Rethinking loyalty in hospitality: Three simple questions for big returns


Tricky yet exciting times lie ahead for the hospitality industry. Business travel has yet to rebound to its pre-pandemic levels, while leisure travel is booming. Customer profiles are also evolving, and their expectations are higher than ever. In this dynamic landscape, traditional loyalty programs centered around room upgrades and exclusive amenities are no longer enough for an increasingly digitally native collective.

As hotel chains compete to attract customers through their direct channels, reimagining their loyalty program value propositions is essential to appeal to a changing and increasingly diverse customer base. A fresh approach to program stickiness and guest engagement that goes beyond transactional benefits and embraces a more personalized, lifestyle-oriented model is critical. So how do we get there?

Three essential questions

To thrive in this new era, loyalty program leaders in hospitality must go back to the drawing board and ask themselves three fundamental questions:

  • How do we reward our members in a way that truly resonates?
  • How do we make them feel genuinely recognized and valued?
  • How relevant and compelling is our proposition to their unique needs and preferences?

Answering these questions will help craft a loyalty program that meets and exceeds today's travelers' evolving expectations.

Rewards: where it all starts

The days of one-size-fits-all loyalty programs are long over. Today's discerning travelers demand more personalized and meaningful experiences, making it essential for hotels to rethink how they reward loyal guests. Data, segmentation, and personalization are critical to rewarding members in a way that truly resonates with them.

Reviewing current technology, processes, and organization is essential for hotels to capture, manage, and execute on customer data effectively. A common challenge hotels face is that data is typically siloed and redundant across core systems and teams, hindering the ability to generate a single source of truth to deliver personalized experiences.

Unifying data ensures that every piece of information is seamlessly collected to understand the guest comprehensively. By leveraging advanced data analytics, hotels can deepen insights into guests' preferences, booking patterns, and spending behaviors. These insights allow hotels to segment guests into distinct clusters. Understanding these nuances enables hotels to craft tailored rewards that resonate directly with each group.

Recognition: making your members feel valued

True recognition means understanding the entire customer journey and acting upon these insights meaningfully. Understanding each guest's Customer Lifetime Value (CLV) helps hotels identify their most valuable customers and tailor recognition accordingly. By focusing on CLV, hotels can allocate resources effectively, ensuring that high-value guests receive the attention and rewards they deserve.

Integrating data from internal and external interactions further enriches the recognition process. Within the hotel, interactions with concierge services, on-premises activities, and in-house dining provide valuable insights into guest preferences. Externally, partnerships with local restaurants, spas, and entertainment venues add another layer of data. Whichever the touchpoint, combining information from different sources provides a holistic view of guest preferences and behaviors. Recognizing and rewarding these preferences with personalized offers or exclusive experiences makes guests feel genuinely valued.

Relevancy: crafting a proposition that speaks to unique needs

In today's noisy world, people value the simplification that comes from relevant rewards and offers based on deep customer understanding. Rather than solely relying on traditional perks, the pressure is on to explore innovative ways to inspire program members and exceed their expectations with curated offerings. And this is where partnerships and data science come in.

Transforming loyalty from transactions-based relationships to a lifestyle program involves understanding your member's everyday needs, habits, and preferences. The ability to quickly and seamlessly integrate new partners into your ecosystem expands your loyalty program's value offering. By diversifying and covering a broader set of your members' needs and engaging with them dynamically at the right time and touchpoints, you'll increase program stickiness.

But for that to work, leveraging advanced data science is critical. Crafting personalized offers relies on a deep understanding of guests' interests, past behavior, and current market trends. AI and machine learning algorithms process vast amounts of information, enabling hotels to suggest or bundle relevant activities, dining options, or local attractions that align with guest interests. 

Fit-for-purpose technology

The current landscape, marked by shifting traveler preferences and increased competition, demands a fresh perspective on how you engage with your guests. By reimagining your loyalty proposition and embracing transformation, you're not just adapting to change; you're proactively shaping your future. But we all know that launching innovative ideas to market is only as agile as the underlying technology to shape and support them. So, the question is - how quickly and effectively can you do so today? The time is now, and the opportunity is big; find out how iLoyal, our cloud-native platform for loyalty management, can get you there.

Author Info

Christman Korah is Associate Vice President of Loyalty Management Solutions at IBS Software. In this role, he is responsible for driving loyalty product sales within Europe, the Middle East, and Africa. He is a subject matter expert on Loyalty and CRM and has also played a crucial role in the growth of the Hospitality Business at IBS Software in his previous roles.


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