New Loyalty Challenges for Hotels

By Kaitlin Dunn, Writer, Hospitality Sales & Marketing Association International (HSMAI)

HSMAI hosted a virtual Executive Roundtable for hospitality chief loyalty officers on July 16 in partnership with Phocuswright. (Find a recap of the previous CLO Executive Roundtable, held on April 3, here.) Participants chose the topics they wanted to focus on. Here are key takeaways from their discussion:


Roundtable participants described two key groups of travelers who make up the bulk of hotel guests right now — essential employees such as construction workers and truck drivers who are constantly on the road for work, and leisure travelers who feel comfortable going on vacation. It’s important to market specifically toward each group. “The bar you need to convince a leisure travel to get out is different than for folks who have been on the road the entire time,” one participant said. “Thinking about communicating to different customers is important. What you communicate to whom in which channels is an important distinction.”

Some leisure customers are ready to travel now, while others aren’t comfortable yet, and there’s no way to convince someone who doesn’t think it’s safe to venture out. That makes it difficult to ensure you are not offending anyone with your messaging. “It’s been interesting to think about what’s appropriate,” a participant said. “How can you be smart about creating a travel inspiration message for someone who won’t travel for a while versus someone who is traveling constantly? There’s so much we get wrong, communicating the wrong message to the wrong person.”

One participant noted that despite the need for more targeted messaging, not every hotel or brand is able to do that right now due to workforce reductions. “These are things we want to do right now but don’t have the resources to make happen,” the participant said. “One of the challenges we’ve faced is having to move to more generic messaging, because cost and labor don’t allow for the uniqueness the situation deserves.”

“We’ve had to be really delicate about messaging,” another participant said. “We’re trying to take a more pragmatic approach that would scale across all our customers as best we can. The last thing we want to do is make anyone angry.”


Much like other aspects of the hospitality industry, loyalty programs are becoming more flexible to accommodate guests’ changing needs during the pandemic. Roundtable participants said that being as accommodating as possible helps build goodwill with loyalty members. “Right now, not a lot has changed structurally, but we’ve made everything more flexible,” one participant said. “The question is, what will change eventually, which is dependent on how long this recovery takes.”

“We’ve dropped the rewards threshold,” another participant said. “The loyalty program is doing what it is supposed to do, which also helped during the Great Recession. The people staying with us, even when our occupancy is 20 percent, are our loyalty members. If they’re going to stay in a hotel, they’re going to pick you because they trust you. There is going to be an end to COVID and we’re not going to be sitting in the place we are today, so we want to always be building on that foundation.”

Forcing customers to use their points sooner than they are ready could force them to choose a different hotel, but if points are going to expire, it can be an impetus for them to stay with you. It’s a delicate balance, participants said. “No matter what you do, if someone doesn’t want a free night and you don’t offer any other options, they’re going to go to a different brand,” one participant said.

“Even if we’re going through uncertainty, people will start to use points again, and the question is, do our points force them to use them?” another participant said. “The onus is on us if we force them to make the choice sooner or not.”


Roundtable participants said that they have felt a lot of pressure, especially from owners, managers, and directors, to maximize profitability, but they are also feeling the pressure to keep loyalty members happy, which sometimes can lead to being pulled in multiple directions. “We don’t want to make any changes that might solve an immediate issue but could cause long-term problems,” one participant said. “We all get pressure from different angles. It’s tough.”

“People join our programs because they want free nights,” another participant said. “Our free night redemption has actually gone up this summer. Everyone is looking at this with different lenses, so it’s about balancing room nights with profitability.” One participant added: “We are trying to balance what the board of the directors and hotels feel like they need without losing sight of what the customer wants. It’s been an interesting challenge.”

Because loyalty members make up the bulk of guests right now, several participants said, there is more pressure than usual to keep existing members happy and bring new members into the fold. “COVID has helped us create engagement with hotels because we show that our loyalty penetration is higher than it’s ever been,” one participant said. “While it’s been a tough situation, it has opened some doors with new opportunities. We’ve been pleased and surprised with the mix of loyalty members at some of our hotels.”

“We have a different type of customer than in the past,” another participant said, “which is an opportunity to bring them into the rewards program and foster these relationships.”

For additional information, insights, and tools, visit HSMAI’s Global Coronavirus Recovery Resources page.

Categories: Marketing
Insight Type: Articles