📌 Despite rapid advancements in hospitality technology, many hoteliers continue to use outdated property management systems (PMS), leading to inefficiencies such as poor integration, security risks, and high maintenance costs. This reluctance to upgrade is compared to Stockholm Syndrome, where familiarity with old systems creates resistance to change. Read more
📌 Due to favorable demand-supply dynamics, the hotel industry is experiencing robust growth, expected to continue in the foreseeable future. Major players are leveraging their combined strength to capitalize on this trend. A report by Motilal Oswal highlights this uptrend, with Horwath HTL estimating a 10.6% CAGR in demand for branded rooms in India from FY24-27, while supply is projected at 8%. In top cities, demand growth may reach 9% compared to a 5% supply growth. Read more
📌 Midyear data shows slight year-over-year RevPAR growth in top US markets due to increases in luxury, upscale, and upper upscale chain scales, while secondary markets struggle due to inflation impacting budget-conscious travelers. New supply remains below historical averages due to high construction costs. Economists predict steady or decreasing inflation, potentially lowering interest rates in late 2024. Despite slow hotel transactions, revenue is forecasted to rise in 2024, driven by consumer spending. As low interest rate loans mature, transaction activity is expected to increase. Leisure travel demand remains strong, with trends favoring experience-based spending. Read more
📌 Booking.com recently removed the price parity clause in the EU, causing uncertainty in the hotel industry about the impact on direct sales. Despite no direct penalties for price disparities, Booking has long prepared for this change with strategies to mitigate the effects. The "billboard effect" where customers discover hotels on Booking.com but book directly has been countered by sophisticated measures. Booking now uses "algorithmic persuasion" to reward hotels maintaining price parity rather than penalizing disparities. This shift aims to ensure fair competition while leveraging technology for strategic advantage. Read more
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▶️ Building effective Hotel loyalty programs
1. Leveraging best practices from other industries
2. Assessing the need for a Loyalty program
3. Building the rewards platform
4. Personalized and experiential rewards
5. Implementing and monitoring the program
In an industry where guest satisfaction is king, the hospitality sector constantly seeks innovative ways to ensure customer loyalty. As travel habits change and expectations climb, the pressure is on hotels to not only meet but exceed these demands. Loyalty programs have long been a staple strategy, yet the challenge lies in keeping them fresh and relevant. This deep dive examines how hotels can craft superior loyalty programs by borrowing successful strategies from diverse industries.
Loyalty extends far beyond mere customer expenditure. It encompasses both transactional and emotional dimensions, providing multiple benefits for hoteliers:
Cost-Efficient Customer Acquisition Advocacy through loyalty programs generates sales at a lower cost than paid advertising and can attract new customers eager for benefits.
Revenue Growth Engaged customers spend more, increasing revenue by 15%-25%, as noted by McKinsey's 2021 report.
Greater Profitability Effective programs focus on overall customer experience, creating ‘moments of joy’ which 67% of customers value enough to pay more for.
Increased Data Quality and Quantity Loyalty programs provide valuable data on customer demographics, behavior, and preferences, helpinghotels make informed, data-driven decisions.
Stronger Emotional Bonds Positive engagement fosters emotional connections, making customers more loyal and forgiving of mistakes.
✔️ Gamification
Gamification, widely used in retail, can significantly enhance engagement and loyalty. Sephora’s Beauty Insider program, for example, uses gamified challenges to reward members with points, increasing both engagement and spending. Similarly, Starbucks employs a gamified loyalty program where customers earn stars for purchases, which can be redeemed for free drinks and other rewards. This approach not only boosts customer interaction but also encourages repeat business, fostering a loyal customer base.
✔️ Zero-Party data
Collecting zero-party data (information provided directly by customers) allows for highly personalized marketing efforts. McDonald’s uses its MyMcDonald’s Rewards app to gather preferences and deliver tailored rewards, leading to improved customer satisfaction and loyalty.
✔️ Omnichannel incentives
Ensuring a seamless customer experience across all channels is crucial in today's competitive market. Harry Rosen excels in this by adopting an omnichannel approach that integrates loyalty programs across both online and offline platforms. This strategy guarantees consistent and frictionless interactions for customers, no matter where they choose to shop. Whether they're browsing online or visiting a physical store, customers can enjoy the same benefits and incentives, enhancing their overall experience and fostering brand loyalty.
✔️Simplicity
A simple, user-friendly loyalty program design is essential for customer engagement. Programs like Segari’s Koin Segari excel by offering straightforward cashback rewards, making it easy for customers to understand and use. This simplicity not only encourages participation but also enhances customer satisfaction by providing clear and immediate benefits.
✔️Value based
Providing high-value transactional rewards remains crucial, especially during economic downturns. Programs that offer significant discounts and high-value deals, such as Debenhams’ Beauty Club, can help retain customers by providing tangible financial benefits.
LIVELY, a clothing and accessories brand, features a tiered rewards program that enrolls customers automatically upon creating an account. Members earn points through activities such as following the brand on TikTok (10 points) or making in-store purchases (30 points). Points can be applied to purchases (e.g., 100 points equals $10) or redeemed for items like totes, socks, and clips. The program's tiers, based on annual spending, are:
Insider: $1–$124
Inner Circle: $125–$324
VIP: $325+
Higher tiers offer better perks, such as free expedited shipping, exclusive discounts, and personalized customer care.
The MoxieLash Insider program is anothert example of a value-based loyalty initiative. Recognizing the power of building a community of advocates, especially on social media, MoxieLash offers points for both purchases and social media engagement, as well as app downloads. They understand that the potential downside of providing product discounts for non-transactional activities is outweighed by the benefits of increased social media engagement, which is crucial for their highly visual products. This approach enhances brand visibility and fosters a loyal customer base.
