Happy guests, recurring revenue — it’s the ideal scenario for any hotelier. While hoteliers focus most of their attention on bringing in new business, scoring repeat reservations can be even more valuable. In fact, a 5% increase in customer retention can boost profits by up to 75%. In hospitality, one of the best ways to do this is by offering a hotel loyalty program.
These programs are designed to incentivize guests for booking with your hotel again and again, giving you the opportunity to wow them on multiple occasions. Let’s jump into what a hotel rewards program entails and how offering one can benefit your bottom line.
If you’ve made a transaction recently, chances are, you’ve been asked to join a loyalty program. Businesses like coffee shops, airlines and seemingly everything in between now incentivize their repeat customers through rewards programs. And hotel loyalty works in a similar way.
Hotel loyalty programs offer perks for guests who book repeatedly with your property. Typically, guests earn rewards in the form of points, which they can redeem on add-ons, upgrades and other perks. Rewards members may also get special offers and tailored promotions that aren’t available to the broader public.
A reward program isn’t just something that benefits your hotel — it also enhances the guest experience for your most loyal fans. Here are the top three benefits to consider:
Every time a guest earns points or receives perks, they’re building a relationship with your brand — and when competition is high, this established rapport can be the difference between a booking and a vacancy. Whether attracting new guests or re-engaging existing ones, advertising the special perks that come with your program illustrates why travelers should choose you.
Happy guests → more bookings → a better bottom line: It just makes sense! And a loyalty program takes care of the “happy guests” part. When guests enroll, you can begin gathering information about their travel preferences to truly wow them. For example, if a loyalty guest requests a room away from the elevator bank, this can be attached to their profile for future use. Just imagine how thrilled they’ll be the next time they arrive and the front desk automatically places them at the end of the hall!
When guests choose your hotel repeatedly, it’s more likely that they’ll book directly with you instead of routing their reservation through an online travel agency (especially if booking through your website is the only way to earn rewards). This reduces the overhead associated with third party bookings, leading to higher profit margins on each reservation.
Offering a loyalty program can be a great value proposition for your hotel, but there are challenges to be aware of, too. Obtaining the right information about your customers, considering the investment needed for setup and choosing the right perks are all hurdles to address as you get started.
Challenge: Getting the right data
To build loyalty, you have to foster a relationship with your guests, so it’s essential to know who they are. But because third-party booking sites and OTAs often obscure guest information, it’s difficult to gather valuable data about who’s staying at your hotel.
Solution: Use mobile check-in or tablet registration so you can gather more granular guest information regardless of where their reservation was made.
Challenge: Investing in setup
Though the loyalty program itself doesn’t represent a line item in your balance sheet, setting aside the time and mental energy required to design it can prove difficult if resources are limited.
Solution: Look for areas where you can streamline your operations so you can divert resources to the implementation process.
Challenge: Offering ideal perks
To incentivize guests to sign up and remain active in your rewards program, the right perks are non-negotiable — but choosing them can prove difficult if you aren’t sure what your guests want.
Solution: See which upsells and add-ons your guests opt for as part of their stay and use them as a jumping off point for choosing which ones could be redeemed for points instead.
1. Understand who your guests are
A loyalty program is only successful when guests are interested in the rewards on offer, so you have to know what they want. Understanding the types of hotel guests you’d like to attract and what perks they’ll find valuable is the first step towards offering them the kind of rewards they most like to earn.
2. Identify and define your objectives
There are a few ways to structure a rewards program, and all of them touch on a different point in the guest journey. For example, if your goal is to increase repeat bookings, you might focus rewards around discounted room rates or complimentary upgrades. However, if you’re more interested in driving ancillary revenue, you may offer more rewards that pertain to local experiences or on-site dining options.
3. Determine your membership tiers
Some rewards programs opt to have a single tier for every guest, where rewards and perks are consistent across the board. Others offer a graduation to a higher tier when guests reach a certain threshold of points or spend. Offering higher tiers can provide an extra incentive for guests, but you have to determine if providing these higher-status guests with more perks is worth it.
4. Choose what rewards you offer
The rewards you offer to guests are one of the most important parts of your loyalty program structure. If guests aren’t interested in what they can redeem for, they’ll be unlikely to enroll or feel incentivized to keep earning. Understanding who your guests are and what they want can inform your perks, but you can also test guest preferences by offering a variety and monitoring what’s most popular.
Wyndham Rewards
The Wyndham Rewards program is a good example of a tiered loyalty program. It incentivizes based on the number of nights booked and upgrades the perks on offer accordingly. Guests who graduate from the base tier receive more dedicated member services, complementary late checkout and can even earn additional perks at an accelerated rate.
IHG® One Rewards
The IHG® One Rewards program allows travelers to redeem their points for experiences, in addition to the standard offerings such as rooms or upgrades. They partner with tour operators and venues in various locations for expeditions, concert tickets and more to infuse the travel experience with local flair.
Best Western Rewards
The Best Western Rewards program is doing something unique for their members: They offer status matching for anyone who is at the Elite level with any other hotel loyalty program. Travelers can enroll in this matching system for free and immediately begin enjoying the perks of being at the Elite level with Best Western Hotels, too.
Marriott Bonvoy Rewards
Marriott Bonvoy has several membership tiers with different perks, and they have a smart way to guarantee enrollment. Not only do members get access to the best rates and the ability to use their phones for check-in and room access, but they also tie in-room WiFi to membership — which is a fantastic way to incentivize signups.
Now that your loyalty program is designed and ready, it’s time for the big reveal! It’s important to get the word out so guests can start earning points ASAP, but there is some strategy involved. Here’s how to roll out your perks program to guests in every stage of the journey:
For potential guests, make sure your website is updated with details about the loyalty program, how to enroll and what can be earned. This is also a good topic for a social media announcement so your followers know it’s now an option.
Guests with upcoming reservations are likely to want to enroll before their stay. Be sure to reach out to them ahead of time to let them know they’re eligible to enroll and start earning.
No matter when you launch your rollout, you’ll inevitably have guests that are currently staying with you — it’s important that these folks aren’t left out! You can message these guests directly to encourage signups and inform them that they’ll earn points on their current stay.
Finally, for guests that have previously stayed with you, this is a prime opportunity to re-engage. Go through your database to pull contact information and let them know about this exciting new offering. You can even offer points retroactively for their previous stay or offer a sign up bonus to thank them for their business.
After doing the work to implement a guest loyalty program, it’s important to measure its performance. This helps you both understand its success and strategize for where improvements can be made. To measure, isolate key metrics for guests in your loyalty program and compare these to the same metrics for guests who have not yet enrolled. Some to look at include:
This can give you good insight into the guest behavior by segment so you can better understand if it’s the loyalty program or other factors influencing these metrics.
The impact of technology on hospitality loyalty programs can’t go unmentioned — it’s what makes it possible to create the successful ones we see today! Here’s some trends technology has made possible:
Secure collection of guest information
To wow your guest, you have to know your guest! Fortunately, technology is making that easier every day. Securely collecting customer data gives you the opportunity to engage guests through email marketing, whether that’s by sending special offers to those already enrolled in your rewards program or advertising perks to those that have left contact info behind for your online chatbot.
Automatic profiles for exceptional service
Before technology, hoteliers may know a guest’s name, address and a few scribbled personalization notes at most — but now the options are limitless. Technology makes it possible to create a personalized profile for each guest that’s accessible for every employee and every location across your brand.
Better personalization through AI
By integrating your loyalty program with predictive AI, you can better anticipate customer needs and offer personalized add-ons and offers at the exact right time. For example, if you have an enrolled guest who often requests late checkout, predictive AI can offer them the opportunity to use their points for this perk automatically.
Ready to get the right tech for your loyalty program? Canary’s Guest Experience Platform helps you collect information, chat with guests and a whole lot more. Book a demo today to see it in action.
Investing in new technology should not force you to deal with a slew of software. That’s why selecting guest experience solutions that integrate with your tech stack is so important.
Read More
Not sure how to decide which hotel reservation management system to invest in? Read this detailed Selection Guide to learn more.
Read More
Hotel market segmentation lets you impress guests at every touchpoint… and did we mention it also boosts revenue? Learn more here.
Read More
Guest experience management is one of the key elements that sets hotels apart. Learn how to drive satisfaction, loyalty and memorable stays with techniques, technology and more.
Read More
As technology continues to evolve, dynamic pricing will likely become even more targeted, letting hotels forecast and respond to market conditions in real-time.
Read More
