As travel demand continues to evolve, industry leaders say loyalty programs are more important than ever. In fact, research from Cornell University’s The Center for Hospitality Research shows that hotel loyalty programs can account for a 57 percent increase in room revenue.
“Our loyalty program is immensely important to our direct-booking strategy as well as our ability to attract return guests to our portfolio of hotels. In our opinion, loyalty programs are a necessity to compete with third-party membership options and provide our guests with the best experience possible while they stay with us,” said Kacia Lessnau, chief commercial officer at Adrift Hospitality.
However, it’s no secret that guest wants and needs have shifted since the pandemic. And that means loyalty has also changed. Research from Deloitte found that hotel companies and airlines have seen their loyal business traveler client base shrink rapidly. That has challenged brands to extend premier status to members and adjust their benefit programs.
“The last few years have brought about tremendous change, particularly across the travel and hospitality industries,” said Heather Balsley, SVP, global loyalty and partnerships for IHG Hotels & Resorts. “There’s been a shift from business to leisure-focused travel, and as an industry leader, we recognized it was an opportune time to dig deeper and uncover what guests truly want from a loyalty program as their needs began to shift.”
Flexibility
Jennifer Chick, SVP and global head of Hilton Honors and customer engagement, said the company has been keeping a close eye on shifting trends and evolving its Hilton Honors loyalty program to meet new needs. As a result, flexibility has become paramount.
“Hilton Honors implemented several global extensions to support members, including status and points expiration and allowing automatic rollover nights to count toward future tier status qualification. Hilton Honors also extended benefits for co-brand American Express cardholders, allowing eligible spend to count as base points rather than bonus points, pushed expiration dates on free night reward certificates and allowed free night reward certificates to be used any night of the week,” Chick said.
Balsley said there’s also been a change in digital guest preferences, and technology is playing an important role in the guest journey. That means hotels need to deliver a consistent experience across all channels. Because of this shift, IHG One Rewards is now powered by the IHG One Rewards mobile app. Balsley said the mobile app is a key element to the rewards program and sets the foundation for future growth—one that offers a personalized and streamlined experience.
“We’ve seen a trend where loyalty programs are now putting the customer in control by giving them choice and flexibility, and this is the basis on which we built our new loyalty program,” she said. “IHG One Rewards provides choice throughout the member journey—allowing guests to select the reward they want and redeem when they want.”
Similarly, in late 2021, Hilton announced two new technology enhancements: digital key share and automated complimentary room upgrades. Digital key share is an enhancement through the Hilton Honors app that enables guests to share their digital room key with family and friends, safely and securely. Then, as an enhancement to the space-available upgrade benefit, Gold and Diamond members receive confirmation of their room upgrade 72 hours before arrival, and also have the ability to select their room upgrade through the Hilton Honors app’s digital check-in technology.
Revamping Loyalty
For its part, Hilton is actively exploring new ways to engage with guests to find meaningful connection touch points, even when they’re not traveling. Chick said the brand continues to research macro trends and listen to guest and Hilton Honors member feedback to provide the experiences, offers and benefits they care about most. For instance, “pet-friendly” became the third most used search filter on Hilton.com, so the brand prioritized increasing pet travel offerings.
Balsley said the revamped IHG One Rewards program is attracting new members with enhanced benefits, partnerships and experiences. Benefits such as room upgrades, bonus points and food-and-beverage credits are some of the most sought-after perks guests are looking for, according to IHG’s research.
“We addressed this through the introduction of Milestone Rewards, where we allow members to select bonus points, food-and-beverage rewards, confirmable suite upgrades or an annual lounge membership,” Balsley said. “However, point redemption is still an important aspect of loyalty programs as we know travelers want to earn points and redeem them for hotel stays and activities. That’s why we introduced our new tier and bonus earning structure with even more ways to earn and redeem points.”
Beyond the Points
Still, some say that points aren’t the only way to build loyalty. And smaller brands are contributing to changing the narrative.
“Some hotel loyalty programs will never change. The institutional brands have such large programs and balance sheets on points that making changes becomes almost impossible,” said Claudia Infante, SVP of revenue strategy with Margaritaville. “The shifts are coming from smaller brands, with fewer restrictions on membership and commitments on points. It is smaller brands that are creating unique and innovating programs that focus on guest choice, ease of use and true added value.”
Adrift Hospitality launched its loyalty program in 2021. The company, which has a family of boutique hotels, restaurants and a distillery located on the Oregon and Washington coasts, opted to go with a program that doesn’t reward points. Instead, the program offers a combination of exclusive discounted room rates plus other perks guests are able to use while on-site at its hotels.
“This allows us a more flexible and authentic way to recognize our most frequent and highest spending guests. Additionally, giving back to our community is one of our core values as a hospitality company, so we made one of our loyalty perks a donation to a local charity on our guest’s behalf. Traditional points-based loyalty programs don’t allow for these types of perks, which are very attractive to our target travelers,” Lessnau said.
Infante reiterated that points aren’t the only way to build loyalty or a loyalty program. “Consumers now more than ever want to have choices, feel valued and have their preferences be recorded. This new ‘fast-paced loyalty’ is the sweet spot for brands that can be nimble, quick to react and offer unique experiences.”