Do hotel loyalty programs need an overhaul?

It’s no secret that earning and maintaining consumer trust is paramount to the success and longevity of a brand, regardless of industry. Across both B2B and B2C environments, the influence of client perception is aptly understood and carefully considered across all touch-points. But perhaps no industry finds itself at the mercy of its power more than hospitality.

Hotels are, in many ways, defined by the loyalty of their guests and the reputation which those guests award them. And while traditional loyalty programs have received no shortage of criticism over the years, their limitations become more glaring than ever before in the wake of a global pandemic.


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Alan Young is co-founder and president of B2B hospitality and travel technology marketing company Puzzle Partner.

As the travel and hospitality industry works to prepare for the next normal and forge a path to recovery, we arrive at yet another question — post-COVID-19, will loyalty programs need an overhaul?

Good in theory

Long before the pandemic, traditional hotel loyalty programs faced potential upheaval. Why? Well, to begin, studies indicated that over a third of hotel guests believed hotel loyalty programs were rarely relevant to them. In many cases, guests also complained that, when it came time to collect, the promised rewards fell far below their expectations.

Over time, both airlines and hotels have devalued their own reward programs and, in many instances, hotel “rewards” place travelers in a room far below what they usually stay in or offer them a seemingly irrelevant experience or upgrade. Does this sound like the recipe for a memorable, loyalty-inciting experience, or a cocktail of sour disappointment?

Although the purpose of a loyalty program has always been to invest back in the guest by way of providing perks, personalized incentives and upgrades, traditional programs have often been uninformed and, for lack of a better term, lazy. Over time, it became apparent that a one-size-fits-all solution, without data-driven attempts at personalization, simply wasn’t the key to delighting guests. The takeaway was undeniable: Hoteliers need to offer a rewards program that is as accessible and accommodating as it is relevant to the needs and experience of guests.

Reimagining loyalty programs post-pandemic

As an industry, we have our work cut out for us in the coming months. The coronavirus pandemic has drastically altered the way hoteliers do business, and the way(s) in which hotels can serve their guests. What was initially predicted to be a record-breaking year for hospitality now represents a year of recovery, ongoing restrictions and reformed protocols, the reality of which will inspire many travelers to forgo international travel temporarily.

Understandably, guests who have had to postpone their long-awaited beach vacation might wonder what will happen to their points. Moreover, if both airlines and hotels are offering limited service, what will loyalty points mean? Beyond simply extending customers’ loyalty status into next year, how can hotels ensure their programs continue to benefit travelers who, due to global circumstances, are no longer frequent flyers?

Already, we are seeing an influx of point promotions that offer travelers incredible sales on points. Air Canada led the charge with its (first-ever) sale, selling miles at an attractive rate of 1 cent each. These promotions arrive on the heels of flexible booking policies, with both airlines and hotels allowing travelers to convert their reservation to points to be used at a later date.

Many hotel programs are also revamping their welcome offers with co-branded credit cards, such as American Express. Recently, the company announced changes to Hilton and Marriott credit cards that are “aimed at providing value to customers even if they aren’t traveling.”

For example, Hilton Honors American Express Surpass Card allows users to earn extra bonus points at U.S. supermarkets, and bonus points earned through eligible purchases that post to the card member’s Hilton Honors account until December 31 will count towards elite tier qualification and lifetime Diamond status.

Some programs are also placing an emphasis on categories consumers are spending a lot in right now, including restaurants. IHG launched IHG Rewards Club Dining, which gives you points by spending money with partner restaurants (even take-out orders). In fact, reports show that loyalty-integrated food delivery orders have grown nearly 25% since March 11, and some hotels have seen usage increase as high was 160% with well-timed promotions. The average order value has also grown by double digits.

Keeping guests engaged

Hoteliers are also encouraged to consider (or rather, reconsider) the wants and needs of their guests moving forward. Perspectives have changed, the landscape has changed, so shouldn’t the rewards also change? What is important now, or a few months from now, versus what was important last year?

If the goal is to keep guests engaged during this period of global uncertainty, hoteliers should remain in touch with their guests and, more importantly, ask what is important to them. Ask them to help inform the design of the program which, ultimately, was created for them. Perhaps, in a post-pandemic landscape, reward tiers may focus on flexible booking policies, staycation travel options and extensive in-room upgrades?

Ultimately, the question that should be guiding the overhaul of loyalty programs is this: How can a hotel support its customers right now in a meaningful, relevant way that caters to the changing needs of guests? As a hotelier, if you can answer that question, you’re on the right track.