Are online customers less loyal?
By Jonathan Barsky, Lenny Nash
Saturday, 19th August 2006
Online booking is increasing - each year since 2002 more guests are making their reservations through travel portals such as (e.g., Expedia, Travelocity, Hotels.com, etc.) or directly on hotel websites.

But how is the rise of online booking impacting guest loyalty? Is the ease of comparing multiple brands and the convenience of booking online creating more demanding guests? Or has the Internet created more fickle guests who are becoming more impulsive in their decisions?

The good news is that hotel customer loyalty is on the rise.

In fact, since 2002 hotel customer loyalty has steadily increased each year. That's nearly six years in a row that more guests are indicating their allegiance to a hotel or brand.

And guest loyalty is important. Satisfying and retaining customers help hospitality companies recoup their customer acquisition costs, grow their revenues, reduce operating costs, generate referrals, and enjoy price premiums.

So despite the rise in online booking, hotel loyalty is on the upswing -- but not for all hotels.

Among the largest hotel chains, there is a significant difference in loyalty between guests who booked offline and those who booked online.

"Online bookers" tend to be more loyal among higher priced chains ($102 average rate) and less loyal among lower priced chains ($66 average rate). For example, Hilton guests that book online are 4% more loyal than Hilton guests who book offline. But Super 8 guests are 4% less loyal when booking online.

Guests of higher priced hotel chains are more loyal regardless of how they book their reservations. But higher priced brands get an additional boost in loyalty from their online guests, with the opposite happening for lower priced brands. What explains this difference?

Perhaps people going to higher priced hotels (who tend to be more loyal) go straight for their favored brand online and, the ease of booking online simply adds to their satisfaction. Guests of lower priced brands (who are typically less loyal) that book online may be bargain hunters who are price sensitive and thus less loyal.

An alternative explanation is that higher priced brands have more appealing loyalty programs or even online booking bonuses linked to their loyalty programs. So guests may go straight for their preferred brand because they really want the points.

Among all online booking options, guests who book through the hotel or brand website are the most loyal (to that hotel or brand). Among travel portals, Yahoo! Travel and Hotwire deliver the most loyal guests - but much less loyal than guests who book directly through the hotel site.

Among off line methods of reservation, guests who book with central reservations display the most hotel loyalty followed by those who book directly with the hotel. Travel agent bookings represent guests who make up the least loyal customer segment.

The Market Metrix Hospitality Index is a quarterly report of customer satisfaction with hotel, airline and car rental companies based on 35,000 in-depth consumer interviews. It ranks top hospitality brands by industry and, for hotels, by categories such as luxury, midprice and economy. Reports are available by subscription.

Jonathan Barsky and Lenny Nash work for Market Metrix LLC ( www.MarketMetrix.com ), a firm that provides customer and employee programs for the hospitality industry. For more information, call 415.721.1300
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