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Loyalty Programs

How to Increase Direct Hotel Bookings with a Loyalty Program

Written by 
Brad Davis
December 16, 2019

What is a hotel loyalty program?

A hotel loyalty program rewards guests for making repeated visits and purchases with a hotel. Some of the typical rewards offered to guests will include value-added benefits such as exclusive discounts, free room upgrades, complimentary gifts, early check-in and late check-out, vouchers, and guaranteed room availability.                

When it comes to customer loyalty, you could argue that the travel industry has it tougher than other industries.

If someone feels like a pizza, they’ll order one from their favourite local spot. If someone needs medicine, they’ll typically go to the same local pharmacy every time.

But when it comes to booking hotels, flights, rental cars and other travel-related products, people generally shop around for the best deal. Online travel agents like Expedia and facilitate this. With so much competition, customers are spoilt for choice. Hotels are also competing with Airbnb and other short-stay options.

These third-party booking sites serve a valuable purpose in presenting travellers with a one-stop shop to explore all their options for accommodation in any particular destination. Meanwhile, hotels (both big and small) gain exposure to a multitude of potential guests.

However, when customers actually book through these online travel agents, everyone loses… everyone, that is, except the online travel agent!

Guests often pay more than they would if they booked direct with the hotel because of the commission, and the hotel needs to pay to appear on the booking site in the first place.

book hotels direct marketing screenshot
Image Source: Headweir Mill House

So, how can hotel owners encourage guests to book accommodation directly through the hotel itself? …With a loyalty program!

A recent Centre for Hospitality Research study revealed that once a guest signs up to a hotel’s loyalty program, the number of stays this guest books with that specific hotel typically increases 49%.

A well-designed hotel loyalty program will offer an exceptional guest experience before the guest has even arrived at the hotel. It will continue to provide them with an exceptional guest experience long after their stay is over.

Here’s how you make your hotel loyalty program so engaging that all your guests join it, and thus begin booking directly with the hotel instead of via online travel agents.

1. Create a Digital Loyalty App

hotel loyalty apps

First and foremost, make sure you offer your hotel loyalty program as a mobile app.

Not only do 85% of loyalty program members agree that redeeming rewards on smartphone is much more convenient, but all the points below are best implemented when you can send loyalty program members push notifications, texts and emails.

Digital apps offer a unique customer experience that no other touchpoint is capable of achieving – this goes for the hotel industry, restaurants, cosmetics and everything in-between.

If a hotel can earn itself a spot in the “TRAVEL” folder of a frequent traveller’s smartphone, then that guest is likely to check rates/availability for that particular hotel before resorting to a quick Google search of what else is on offer.

It also provides an element of convenience. The customer can have their personal details and payment methods auto-saved and prefilled for quicker booking and easier check-in.

An app allows customers to see their current loyalty status whenever and wherever they like, which incentivizes them to book another stay in order to redeem that free night’s accommodation, for example.

But the true power of a digital loyalty app is illustrated in our next point…

What are the benefits digital loyalty program for a hotel?

A digital loyalty program allows a great opportunity for hotels to communicate directly with their guests to strengthen relationships and increase direct bookings.

2. Personalization & Engagement

mandarin oriental complimentary hotel privileges
Image Source: Mandarin Oriental

Mandarin Oriental, a hotel chain with locations scattered across Asia, Europe and the Americas, has a loyalty program called Fans of M.O. Members of this loyalty program have the pleasure of choosing two “perks” to complement their stay when they book directly with the hotel.

The list of perks to choose from includes free breakfast, spa credits, early check-in, late check-out, complimentary beverage from the bar, and so on. Not only is this a good motivator to book directly with Mandarin Oriental and “skip the middle-man”, so to speak, but it offers every guest a unique experience from their hotel stay.

Some people would instantly opt for the spa, while others would be more interested in checking in at 8am after an overnight flight – these little gestures go a long way.

While this feature doesn’t require any form of membership, a loyalty program allows hotels to take personalization to a whole new level.

With every stay, the hotel accumulates more data on its loyalty program members. For example:

- how often they stay

- how long they stay for

- what time of the year they typically make bookings

- whether they eat at the hotel

- if they use the hotel gym

- whether they visit the hotel bar…

These data points allow a hotel to tailor rewards and offers to directly target each individual guest. This is where a digital loyalty app becomes crucial to the process.

Imagine being able to send push notifications directly to loyalty program members’ smartphones, along the lines of:

  • “Enjoy a free cocktail next time you stay with us.”
  • “Going away again this June? Stay with us wherever you go, and enjoy free breakfast every morning of your holiday!”
  • “Stopping over in Hong Kong again next month? Tell us what time you’re arriving, and we’ll have a room ready for you any time of the day or night!”

See how these offers would appeal to different guests for different reasons?

A notification like this, sent precisely when a previous guest is exploring hotel options, can be the deciding factor when choosing to book another stay with the same hotel.

Push notifications drive nearly 10 times more users to make a purchase.

3. Tiered Rewards

hotel loyalty card tiers
Image Source: Wyndham Hotels

Give your return/repeat guests the VIP treatment. This can be achieved by implementing a tiered system (entry level, 10+ stays, 25+ stays, 100+ stays etc.). The higher the tier, the better the perks and rewards.

Not only does this give guests something to strive for, but it also ensures your top-tier guests feel appreciated and valued for their higher level of loyalty.

If you offer the businessman who has spent more than 100 nights in your hotel over the years all the perks like permanent late check-out privileges, free room upgrades, complimentary beverage upon check-in, free breakfast etc., he’s far more likely to book directly with the hotel via the loyalty app every time he’s planning a trip.

Meanwhile, simpler benefits like flexible cancellation policies are appropriate for the loyalty program member who has only stayed at the hotel six nights since joining the program. Push notifications to remind them of the higher level of perks they can enjoy after just four more nights’ accommodation can help boost those direct in-app hotel bookings.

4. Spontaneity

free champagne complimentary hotel gifts

Here’s another nifty trick: add some spontaneous incremental rewards to the hotel loyalty program structure that members aren’t aware of, like a free beer or wine with dinner or a one-hour later check-out than non-members.

While these perks are known to the hotel and its staff, they will come across as an unexpected and delightful surprise for members, which bodes well for recommendations and hotel reviews.

Also, consider Mintel’s findings that instant gratification motivates 47% more consumers to join a hotel loyalty program, compared to “down the line” rewards.

An attractive signup offer will jumpstart your new hotel loyalty program’s registrations, and gets the ball rolling.

Once guests have signed up and redeemed their reward, they’ll be eager to accrue points and redeem the next reward!

5. Partnerships

eastern explorers rewards program
partnered loyalty program
hotel loyalty program guide
Image Source: Marriott International

Partnering up isn’t just for the big players (like Marriott International unifying its Marriott Rewards, Ritz-Carlton Rewards and Starwood Preferred Guest programs, for example). By partnering up with local attractions, restaurants, rental car companies and so on, hotels can offer their guests much more variety in their loyalty program rewards.

The better the rewards, the more enticing the loyalty program, which equals more app downloads, and thus more direct bookings.

6. Communication

communication with customer loyalty program benefit

Feedback forms are by no means a new concept in the hotel industry. However, not every hotel puts that feedback to good use. Feedback allows you to make improvements and further enhance the customer experience, so the more feedback you can get from guests the better.

Why not incentivize guests to tell you about their stay by offering rewards for reviews?

Not only does this increase customer data (which we already established is invaluable to personalizing each guest’s stay), but it also helps you manage online reviews and keep them positive! Not that the feedback is required to be positive, but still…

On this note, offering rewards for referrals is another great way to get people downloading your hotel loyalty program app, and increasing direct hotel bookings as a result. Which leads us to our next point…

7. Good Promotion

advertising a hotel loyalty program
Image Source: Best Western Rewards

What good is a hotel loyalty program if no one knows about it? A rewards program will only help to increase direct hotel bookings if all your guests are downloading the app and using it.

The lobby should have as much promotional material as possible. If a guest can walk through the hotel lobby without being made aware of the hotel loyalty program, then you don’t have enough signage.

Train hotel staff to inform guests about the loyalty program when they check in. Have promotional material in every hotel room, on the brochure, on the room service menu, on the cards that contain the Wi-Fi code… everywhere.

The hotel website should also have a page dedicated to highlighting the perks and benefits of joining the fantastic loyalty program. There should be regular periodic posts about the program on all of the hotel’s social media pages, and a pop-up should… well, pop up… when non-members are booking a room on the website.

Why not host rooftop movies nights with blankets, snacks and drinks? Display promotional material around the hotel and have staff inform guests of the event upon check-in, and make it very clear that loyalty program members enjoy free access, while non-members have to pay.

movie night as a loyalty sign up incentive

Posters for a rooftop movie night are likely to grab people’s attention far more successfully than posters about a loyalty program, and this incentivizes guests to simply download the app and join the loyalty program to avoid paying for a movie ticket.

There’s no limit to how creative you can get with promoting your hotel loyalty program – get the marketing team together and have a little brainstorm!

8. Innovative Rewards

While it’s natural to immediately think of offers like “book X nights with us and receive an extra night for free”, this type of offer won’t appeal to everyone. As mentioned earlier, experiences are more important to consumers than discounts these days.

Put yourself in your guests’ shoes, and think of what kinds of perks and benefits would make them rave about the hotel loyalty program to their friends, family and colleagues when they return home.

hotel loyalty customer rewards

Some good rewards to offer guests other than discounts include early check-ins/late check-outs, free hotel room upgrades, room preferences (i.e. garden view vs. beach view vs. city view), 24-hour room service, free bottle of wine/champagne on arrival, or free parking.

Increase direct hotel bookings with a digital hotel loyalty program app

Seeing as your hotel guests now have a nifty app in their pocket that allows them to make/change bookings, communicate with the hotel, receive notifications about their existing booking or special offers, track rewards and a multitude of other convenient features, we’ll leave you with one more tip!

Don’t reward guests for booking a night at your hotel… reward them for their loyalty.

Give your guests points towards their next reward for anything and everything related to their stay – drinks ordered at the bar, items purchased from the mini-bar, ordering room service, and so on.

This ensures they see ongoing progress towards their next reward throughout their stay, while also demonstrating that when guests engage with your hotel’s various offerings, your hotel engages them back.

What are some examples of effective hotel loyalty programs?

According to Forbes, the top 10 hotel loyalty programs include Starwood Preferred Guest, Wyndham Rewards, World of Hyatt, Hilton Honors, Le Club AccorHotels, Marriot Rewards, ING Rewards, Best Western Rewards, Choice Privileges, Club Carlson.

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