Ask the hotel experts: How can hotels halt the demise of guest loyalty?

  Posted in Hotel Management

In the current industry, the task of generating hotel loyalty is a difficult one. The behaviours, attitudes, and expectations of today’s traveller are constantly changing. Couple this with an overwhelming case of brand saturation and it’s not surprising many believe loyalty is dead. The problem is, it’s still important.

It’s no longer enough to implement a points-based rewards system or offer discounts to returning customers. The amount of places to promote and implement loyalty programs is ever increasing making the landscape more confusing for hoteliers. It’s hard to nail down exactly what will convince modern travellers to become brand-loyal again.

Thankfully it’s not impossible. That’s why SiteMinder’s Dean Elphick spoke to Jordan Hollander of Hotel Tech Report. Jordan previously worked at Starwood Hotels & Resorts with the Global Partnerships team, contributing to the award-winning Starwood Preferred Guest (SPG) program. Now, at Hotel Tech Report, he has co-founded the number one ratings and review platform for the hotel technology industry.

In this interview, he reveals how hoteliers can give themselves the best chance of winning guest loyalty and create a distinct brand personality.


What is the current state of loyalty in the hospitality industry?

While it may be extreme to say hotel loyalty is dead, it’s certainly not the same as it once was.

The concept is alive, but old tactics are dying. That is the opinion of Jordan Hollander, who says loyalty is about being dynamic and efficient in the space.

“It’s more important than ever to create a great experience because loyalty only lasts as long as a quality experience,” he explains. “There’s no amount of loyalty points that would give someone who had a terrible experience reason to come back again. I don’t think there is a strong enough offer in the market yet that can break away from the fact loyalty is about creating a fantastic relationship with your guest.”

The amount of options for travellers in the market today means hotels can not get away with run-of-the-mill strategies or playing a numbers game, says Jordan.

“In the end, we have so many different choices that if your brand doesn’t really play off the unique consumer insight, you’re not going to develop any loyalty.”

Another consideration for hotels is the balance between price and experience. Ultimately it comes down to value and Jordan says hotels at opposite ends of the scale are making it difficult for other brands who can’t differentiate themselves.

“With income disparity and the wage gaps that occur wealth is spread to both ends of the spectrum, so you find that people in the middle of the band on the retail side get squeezed and their businesses dissipate quite quickly. The high end of retail is doing well and at the really low end on the price conscious side, people who run very efficient operations do really well. Everything in the middle is focused on value but they’re not actually delivering the greatest value and it becomes a bit confusing for the consumer.”

The amount of options for travellers in the market today means hotels can not get away with run-of-the-mill strategies

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The attitudes of travellers are changing

Besides technology, one of the most important things to keep up with is the personality of the customer.

Travellers today are extremely diverse with a multitude of resources at their disposal, meaning their expectations can change dramatically between individuals. Time and again, social media is mentioned as a game changer but that’s because it’s true!

“I think it’s pretty clear how social media has been able to share the experience that guests are having”, says Jordan. “Word of mouth travels really quickly. It travels in a digital realm now too, along with the physical, so hoteliers need to have an extremely heightened focus on experience because any slip up could become significantly amplified.”

Social media is a place where guests not only share their experiences but find inspiration and information from other users. It’s a medium that hotels need to look closely at and uncover certain questions they need to ask themselves, according to Jordan.

“Generally speaking, what is the mindset of someone coming to my property and how do I satisfy that in a way that really meets their needs instead of just being a bed and trying to be a factory for corporate travel? I think it’s just the little details that stand out because the market has become so saturated”, he says.

“If you can find these small touches to break through, whether it’s a seamless check-in or having an extra amenity in their room, understanding the kind of preferences that they have, these are great ways to stand out.”

Key loyalty strategies for hotels

Unless your hotel is lucky enough to have a customer base that regularly returns out of convenience and necessity, Jordan believes a one-off loyalty program is unlikely to work.

“Overall it’s far too time consuming and expensive to invest in that kind of plan. I think plugging into a loyalty network is the better option. Something that allows a global user base to use points across properties around the world,” he explains. “I know that there is a company called Guestbook that has taken a really interesting approach to loyalty. They partner with the hotel to give their guest 5% cash back when they book. The loyalty happens at the time of purchase and it has unique network effects that one-off hotels are just not going to have.”

“Soft brands are another good method that Marriott implemented. The idea is that instead of forcing an independent hotel to convert to a specific brand, they allow them to maintain their local authentic flavour, their name, their history, and plug them into a loyalty program. You’re going to pay a little bit of a higher fee than you would direct, but it also opens up this entirely new market for you.”

Despite the apparent strength of social media, it’s not always the most powerful way to engage guests and keep them top of mind. Not all hotels have the necessary aesthetic to be a viral force and so email can still pave the way for their marketing activities.

“It’s really about keeping the core marketing message simple,” says Jordan. “Be clear about what guests are getting for their loyalty. Simple rewards are much easier to share than a complex points conversion.”

The best technology for hotels

While it’s obvious to say channel management technology needs to be a huge focus for hotels, Jordan also believes the revenue management space and the ‘Internet of Things’ (IOT) provide huge opportunities for hotels to increase their margins.

“You have to look at personalisation and how you can deliver the right price at the right time,” he states. “You need to understand what specific variables you can offer and provide real value to capture business.”

“The other side is IOT. You’d be surprised how often guests state how hard it is to find the lights in a hotel room. These are small, but at times very frustrating, things that occur, but can be solved by more modern systems in the property. There are a lot of ways in-room tablets and internet connection to devices, are creating a better experience for guest in a really meaningful way. You see tonnes of guests in the properties that have installed these kinds of devices, leaving reviews about what a seamless experience it was once they got into the hotel room, and how it made them feel like they had even better connectivity than at home.”

Your hotel can also combine these systems with the data you collect to thoroughly understand what your guest enjoys and tailor the entertainment, snacks, and room amenities to suit them.

Unfortunately, not all hotels see the immediate benefit of implementing the newest and best technology available to them, something Jordan also laments.

“As you have more competition in the market, you can no longer afford to deliver sub par experiences because now your guests have a whole gamut of different types of opportunities and substitutes for your product. It’s more important now more than ever to make sure your operations are efficient so you have the right margins to invest in your business.

“There’s a great saying that Charlie Munger, who’s Warren Buffet’s business partner said; ‘If you throw a frog in boiling water he’ll jump right out, if you put him in cold water and slowly turn up the heat he’ll die there.’ I think the second situation is where hoteliers are now – they’re slowly dying and they don’t know it. The ones that are able to compete and use technology to create great experiences to make their business stronger are going to be just fine.”

 

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