Partnerships are the key to hotel loyalty programmes

The hospitality industry was one that was hit hard during the recession ten years ago, but it has bounced back and is bigger and better than ever before. Globally, the hospitality industry reached over $1.6 trillion in 2017, and the hotel industry accounted for over 30% of this. The hotel industry is projected to reach a 6-7% growth in 2018, partly due to the increase in travelling for business, as corporate travel has risen 6.1% already this year (Deloitte). VisitBritain estimate there will be over 40 million visits to the UK in 2018. The positive growth projection for industry success looks set to continue into 2019. This is clearly an industry to watch… so what’s happening in loyalty?

 

The hotel industry hit an occupancy high in 2017 in the UK, with 76% of rooms full (PWC), but hoteliers want to do more to try and increase occupancy, frequency, spend and engagement. As a way of incentivising guests to repeat stays, most hotels have loyalty programmes, they are amongst the biggest and longest running in the world.

However, engagement isn’t as high in the UK as you would think. According to Mando-Connect’s whitepaper with YouGov, only 8% of the UK population are part of hotel loyalty programmes, compared to 78% of the UK population who are signed up to some kind of loyalty programme.

Those that are members of hotel loyalty programmes have three key things they look for and want within a loyalty programme according to The Oracle:

 

  1. 61% want to choose their rewards
  2. 57% want to customise their stay and their hotel experience e.g. late checkout, free mini bar etc.
  3. 49% are interested in upgrading their room in the UK

 

The Oracle also states that more than 20% of the people they surveyed aren’t subscribed to a hotel loyalty programme as the rewards offered are not interesting to them. However, as determined from the study above, 61% of customers want to choose their own rewards. If more hotels were to offer rewards from a range of partner brands and give customer the option to choose their own, customers would find them more enticing and hotels will find that people are more likely to sign up.

Hotel brands need to look at our how they improve choice, personalisation and add value above and beyond room upgrade to solve this issue. A combination of rewards from the hotel itself and from carefully curated partners is a good solution. Over half of customers want to customise their stay, rewards are a great way for them to do this. For example, members of the loyalty programme could get extra partner goodies in their mini bar, all supplied by partner brands.

Partnerships for hotel brands is key for hotels wanting to engage more people in their loyalty programmes, as we found that 59% of people want hotels where loyalty members receive both partner and the brand’s own rewards equally (Mando-Connect & YouGov). An example of an existing hotel loyalty programme offering partner rewards is Marriott Rewards, who offer the ability to transfer any points accumulated through them into Air Miles with British Airways and 35 other airlines. Hilton Honors also offers this and is one of the most recognisable hotel loyalty programmes around the world, with over 60 million members worldwide (Head for Points).

Another key area of strategy for hotel loyalty programmes to address is new member acquisition. One option for hotels to look at, is to engage the use of a brand ambassador or influencer. Influencer marketing is a form of marketing that has become incredibly popular over the last 12-18 months and is continuing to see a rapid rise in popularity. Further strengthening this proposition, 43% of consumers are much more likely to believe and trust a recommendation by a YouTuber over any type of brand advertising (The Oracle). 37% agree that if a hotel was used and advocated by a social influencer, they would be more trustworthy than a celebrity. This is due to influencers being perceived as more down to earth, reachable and attainable by the everyday person. So far, this is an under-utilised marketing discipline by hotels – 62% of hotel brands do not engage with influencers, and 71% of hotel brands don’t engage with any kind of brand ambassador at all.

With the above in mind, the evidence clearly stacks up in favour of giving the customers choice and flexibility to choose their own rewards, to upgrade their entire experience, to feel they are getting that little bit extra. But customers not only want to receive small customisable extras they want to receive partner rewards too, to prolong the experience and make it memorable, e.g. redeeming points against flights with a partner airline will really help to maximise the goodwill and improve positive feelings for the brand; ultimately partner rewards are the future for hotels.

    Charlie Hills
    MD & Head of Strategy