The Loyalty Trap

I've come to believe that the traditional loyalty program might not be the powerhouse it once was – the engine driving customer satisfaction, engagement, and hotel profitability. In my view, these programs often become an unnecessary burden on the balance sheet.

I can already hear the cries of "Heresy!" but give me a moment to explain...

As a frequent business traveler across APAC, I accumulate points rapidly. But this isn't the case for most of our guests who take just a few vacations a year. Airlines have mastered the art of making loyalty programs enticing with immediate, tangible rewards like seat upgrades, exclusive airport lounge access, and instant mileage redemption for flights. This appeals even to infrequent flyers, helping them balance the financial burden of flying, regardless of the destination.

In contrast, hotel guests need to display steadfast loyalty to collect a substantial number of points. However, room upgrades are often subject to a bewildering array of blackout dates. This drives guests mad, as they can't use their points at their preferred hotels when they want to travel.

I'm an advocate for instant hotel rewards and immediate upgrades. The potential is limitless, ranging from classic perks like room upgrades and executive lounge access to more innovative lifestyle experiences. The options are nearly endless, and by harnessing on-site resources creatively, budgets can be efficiently managed. This kind of program excites me because of its flexibility, allowing customization to suit each property and guest.

Our property owners seek a robust database of loyal, engaged guests. However, they can be disappointed by steep program fees and can easily get lost among a vast portfolio of properties, each striving for a meaningful share of the spotlight. They wonder whether these funds could be better invested in a CRM program tailored to their own property and guests' needs.

We're all aware of the responsibilities that come with loyalty programs – gathering and securing extensive guest data while adhering to strict privacy laws like GDPR. This increased burden adds costs and long-term commitments to program maintenance and marketing, impacting both owners and management companies. The Marriott-Starwood loyalty program integration serves as a cautionary tale, highlighting the complexities, risks, and pitfalls of conventional loyalty models in the modern landscape.

Rather than relying solely on loyalty programs, I advocate for investing in a robust CRM program that enables year-round guest engagement.

By focusing on personalized communication and substantial direct marketing and instant rewards within each hotel, we can prioritize meaningful interactions. This approach not only demonstrates that our guests are more than just point collectors but are really valued individuals.

I invite you to share your thoughts and strategies for innovation and loyalty program development. Please share your thoughts on reshaping loyalty programs and let's inspire each other with some alternative approaches.

HT