For loyalty programs, COVID shifts focus to guest relationships

For hotels’ most frequent guests, the pause triggered by COVID-19 has added up to zero travel – and zero accrual of loyalty points. Many hotel companies, including the biggest – with Hilton first out of the gate – extended elite status and paused point expirations for loyalty program members. Those actions assuage two of guests’ biggest short-term concerns, but brands have longer-term opportunities to woo potential members away from OTAs (and even steal them from other brands). HOTELS spoke recently on these and other topics with Scott Mayerowitz, executive editorial director at consumer travel resource The Points Guy.

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HOTELS: Do you see coronavirus triggering a shift in loyalty and points programs, or is everything just on hold for when things improve?

Scott Mayerowitz: Brands have built up their goodwill with loyal guests by saying, ‘don’t worry, we’ve got your back for the next year.’ But in a perverse way, it also frees up the guest to sleep around with other chains … because you’re not chained to a brand to hit status that following year. They’ve already given it to you… Travelers have nothing to lose. They are off the elite status hamster wheel for the rest of 2020.

I don’t see the points programs changing that much, because other programs have been shifting towards a much more dynamic point system where they have the ability to change prices on you more frequently… The hotels are going to be desperate to fill beds. And one of the ways that they’re going to do that is probably by offering a lot of sales on redeeming your points.

H: Do you foresee that kind of shift in guest loyalty among brands?

SM: Hilton is being very aggressive about trying to grab Marriott members, particularly those who are still feeling hurt over the loss of the Starwood Preferred Guest program and the merger. And Hilton is pushing technology to improve that guest experience. A good example of that is that you can use their app to see floor plans and actually select your room in advance.

H: Are there other opportunities to differentiate?

SM: Cancellation policies. People want to book vacations, but this has been such an unpredictable period and we don’t know what the fall is going to look like. And you want that ability to cancel, if suddenly a destination gets closed, or because the virus has a new outbreak.

The other thing that I think is a great opportunity is for entry-level guests. Not the road warriors, but the occasional folks who have failed to sign up for the loyalty programs. Hotels are going to really push to get them to be part of their programs. And this is where they can be smart about it… Many people felt burned by the OTAs when they needed to cancel vacations in March, April and May. It just showed how much better it was to book direct. You had one party who took responsibility, and that was it.

Many of the big hotel chains have been trying to get guests to skip the front desk. If you are a member of a loyalty program and you book directly, and you’ve downloaded their app, you can now get a digital room key and skip the front desk. And in this age of social distancing and worrying about cleanliness, I think there are going to be guests who want to go straight to their hotel room, touch as few things as possible, and use their phone to open up the room. And you can’t do that unless you are first in the loyalty program.

H: Will the role of experiences, which hotel programs have been promoting, continue to be a high-profile part of loyalty programs?

SM: The experiences have been all over the map. I’ve seen, for instance, amazing baseball packages, and then I’ve seen some that are just a complete waste of money. And savvy travelers are going to know the difference about that. Some of the dining with a celebrity chef or taking tennis lessons with a pro are these really unique, once-in-a-lifetime things that only the big hotels can make possible. But at the end of the day, there are only so many travelers who are ever going to do these things, and it’s definitely more of a marketing campaign than actual people doing those things.

H: What about longer-term shifts in loyalty programs?

SM: This is an opportunity for brands to be thinking long term about what their relationship is like with (frequent travelers). It’s not so much about the next year, but what are you going to do as a brand for me in the next 10 years? You’re going to start seeing some moves that might be a little bit more costly. But this is a time where brands are really going to want to invest and win back travelers.

There was, from 9/11, a rebound of six, seven years. (Then there was the) climb out of the 2007-08 financial meltdown. We’ve had almost a decade of growth since that recession bottomed out. No one knows what the next decade will bring, but this is the moment where brands build their loyal customers for the next decade. This is their opportunity to show that they care about travelers and are going an extra step.

It’s going to be a very interesting year ahead for the travel world, and there’s a lot of pent-up demand out there, but there are also a lot of people concerned about their health and safety.