Loyalty programs — once the province of the freshly deregulated airline industry alone — are as much a staple of today’s hotel industry as the toilet-paper point and paper-wrapped soap. For almost 40 years, lodging companies have rewarded guests with currency for each stay under their roofs, which guests have subsequently redeemed for more stays under their roofs. The idea has permeated the retail spectrum and the modern consumer’s wallet bulges with loyalty cards. So extensively have loyalty programs taken root in the industry that one might call them an unqualified success.
But success is one thing and unqualified is another — and the professional consensus on hotel loyalty programs is that they have yet to perfect their craft.
Just because a guest continues to patronize a brand or master brand doesn’t mean they believe in the essence of the brand or are singing its praises to their friends, point out those with an eye on this landscape. Frequency, after all, is not the same as loyalty.
“A loyalty program is highly transactional,” says Alan Young, president of Puzzle Partner Ltd., a Barrie, Ont.-based B2B PR-and-marketing firm. “I stay so many nights and they give me nights back to compensate me. But that doesn’t mean I’m loyal to [the brand]; it just means they give me things. There’s a huge void between that and what drives true loyalty to a brand.”
Today’s hotel loyalty programs are lost in that murk — heavy with potential, but not yet in a position to realize it. That, says Young, is because instead of focusing on how to build relationships with their guests, hoteliers are turning their gaze on their P&L sheets and how these loyalty builders might augment them. “Is this a program for connecting with guests or is it just a revenue stream?” he asks. Too many hotels pay lip service to the former, he says, but operate inside the latter.
The discrepancy comes down to the location in which the loyalty building takes place. It has to be onsite, says Young, not while the guest is on their laptop negotiating an electronic-points transfer in a booking transaction. “No matter how good the loyalty program is and how much stuff they offer me, if that on-property experience is lacklustre, the loyalty program is moot.”
Tanya Pratt, vice-president of Strategy and Product Management for Opera Cloud — Oracle’s hospitality product — agrees. That experience is largely the lookout of front-line staff, whose best intentions might still fall short if they don’t have the support to see them through. “I’ve stayed 15 times at the Fairmont Royal York, but now I’m staying at the Fairmont Singapore and the front-desk clerk is asking me whether this is my first stay with them,” Pratt laments.
What hotels do have is data, thanks to data-gathering technology, many with embedded machine learning to increasingly understand guests’ travel habits and preferences. That means computer systems stuffed with information on whether this guest wants a room on a high floor or that guest wants a foam pillow; whether they use the spa or the restaurant; and if they prefer a shower or a tub in their rooms.
But as critical as big-data competency is to the future of hotel loyalty programs, says Dorothy Dowling, senior vice-president and Chief Marketing Officer for Best Western Hotels & Resorts (BWHR), more critical is how a hotel exploits it. “In the next year, every loyalty program must become better at customizing promotions that will add real value to each unique group of customers,” she says. BWHR’s program, Best Western Rewards, treats every member to a policy of “soft benefits” in the form of free water, snacks and extra points whenever they stay. But the company is constantly using analytics and business intelligence to refine these gestures, “to create personalized and distinguished offers that are more valuable to each individual.”
PARTNERSHIPS VERSUS COMMODITIZATION
Enter partnerships and their potential to enrich these offerings. In December, Accor launched its revised loyalty program, renamed ALL or Accor Live Limitless. Along with status-based benefits, such as free nights, late check-out and guaranteed room availability, now ALL members can convert their points into experiences — with or without staying at an Accor hotel. “This is the new frontier,” says Jeff Doane, Accor’s senior vice-president of Sales and Marketing. For example, the company has recently aligned with IMG, a company that delivers custom food-and-beverage experiences, such as tastings and foodie festivals.
The alternative to such innovation, he says, is commod- itization — a slippery inevitability for some loyalty programs. “It’s a level playing field right now. But, if you’re trying to gain a greater sense of loyalty from your customers, you have to stop and ask yourselves how you’re going to do that. Otherwise, you just keep going down the same road.”
Another detour is by way of service apps, whose evolving capabilities let you select a room, check in, advise of late arrivals and even use your phone as a room key. While mobile sites that let guests make bookings or check account information have been around for a while, their sophisti- cation’s on the climb. “The convenience and service factors [are] becoming bigger keys of technology investments with these programs,” says Jeri Salazar, vice-president Loyalty at Preferred Hotels & Resorts. “If you don’t give them a good experience, if you don’t make it easy to transact with you, they’re not going to come back.”
A SILOED SYSTEM
Pratt is skeptical about hotels getting with the loyalty program as quickly as they need to. She pins the blame on a widespread failure to communicate. Typically, hotels maintain both loyalty and operational systems, the latter flying into action when a guest checks in and a desk clerk creates their bill. Not engaged in this transaction? The details from the loyalty system — including the myriad preferences the guest has amassed over their history of stays with the company — which the front-desk person can only access by flipping to them from the operational system. “As the volume of requests increases in a large hotel that’s having to flip back and forth, things get missed,” she says — the kiss of death, she declares, for a loyalty program.
Pratt believes some brands are closer to tackling the system-integration challenge than others. But the behemoths with thousands of hotels and legacy systems, she says, are probably only halfway there. And while she’s encouraged to see hotels tightening the integration of their various applications, she says the customer will always be a couple of years ahead of whatever technology transformation the hotel industry might pull off, demanding new things and wanting better access to them through their mobiles and self-service. “I don’t think we’ll ever arrive.”
Written by Laura Pratt