How hotels are alienating high value guests
Mark Ross-Smith
CEO at Loyalty Status Co, Creator of StatusMatch ?? Delivering the next $100B of ancillary revenues to airlines & hotels | Loyalty 30 under 40 Winner | World Aviation Festival Travel Start-Up Winner
Speaking with a Manager from a top hotel chain in Hong Kong recently who revealed that while more than 50% of their room nights are booked through Online Travel Agents; a large portion of those OTA customers also hold elite status with the brand. Not all guests understand what this means, however on check in – this hotel instantly denies the guest all elite loyalty benefits (points, free breakfast, free wifi, room upgrades, lounge access) and instead hands the guest a coupon for 2 complimentary drinks and a note to book direct with brand.com next time they stay.
I could not dream up a better way to alienate a loyal customer – but this industry-wide practice of denying loyalty benefits when the guest fails to book direct through the hotels preferred distribution channel is a daily occurrence at many top hotels around the world.
Essentially this is a textbook case on how to turn off a brand loyal customer. Nobody wins in this scenario.
Here’s why:
Some hotels employ this practice of denying loyalty benefits to the guest purely for 1 reason – that is when guests book a room through an OTA – the hotel can be paying anywhere from 12-25% commission for that reservation. The hotel justifies not honoring any loyalty benefits to keep a point of difference to strengthen the reason for the guest to book direct, and to save paying out commissions in addition to fees paid to the brand for loyalty points.
The biggest problem with this scenario is the guest won’t give a moment’s thought to commissions or distribution channels and quite frankly – why should they care? In their mind they are loyal to the brand by booking a room with this particular property. If the hotel is overpaying on commissions – it’s hardly the guests’ problem.
Getting on the train
At a time when OTA commissions and brand relevance are at an all-time high - hotel brands have a unique opportunity to reposition their loyalty proposition by granting full loyalty benefits to the guest no matter the distribution channel. If hotels want loyalty they will need to first show loyalty to the guest.
Guests at present may prefer to book through OTAs for a multitude of reasons including perception of lower pricing, customer experience, simplicity of booking a room, more personalized post-reservation experience and undoubtedly the brilliant job OTAs have done to remain top of mind when booking a room. Penalising your most valuable guests because your hotel website isn't up to scratch, doesn't appear in top listings or because an OTA website/app is easier to use seems fair, right?(!)
Hotel brands run a very real game of russian roulette with their guests that are brand loyal, yet book through OTAs by not extending loyalty benefits. With rate parity agreements being dismantled around the world – OTAs will need a new secret weapon to defend existing market share outside their existing value propositions. The most logical and profitable target is the game of loyalty…
CEO, EasyAI | Board Advisor | Data Nerd
8 年Great article Mark. Your article got me thinking -- this practice also "forgets" two of the main reasons organizations have a loyalty program in the first place: promoting consolidation of purchase (which the customer is certainly doing their part) and data collection of all customer behavior.
EVP Strategy and Partnerships, CAA National , CLMP
8 年Thanks Mark. As the industry continues to consolidate this issue will become more and more common.
195 Airlines | 109 UN Countries | Travel Expert/Blogger | Speaker | Airline Consultant | Author | Content Creator | Black Travel Alliance Co-founder
8 年Yeah, its weird. I had that at a brand and was totally annoyed. The issue was that when I went to the brand's site, they were sold out! I wanted to stay at that property so I booked on the OTA and was denied all my benefits of course. Totally wrong. It's not my fault that you sold all your seats to an OTA. This really needs to change.
Loyalty Strategy | Driving Profitable Growth | Unlock Brand Loyalty & Engagement
9 年Nick Ferguson - those customers you describe are not "loyal customers" as per Mark's description. Those that don't care aren't relevant to this issue. Nor are they loyal - their employer could switch to Hotel Brand 2 tomorrow - and Hotel Brand 1 has lost that customer completely. At least by engendering some love in the form of status benefits - then those guests who can influence the corporate decision-making in some way, may gain an affinity for that chain.