Guest expectations are constantly evolving in the hospitality industry, and the competition is fierce. In the past, hotel loyalty programs have been a cornerstone of customer retention strategies. In 2024, a critical question arises: Are customers still loyal to hotel loyalty programs? As the industry shifts, hotels must adapt to new customer values and options for alternative accommodations.
The Changing Landscape of Hotel Loyalty Programs
In the last few years, many hospitality companies have used enhancements and innovations to attract guests who have joined loyalty programs. Traditionally, loyalty programs have rewarded frequent travelers with points they could redeem for free hotel stays, upgrades, and other perks. As consumer behavior changes and the market becomes more competitive, hotels may need to offer more than points to stay relevant.
The Value of a Unique Experience
While loyalty programs are still an important factor for frequent travelers, especially especially those traveling for business, it’s not abnormal to see some decline in overall customer loyalty. Today, there are so many other alternative accommodation options, including Airbnb and VRBO, which offer unique experiences some hotels aren’t able to match. Many travelers are also looking for unique experiences over loyalty points. Loyalty is about more than gaining rewards. As guests seek personalized travel experiences, they may not choose to take advantage of loyalty programs.
The Availability of Alternative Accommodations
Even among traditional hotels, guests have more options to choose from. For instance, guests have different expectations of an independent hotel than one with brand recognition. A small, independent hotel might give the impression of a more customized experience and flexible pricing. An extended stay hotel that feels more like a home might offer a loyalty program that offers free breakfast or discounts on meals.
The Return on Investment for Hotels
Since so many hotel guests now value a personalized experience, some hotels find that adapting a loyalty program is more costly and time-consuming. Some studies suggest that the high cost of trying to appeal to guests does not offer the desired return on investment. As a result, your team should carefully consider your strategy for building loyalty in the wake of so many changes in the hospitality industry.
What Do Guests Value in a Hotel Loyalty Program?
While some customers are still loyal to those programs, loyalty is not a given. Customers are more likely to try out different hotels rather than to stay loyal to a single brand. The one-size-fits-all approach to loyalty programs is becoming less effective as more travelers seek out personalized experiences.
Tiered Rewards Programs
Many hotel brands now offer tiered programs that cater to different types of guests, including tourists and business professionals. For example, Best Western’s reward program allows access to immediate perks, such as early check-in and late checkout. Members who spend more nights at the hotel also earn points for each dollar spent, and points can be used to book nights in the future. Hilton Honors offers tiers as well. Regular members earn 10 points per dollar spent, but elite members earn one free weekend night each year.
Technology
Your hotel loyalty program may also benefit from integrating technology. Digital experiences, mobile apps, and AI-driven recommendations can create a more personal stay for your guests. An online platform will also allow your guests to access their rewards, check their member status, and manage preferences.
Immediate Perks
Some hotel guests might be more likely to take advantage of a loyalty program if they received immediate benefits instead of waiting to accumulate points over many stays. Your hotel might offer a free breakfast, spa credit, or late check-out opportunity for each stay, including the first one.
Transparency
Finally, guests value transparency. Make your loyalty program’s terms straightforward. Customers are less likely to participate in a program if they feel that the rules are complex or there are hidden fees. Clear terms help you build trust with your guests.
How Have Alternative Accommodations Affected Hotel Loyalty Programs?
The rise of alternative accommodations, particularly Airbnb, has had a significant impact on traditional hotel loyalty programs. These platforms have attracted a growing number of travelers who prioritize local culture, flexibility, and unique experiences.
For many travelers, including those looking for long-term stays or space for a large family, the appeal of having a large home or apartment outweighs the benefits offered by most hotel loyalty programs. Additionally, Airbnb uses local hosts to create a sense of connection and authenticity with guests.
Of course, this does not mean that alternative accommodations are rendering hotel loyalty programs obsolete. In fact, many travelers still prefer the consistency, security, and amenities provided by hotels. They also enjoy not having to pay extra fees or cleaning the space before they leave. Hotels can innovate and adapt their loyalty programs to capture the interest of travelers who might be swayed by other options.
Are Hotel Loyalty Programs Still Relevant to Consumers?
Customer expectations have changed dramatically over the years, and hotel loyalty programs must keep pace with shifting needs. Considering today’s market, travelers expect more than accumulating points. They seek meaningful experiences and recognition from brands they are loyal to.
One way to keep your hotel loyalty program relevant is to use data analytics to offer personalized recommendations. Incorporate a program that caters to specific needs and preferences, enhancing the overall experience for each guest. Ensure that your loyalty program stands out when potential guests are faced with a vast number of accommodations to choose from.
Loyalty programs are not the only way to build a relationship with hotel guests. Your brand might also consider the importance of sustainability and corporate responsibility. Hotels that incorporate eco-friendly practices and give back to the community attract and retain loyal customers. Show off your brand’s values to provide guests with just one more reason to remain steadfast.
Hospitality businesses must also consider which customers they want to retain. The way you appeal to a family that travels once per summer is going to be different from the way you appeal to people who travel for business once per month. Ensure that you don’t use the same strategy to appeal to every kind of guest.
Are Hotel Loyalty Programs Still Effective in Today's Market?
It’s fair to question the effectiveness of hotel loyalty programs today. While these programs still hold value, the key to their continued success lies in how well you can adapt them to meet consumer needs–and understanding when this adaptation is necessary.
Programs that evolve to meet the demands of modern travelers by offering personalization, flexibility, and other rewards, will continue to play a vital role in customer retention. However, you may find that your program is less effective if you fall back on generic rewards and don’t consider consumer preferences.
Are you ready to learn more about the hospitality industry? Contact us to learn more about our hospitality brokerage firm and see how we can help you establish a leading hotel in this industry.