11 Observations About Hotel Loyalty

What is hotel loyalty? Is it a rewards program? A value proposition? A brand promise? All of the above? None of the above?

At HSMAI’s first-ever Chief Loyalty Officer Executive Roundtable, held at the Crowne Plaza Times Square Manhattan on Jan. 21, loyalty executives from leading hospitality brands explored these and other questions. It was a broad and deep conversation, because loyalty encompasses everything a hotel company does — not just sales, marketing, and revenue optimization, but also technology, distribution, and more.

To start, Roundtable participants shared recent trends that have surprised, emerging issues on their radar, and insights into the nature of loyalty programs. Here are observations from that conversation:

1. Loyalty = rewards + more. “I separate loyalty and rewards program in our business, because I think you can have loyalty without having a rewards program, but the rewards program is the price of entry. We separate that out from a function versus an actual overall feeling of loyalty.”

2. Data, part 1: We still haven’t mastered it. “I’m not sure people have figured out a way to really utilize all of this data that we have to make it actionable. We’ve been talking about it for a long time, but it’s still very muddy.”

3. Gaming is its own animal. “Customers in Las Vegas are spending less money in the casinos. They’re spending more money on F&B, entertainment, and retail. Also, we don’t have the same type of frequency that probably most of you all have in your space. Our most loyal customers — our gaming customers — visit on average about 1.8 times per year, so we’re not seeing a road-warrior type of consumer visiting our property. That’s something we have to take into consideration when developing loyalty strategies.”

4. It’s hard to figure out demand. “A lot of our conversation this past year has really been not so much about loyalty — that’s always part of the conversation — but the unpredictability in the cycles right now. What’s driving demand, why is it going away, and why is it back? It’s been very difficult to predict, and I think that will probably continue.”

5. Data, part 2: Use it or lose it. “We’re getting into a bit of a tipping point. If we’re not going to use the data, there’s potentially more risk in having it than not, and so how do we thoughtfully identify what we need, collect it, and use it or get rid of it? This is maybe a different perspective on big data than might have existed five years ago, which was just to collect everything, but now I think the risk of collection-and-hold is potentially outweighing the value.”

6. Know your customers. “We focus on customer value, because we know customer behavior. That enables our operation to really deliver the intimate moments for our customer — what they like instead of being more focused on the traditional program, where if you stay five times you get some reward.”

7. Data, part 3: Getting what you need. “One of the common trends is data, which is about data quality, but it’s also about having the right access to the data to do what you need to do, because there’s GDPR and there’s this incredible sense of privacy and protection around the data. How do we get access to what we need to make smart business decisions?”

8. Owners want to be involved. “Owners are becoming very focused on the importance of loyalty and how to make sure that’s driving their top line and operating margins. They’re often not terribly well versed in the complexities of loyalty; it’s its own business, so there’s always that surprise. Keeping them educated is always a challenge.

9. D is for disintermediation. “We’ve been spending a lot of time thinking about the new and upcoming disintermediation in the industry. Thinking about companies like Google, Facebook, Amazon, and others that are slowly — in some cases faster than others — finding their way into the industry, and how to think about them from both the friendly but also potential threat perspective. We’re still learning how to find our way through that puzzle.”

10. Data, part 4: Our apps need to do better. “Technology is very easy for our customers to use in lots of other areas of their lives, so they’re used to other types of companies using data differently to know who they are. You use airline apps or retail apps, and there’s that understanding of the guest. Target knows who I am, they know what I bought. It’s a little bit frustrating when you use a hotel app and there’s nothing in there that says you know who I am.”

11. Data, part 5: The paradox of consumer protections. “With GDPR and CCPA [California Consumer Privacy Act], they’re going to cause us to lose that insight on our customers that customers expect us to have. On the one hand, customers are hitting the button saying, ‘I don’t want to share my information.’ On the other hand, we’re still marketing to them. The laws that are designed to protect them are actually going to distance themselves. It’s not going to stop the marketing, it’s not going to stop the digital experience, it’s just going to stop the personalization. I’m really fascinated by what are really well-intended consumer protection laws — how could you not agree with them in principle — where the manifestation of them and the execution of them will fundamentally change what it is we deliver and the economics that make these things possible for our owners, our franchisees, and ultimately the customers.”

Categories: Marketing
Insight Type: Articles