21st Century Hotel Loyalty Conundrum: What’s Really Driving Hotel Loyalty?

Harvard Business Review has a featured article on “The Age Of Continuous Connection” in the May-June edition 2019, highlighting a ‘seismic shift’ given the onset of digital technology on business models when interacting and engaging customers.  A recent travellers’ survey, conducted by The Engine Group, amongst 3,000 representative respondents across Hong Kong, Singapore, and Australia, has also revealed some interesting rifts.

Only 1-in-4 travellers have a hotel loyalty card, yet 40% of travellers stick to the same hotel brand for all their trips. Hotel loyalty programmes need to better-harness/ “own” the loyalty that customers already have with their brand.

Normally, logic would dictate that brand loyalty and its loyalty program tend to go hand-in-hand reinforcing each other.  If I’m loyal to a hotel brand, it only makes sense to join its loyalty program.  There is no question that many travellers are loyal to a particular hotel brand/group, with more than 40% of all travellers from Hong Kong, Australia and Singapore claiming they very frequently choose the same hotel brand group for all their trips on account of the locational convenience, value, and the reassurance that a familiar brand offers:

increasing customer loyalty for hotels

Yet, this loyalty, in the majority of cases, is not being specifically driven by a hotel’s CRM program, with only 1- in-4 travellers currently bothering to join a hotel loyal program. Even among those that frequently use the same hotel group, loyalty card ownership stands at only 35%.   This means that even among loyal customers, 65% are simply not seeing the benefits of doing so. This represents a huge opportunity for those hotels that can better target and connect with these ‘high potential’ loyal customers and communicate the benefits of its loyalty program at the right time and via the right channels.

Hotel trends in customer loyalty

The good news for hotels is that among the 35% that have a loyalty card, the ability to build up loyalty points is cited as the number 1 reason for their high hotel group loyalty, further reinforcing the influence that a loyalty program can play in driving loyalty and the opportunity that awaits those hotels that can successfully persuade loyal customers that it pays to join their loyalty program.

The booking ‘space’ is a massive opportunity for hotels to better own and influence their customers…. yet currently only 13% of all travellers book directly through a hotel.

Even when travellers do have a loyalty program, only 1-in-5 book directly through a hotel, with the majority preferring instead to book via an Online Travel Agent. It’s crucial for hotels to more effectively compete with OTA’s; loyalty programs must have enough traction and influence for members to see and appreciate the benefits of booking directly with them.

Technologies have created multiple streams of continuous connections.  Travellers go onto online travel sites to check for specials, recommendations and what’s new; they get connected, if not ‘addicted’, to a web of information which gives them the satisfaction of being smart and able to get the best deals.  These online travel sites are the dominant players in these streams while hotels and airlines are their chits.  This strongly undermines hotel brand equities and business opportunities.

Loyalty programs are built upon relationships and ongoing relevant ‘conversations’.  It’s crucial then that they play a more influential role. Yet currently, even among current hotel loyalty card holders, word-of-mouth influence, personal recommendations from travel agents and online hotel ratings and reviews all come before loyalty program communication. Hotel loyalty programs need to ensure enough traction to help their members see and appreciate the benefits of booking directly with them.

Customer loyalty card holders in hotel industry

These rifts will only get wider if hotels don’t get back into these streams as dominant players.  Hotels need to look at how to reconnect with today’s and tomorrow’s travellers; they need to create their own stream of continuous connections with their loyalty programs. In today’s digital economy, hotels need data-driven marketing solutions that drive growth.

It is important hotels connect experiences that count. Engine uncovers and connects the beliefs and behaviors of your most valued prospects, customers and employees, to enable action to drive business outcomes through Engine Connect.