ELEVATE GUEST EXPERIENCES
The ultimate guide to guest loyalty
Understanding, assessing, and optimizing guest loyalty is critical in today’s competitive hospitality marketplace.
And with new marketplace dynamics and evolving guest expectations to contend with, the strategies of yesterday are no longer sufficient in establishing loyalty with the guests of tomorrow.
Read on to understand the evolving nature of guest loyalty to position your brand for successful long term guest relationships.
What is hotel guest loyalty?
Guest loyalty refers to the ongoing emotional relationship between guests and hotel brands.
Travelers are considered loyal when they choose to stay at one hotel brand over another or when they engage with and repeatedly book from your hotel brand versus your competitors.
Hotel customer loyalty is the byproduct of a customer’s positive experience across all interactions with your hotel brand and works to create trust.
This can be manifested by how willing a hotel client is to repeatedly book from you vs. your competitors.
In today’s complex and competitive hospitality market, establishing loyalty with your guests or hotel customers has become a requirement, not an option.
Yet, hoteliers often struggle to find the right ways to create, optimize, and measure guest loyalty.
Why is guest loyalty important?
Loyal guests are imperative for every hotel because they are more likely to:
- stay at your property repeatedly
- buy ancillary products and services
- recommend your hotel to others
Beyond perks, points, and rewards, guest loyalty represents an emotional bond between the guest and your brand.
It is the culmination of the entire guest experience which yields a positive sentiment from the client.
The end result is repeat business and greater revenues from guests, increased direct bookings, positive word of mouth which can attract new guests, high ratings on travel review websites, and effective and ongoing 2-way communications with the guest that enables lasting relationships.
Guest loyalty programs are also an extension of your brand and represent a tool for aiding in guests’ connection with that brand — one that is ultimately seared and sealed through thoughtful interactions that create stories worth telling and feelings worth coming back to.
Furthermore, it can cost businesses between 5 to 25 times more to acquire a new hotel customer than retain a current one (Harvard Business Review). Beyond looking solely at cost per customer acquisition, organizations should also consider the profitability of each customer over time, or customer lifetime value (CLV). And due to the pandemic, guest acquisition and retention has become even more vital.
How to measure guest loyalty?
Calculating guest loyalty involves metrics such as:
- Average booking value
- Booking frequency
- Profitability per order
- Repeat booking probability
- Repeat booking rate
- Guest retention rate
- Loyal guest rate
- Guest churn rate
Not all loyal guests are of equal value. For instance, a customer who stays frequently but only spends on discount or budget rooms may be less valuable than a client who stays less frequently but spends more on their stay.
The same happens with a frequent client who books through your direct channel. They will typically be more valuable than a frequent guest who books through an OTA or another channel that entails commission costs.
Hotel loyalty programs and examples
Surprise and delight
These are tactics that provide unexpected rewards as a thank you for continued business.
Most campaigns involve compensations such as free gifts, upgrades, or a meaningful discount.
In today’s social media environment, these “unplanned” surprises can also help foster brand awareness and reach viral status as customers share their delight far and wide.
The key with ‘surprise and delight’ is to build a meaningful emotional connection between the consumer and the brand through the notion of “we care.”
You can enhance that emotional connection by providing them with personalized rewards that will matter most to them, based on data from their individual guest profiles.
Cash back & points
This approach speaks to consumers who want freebies and direct cash.
A common example is with credit cards: a percentage of purchases charged to a credit card come back to the customer in the form of a check, gift cards, airline tickets, or even college savings programs.
For hotels, these loyalty programs tend to be point-based with a certain number of stays or hotel spend qualifying customers for partial or full redemption toward their final bill.
They can also take the form of points toward a special customer experience, such as a free spa visit or room upgrade during their stay.
These rewards deliver an experience with the brand that non-participants can’t receive and for hotels, this means adding value to their experiences at your location with simplicity and ease for guests.
For example, offering a late checkout, so guests can change out of their suit in their room, rather than a cramped, public bathroom stall.
By partnering with local attractions, hotels can offer another type of value-add - bespoke experiences at their destinations, such as discounts on exclusive cooking classes and local experiences or VIP tickets to shows and festivals.
Include a mix for the max
We’ve found that loyalty programs enjoying maximum success are those that incorporate a mix of all three types.
While one program may be the focus, offering tastes and highlights of others is the best offering a hotelier can design.
For example, a pure points program with no “surprise and delight” moments lacks the human touch. As well, endless surprise and delight becomes repetitive and cliché with little long-term benefit.
Building an effective guest loyalty strategy
Re-engaging guests: old and new
With travelers trying to get the most out of their trips, from local experiences, to dining and well-being options, re-engaging guests by promoting a strong loyalty program becomes more important than ever.
Some hotels are expanding their ‘tiers’ at lower levels or with third party vendors, which enables guests to earn benefits at a faster rate and choose different ways in which points can be earned.
This type of fresh thinking in relation to loyalty programs has become an essential pillar of any hotel’s strategy when considering how to re-engage and re-incentivize guests.
Creating dynamic marketing strategies
By leveraging existing data, hotels can send targeted and effective hotel email marketing to the right guests. You can also use your knowledge of that guest to offer defined incentives, such as spa or dinner vouchers.
There’s room for creativity here too, with many hospitality leaders upgrading their use of imagery or even testing receptiveness to humor within their communications.
By using integrated hotel booking platforms, you can make data driven decisions to personalize communications or incentivize guests in a creative way. This is key to increase your opportunity to win customers over.
Driving engagement and collecting data
Moving away from traditional loyalty programs with defined tiers, member programs are increasingly being used to drive engagement by offering the same exclusive benefits to all that join.
This not only significantly reduces complexity for hotels, but also improves overall loyalty.
A good example of this is Village Hotels, which demonstrated the importance of implementing inventive approaches to membership loyalty strategies, through member-only offers.
By boosting visibility of their member-only offers through transactional hotel email marketing and benefit merchandising throughout the booking flow, this UK-based hotel group generated over £1 million in revenue within just the first month of their “Booking Revolution” campaign!
Leveraging your hotel CRM data
Running a successful hotel guest loyalty program doesn’t mean you need to have a massive budget to compete with big brands.
There are several things smaller hotels can do to attract, retain, and reward hotel guests for long term loyalty.
You can start by following these 3 CRM guest loyalty strategies.
Hotels have also begun to utilize the treasure trove of data available to capitalize on inbound marketing opportunities.
This means that when a guest logs onto a site, hyper-personalized offers are generated automatically, and this can be particularly effective for hotels with the flexibility to tailor to different types of guests.
The benefit of these personalized offers is that they can also discern the value of a guest within a tier and promote to those with a higher likelihood of conversion.
The changing dynamics of guest loyalty
Guest loyalty in the post-Covid era
A new dynamic today becomes of paramount importance - the feeling of safety.
During the pandemic, if you could be their calm in the storm through your crisis hotel communication strategy, not only were you likely to instill your customer's loyalty for a lifetime, but they would also become your biggest (and most vocal) advocates.
This strategy should remain in place for the foreseeable future, and promoting how you are implementing safety measures in your property should be part of your routine.
Guests today not only want to be updated on safety and security information but also expect thoughtful, empathetic, and personalized communications from your hotel brand. In this context, the ability to segment, personalize, and deliver outstanding customer service is even more critical to gain their loyalty. To achieve this, it is recommended to lean on your hotel CRM to help you intelligently engage and communicate with guests and reassure them.
Finally, in hospitality’s new normal, holistic guest loyalty strategies are vital. They can be used to entice loyal guests back as well as encourage new bookings. The process is becoming increasingly cyclical, too. Once a guest finishes a stay, hotels are already considering how to use their data to drive the next booking, and in an increasingly competitive landscape, those that fail to adopt this approach may be left behind.
The challenges with guest loyalty today
While guest loyalty is key to drive more revenue, many hoteliers struggle with obstacles to achieving a successful and sustainable loyalty strategies:
- Greater competition
Competition is wider and deeper than ever, from traditional big chains to boutique brands to bed-and-breakfasts.
Some credit cards also offer generic travel rewards redeemable with numerous hotel brands, making it increasingly difficult to design the ideal loyalty program for each hotel.
- Guest expectations
Then there’s the dilemma of determining exactly what customers want in exchange for their loyalty. For some, exclusive discounts or collecting points for a free stay is a strong driver and for others, value-add rewards such as free meals or discounts on services such as spa treatments will gain fans for your brand. - Bandwidth
Finally, for smaller hotels with limited resources, capabilities, and staff, the idea of loyalty is just one more thing to add to a task list that’s plenty long already.
To address these challenges, we recommend using guest recognition and unique loyalty programs. It is important to ask yourself whether your customers are attached to your loyalty program because of what they can get from it (transactional loyalty) or are they loyal to your brand because of the experiences they receive (emotional loyalty)?
You can then start planning how to design your loyalty programs based on that distinction and use a customer relationship management (CRM) tool to make your loyalty program a pivotal part of your overall customer engagement strategy.
The future of guest loyalty
Some new guest experiences like contactless services will endure, but as hotels strive to differentiate, there will also be a dramatic refocusing on digital transformation to enable truly personalized offers and experiences.
The hospitality industry will become an increasingly self-service experience, and technology will play a key role in allowing personalization that delivers memorable experiences that guests crave.
Today, hoteliers must rethink how to adapt their strategies related to guest loyalty in hospitality’s “new normal”. They are more and more aware that loyalty programs are a crucial part of the holistic hotel experience.
These programs can not only incentivize return bookings and help differentiate a hotel from the competition but they are also a great way for brands to continuously engage with customers in between trips and build an end-to-end value proposition.
Guest loyalty in a human-first industry
Cultural guidelines for better guest connections
The hospitality industry has always been and will always be about the human relationships and interactions between guests and hoteliers.
With this in mind, you must establish cultural norms that build connections across hotel departments and employees.
Everyone involved within your property or brand should commit to delivering the same levels of customer satisfaction and service.
The impact of people and culture can go in either direction.
An attentive, helpful, and pleasant employee and culture that fosters such engagement enhances satisfaction and leaves the guest with a positive perception of your property or brand. An unpleasant interaction with an employee delivers the opposite impact.
Microsoft declares in their State of global customer service report that, globally, 54% of all consumers say that they have higher customer service expectations than they did just one year ago. And there are many other statistics that reiterate the importance of how a higher level of customer service satisfaction can be a vital cog in the business machine.
It only takes one misstep from a single employee to ruin the goodwill created by all others. This is why establishing cultural guidelines for guest interaction and engagement remains crucial at every phase of the guest journey.
Also, in the new contactless world of hospitality where that personal touch can be lost, technology-driven personalization can be the bridge that makes the all-important connection with the guest. If a hotel knows from its data that a couple are traveling for an anniversary, then offering an upgrade to the honeymoon suite is a simple task.
Loyalty starts with recognition
The industry has talked about personalization for years, but most hotels have found it extremely challenging to roll out a fully personalized experience from looking to booking to on-property to post-trip.
Many organizations have also been limited in their ability to implement true personalization due to resource or system constraints.
That’s because bringing together a hotel’s knowledge about a guest from the property management system to the CRM, the central reservations system and possibly others, is a real challenge.
The industry has talked about personalization for years, but most hotels have found it extremely challenging to roll out a fully personalized experience from looking to booking to on-property to post-trip.
Many organizations have also been limited in their ability to implement true personalization due to resource or system constraints.
That’s because bringing together a hotel’s knowledge about a guest from the property management system to the CRM, the central reservations system and possibly others, is a real challenge.
A great way to personalize the guest experience is by leveraging your centralized guest profile and loyalty data to offer the right value-adds which in turn increases the likelihood of guest conversion, drives ancillary revenue, and also increases guest satisfaction through enhanced booking value.
Ensuring that guests are presented with the right offer at the right time, as well as the ability to differentiate the perks available are all recipes for success.
Guest loyalty's “new normal”
In the post-pandemic world, many new guest loyalty practices and guest experiences will endure.
But as hotels strive to differentiate, there will also be a dramatic refocusing on digital transformation to enable truly personalized offers and experiences.
The hospitality industry will become an increasingly self-service experience, and technology will play a key role in allowing more advanced personalization.
This personalization will deliver memorable experiences that guests crave – a “must-have” in order to build lasting relationships and loyal fans.
While there is no secret recipe for success, awareness of guest loyalty dynamics and programs combined with a focused data and technology-driven strategy that aligns with your brand’s vision and guest expectations can set your brand up for long-lasting relationships.
Recognize, personalize, and reward guests across their entire journey to deliver the experiences they crave while adding more revenue to your bottom line – it’s a win-win.
The Hotelier’s Guide to Loyalty Programs
Ready, Set, Drive Loyalty!
We hope this guide on how to generate guest loyalty was useful for you.
As travel reaches pre-covid levels again, hoteliers are taking the time to reevaluate the fundamentals of how they’ve historically operated and strategize new ways to ramp up their guest loyalty efforts in unprecedented ways.
By considering the actions presented in this guide on how to generate guest loyalty, we hope hotels can find the keys to succeed in this new – and evolving – world of travel.
You can also access our other comprehensive guides for hoteliers:
- The hospitality market insights hub
- The ultimate guide to hotel Marketing
- The ultimate guide to elevate guest satisfaction
We wish you a lot of success in your guest loyalty strategies, and please do not hesitate to contact us if you would like to discuss how to increase your guest loyalty efforts.