Canadians are a loyal bunch. In fact, according to Aimia’s 2015 Loyalty Lens report, 89 per cent of us belong to some form of loyalty program, compared to 85 per cent globally. We use our loyalty rewards for treats (28 per cent), essentials (22 per cent) or a mix of both (45 per cent).
Today’s increasingly savvy consumer understands the best loyalty programs are all about give-and-take, but while 31 per cent of Canadians consider their personal data “highly valuable” to the companies they choose to share it with, only eight per cent feel they’re actually receiving better offers as a result of sharing their details.
That’s a problem Best Western Hotels & Resorts is looking to rectify. “We look at our Best Western Rewards Program as a platform that allows us to establish relationships with customers,” explains Tammy Lucas, vice-president, Marketing at Best Western Hotels & Resorts. “It’s the backbone of our relationship with them,” she says of the award-winning 25-year-old program. “It really is an extension of our customer service and the program allows us to communicate effectively with our customers.”
The benefits of administering a hotel loyalty program can include a closer relationship with customers that, through targeted offers and rewards, encourages them to book directly, visit your hotel more often, stay longer and spend more money while they are there.
“It’s a delicate balance using data to better understand your customers, because lots of people are still very much focused on their privacy,” acknowledges Lucas. “My personal data and my privacy is important to me; however, I’m also expecting brands to understand me and serve me up relevant, targeted offers.”
As the saying goes, with great power comes great responsibility. With these benefits comes increased expectations. “Our guests are smarter, sharper and their expectations have been elevated so they have certain expectations of how this relationship should work,” says Lucas. “The way our customers are consuming information is much more empowered than in the past, so we have to make sure we’re on our toes.”
POWER IN NUMBERS
The Atlantica Hotel in Halifax, N.S. was previously a nationally branded hotel whose owners decided to go the independent route about seven years ago. Naturally, the company wanted to retain its existing customers, who had been accustomed to collecting points during their stays through the national program. “A loyalty program was very important to them and so it’s very important to us,” says Colleen Forward, director of Sales and Marketing for the Atlantica. The hotel initially developed its own loyalty program, but found the rewards it could offer as an independent hotel were limited.
Business travellers, for instance, who are consistently among the most avid hotel loyalty program participants, often don’t want to return to the destinations they visit on business when they are travelling for leisure.
In March 2016, The Atlantica launched a new program — Atlantica Advantage Rewards — in partnership with Voilà Hotel Rewards (Voilà) through Hospitality Marketing Concepts (HMC). Established in 1988, B.C.-based HMC’s offerings include white-labelled points-based loyalty programs, with Voilà serving as the individual hotel program’s supporting brand (similar to the Star Alliance frequent-flyer program). Voilà, launched in 2008, is the world’s number-1 loyalty program for independent hotels, uniting a network of more than 250 properties.
“We’re here to do two things: one, to provide a hotel loyalty program that rivals the national chains in terms of its benefits and its value proposition and, two, unite those hotels to appeal to those who prefer independent boutique hotels or travel to areas that aren’t serviced by the big c
“What we’ve enjoyed about the program [since launching in March 2016 is] that it offers the ability for guests to collect points they can redeem at a vast network of hotels internationally,” says Forward. “Or they can choose to get gift cards for a number of different partners. The administration of the program is handled through [HMC] and it is professional, well-designed communication.”
Forward says all hotels — brands, independents, et cetera — are looking for ways to encourage guests to book directly, which is the most cost-effective channel for hotels. “Having a loyalty program is a great way to incentivize people to do that because people only collect points when they are booking directly. They don’t collect points if they are booking through third-party channels,” says Forward.
Gorla explains that while large hotel chains have the leverage to negotiate reasonable commissions for online travel agents, independent boutique hotels don’t have that kind of power and typically pay about 25-per-cent commission on these bookings. Gorla estimates that, even with the costs associated with administering a loyalty program, hotels save 19 to 20 per cent every time a customer books directly in order to collect loyalty points.
GIVE GUESTS WHAT THEY REALLY WANT
With 55 million members in 105 countries across 13 brands, the Hilton HHonors program was ranked highest among hotel loyalty and rewards programs for overall customer satisfaction in J.D. Power’s 2016 Hotel Loyalty/Rewards Program Satisfaction Report. And the program continues to grow — last quarter, Hilton HHonors enrollment was up nearly 80 per cent year-over-year, adding 2.4 million new members in Q2 alone.
“Our job is to make sure our members are always feeling honoured,” says Aaron Glick, Hilton HHonours VP. “Hilton HHonors members are our greatest asset and we’re constantly trying to stay a step ahead of what our guests want. We’re continuously innovating, but the one thing that never changes is that our guests want exceptional experiences that are relevant and personal to them. What those expectations look like and how we execute them will vary from person-to-person, but our fundamental goal is to consistently deliver industry-leading personalized experiences, with greater value and more benefits.” A balanced approach to serving guests’ wants and needs is a hallmark of successful programs. While the hospitality industry is all about great experiences and guests appreciate feeling pampered, they also want to be assured they are getting solid value through their participation. Third-party hotel loyalty program rankings also give significant weight to the “earn-and-burn” ratio of programs — the cost of earning points versus their redemption value.
Lucas believes many hotel loyalty program administrators have devalued their offerings in recent years by increasing the cost of collecting points and/or the amount of points required to redeem for rewards. She declines to name names and, according to J.D. Power’s latest report, slightly more than three-quarters (77 per cent) of members say their program is equally as valuable as it was in 2015, with just 11 per cent indicating they believe their program is less valuable than the year before. “We remain focused on continuing to strengthen our position,” says Lucas. “For example, the actual threshold, or points, it takes to redeem for free nights — many of our competitors have increased those. We’ve tried to go the other way and make sure our free-night points levels are very competitive, if not one of the lowest in the industry, globally.”
THE FUTURE IS MOBILE
Increasingly, connections of all kinds are happening through mobile phones and this shift is creating a plethora of new opportunities for hotel loyalty programs.
“People are becoming more reliant on mobile phones — to give us directions, to help us pick a great restaurant and to manage our daily lives,” says Glick. “This is also true in hospitality and loyalty: travellers are increasingly mobile and it’s vital that hotel loyalty programs take this into consideration. So we gave Hilton HHonors members the ability to turn their smartphones into the “remote control” of their stay experience with the Hilton HHonors app. A guest wants a room with a view? They can use the app to view the hotel floor plan and pick their room location before they arrive. Don’t like lines? Use the Digital Key to bypass check-in. Hungry? Uber Local Scene provides a list of restaurants and nightlife locations based on the drop-off/pick-up popularity with Uber riders.” Features such as these have made the Hilton Hhonors app the top-rated hospitality app on the Apple App Store. It is downloaded every six seconds — or 600 times every hour. How the hotel loyalty programs of tomorrow will leverage mobile technology to better understand guests and consistently deliver what really matters to them is anyone’s guess, but at the end of the day, the principles of warm hospitality combined with solid value are timeless.
“The human aspect of delivering on strong customer experience and delivering on the expectations of our guests relative to their experience, is a make-or-break opportunity,” concludes Lucas. “You can have a great program, but if you don’t have the customer-service angle or if you’re not following through on your customers’ expectations, they are not going to stay with you or your rewards program. There’s no reward strong enough to make that happen. It really comes back to the foundation of customer service.”
Volume 28, Number 8
Written by Sarah Maclean