It’s Time to Revitalize “Reward-centric” Paradigms in Hotel Loyalty Programs
The “liquid” nature of hotel consumption patterns poses challenges in fostering genuine guest loyalty through the sole provision of loyalty rewards.
Conventional reward-based loyalty programs
Loyalty programs play a pivotal role in retaining valued customers for businesses. Within the hotel industry, acquiring new patrons demands a considerable investment of effort and resources, (5-to-8 times) surpassing the resources required for maintaining existing clientele. Testimonials from customers also underscore the substantial impact of hotel loyalty programs in bolstering revenues by fostering guest retention. Loyal customers not only exhibit consistent patronage towards their preferred hotels but also metamorphose into passionate advocates, amplifying positive word-of-mouth. Consequently, esteemed programs such as Marriott Bonvoy, Hilton Honors, Wyndham Rewards, and Accor Live Limitless prioritize the meticulous execution of their loyalty promotions. Notably, hotel customers themselves attest to the allure of irresistible deals and enticing promotions from these programs, creating a strong inclination to indulge in a luxurious hotel experience.
Amidst the undeniable advantages of loyalty programs in nurturing guest loyalty and driving revenue, the time has come for hotels to reimagine their loyalty strategies beyond a mere fixation on rewards. Too often, hotel loyalty programs fixate on an inundation of enticements — be it discounts, points, opulent room upgrades, or exclusive services — to coax customers into a cycle of repeated purchases through reward redemption. However, this myopic approach fails to foster this coveted “loyalty loop” among hotel guests, whose consumption patterns inherently exhibit a fluid and transitory nature.
In the dynamic realm of hotel loyalty programs, it is vital for hotels to redefine their strategies and transcend the conventional reliance on rewards.
“Liquid” hotel consumption
Nurturing customer loyalty in the hotel industry presents formidable hurdles, given the distinctive nature of customer consumption. With the freedom to seamlessly transition between brands based on travel objectives and destination preferences, even guests who frequently stay in business or luxury accommodations may gravitate towards boutique hotels in pursuit of unparalleled experiences. This intricate landscape poses a challenge in cultivating unwavering loyalty towards a singular hotel brand.
Thus, we can say, within the domain of hotel consumption, guests demonstrate a discernible pattern known as “liquid consumption.” Unlike consumers in other sectors who embrace steadfast and predictable consumption behaviors, hotel customers engage in intermittent utilization of products and services, influenced by their travel-oriented inclinations. This transient and mobile nature of hotel experiences presents a dynamic landscape for marketers to skillfully traverse, adapting their strategies to meet the ever-changing needs and preferences of these nomadic guests.
A significant catalyst behind this fluid consumption behavior is the prevalent phenomenon of “polygamous loyalty” among hotel guests. It is customary for individuals to actively participate in multiple loyalty programs concurrently, granting them the flexibility to effortlessly transition between hotels should their current rewards fail to engender enduring loyalty. That said, a guest may possess loyalty memberships with diverse hotel chains, affording him or her the liberty to embrace alternative options based on evolving tastes or unique travel requirements.
This reality presents a formidable challenge to conventional loyalty program strategies in the hotel industry. Relying solely on reward-based incentives may no longer be adequate for cultivating true guest loyalty. It is imperative for hotels to acknowledge this paradigm shift and explore innovative approaches to effectively engage and retain their valued customers.
Recreational and “sticky” loyalty program model
In light of these evolving dynamics, hotels are embracing avant-garde methods to redefine loyalty programs. They are crafting customer journeys that are characterized by spontaneity, variation, and an inherent allure akin to TikTok (i.e., “sticky”). By orchestrating immersive and novel content and experiences, hotels aspire to fashion an enthralling spiral of engagement that nurtures lasting customer loyalty and devotion.
By transcending the confines of conventional reward-centric paradigms and embracing a realm of experiential marvels, hotels can effectively surmount the limitations of traditional loyalty programs. This transformative shift not only harmonizes with the dynamic nature of hotel consumption but also affords an invaluable opportunity for hotels to stand out amidst the cutthroat competition of the industry. From hosting exclusive gatherings tailored exclusively for esteemed members to orchestrating bespoke surprises upon arrival and unveiling unparalleled amenities, hotels can truly redefine the realm of guest experience and set themselves apart from their rivals.
In a captivating twist, the infusion of gamification elements into loyalty programs presents a trailblazing avenue to captivate guests and foster unwavering loyalty. Through the incorporation of interactive challenges, tantalizing achievements, and enticing rewards, hotels curate an enchanting environment teeming with excitement, accomplishment, and eager anticipation.
Outro
By unraveling the intricate intricacies of liquid consumption and embracing the call for avant-garde methodologies, hotels unveil a realm of infinite possibilities to redefine their loyalty strategies in tune with the ever-changing expectations of discerning guests. Embarking on a voyage of unpredictability, infusing doses of exhilaration, and entwining the magic of gamification within the tapestry of the customer journey, hotels orchestrate unforgettable encounters that transcend the boundaries of time and nurture an unbreakable bond of enduring loyalty.
Author’s note:
I — Wangoo Lee — am a Ph.D. researcher researching tech-mediated service and hospitality experiences, including gamification applications in restaurant and hotel contexts.
