened up the concept of redeeming loyalty points for gift cards.

“It takes a lot of guts to redeem points under someone else’s name,” Russo said. “It’s a lot easier if it’s a digital card.”

3. Redemption Rules

But loyalty program earnings and redemptions are probably even more complex for a hotel operator than they are for a guest.

Hotels that allow guests to redeem points for free room stays are missing out on that cash revenue. Yes, they are compensated by the brand, but compensation is based on the night’s occupancy and rate averages. And there are thresholds you must meet to recoup the full cost of a hotel room.

“If you don’t get to that occupancy threshold and you’re filled with loyalty members you could lose money,” Dean said. “Because you’re chasing that threshold, it definitely affects your ability to grow ADR. If you’re at 95% occupancy, should you sell those two rooms, and how will it affect your loyalty compensation?

“That in itself leads to a vicious cycle where we struggle to grow ADR.”

Jason Q. Freed, Managing Editor at Duetto
Jason joined Duetto as Managing Editor in June 2015 after reporting, writing and editing hotel industry news for a decade at both print and online publications. He’s passionate about content marketing and hotel technology, which leads to unique perspectives on hotel distribution and revenue management best practices.


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