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February 18 2013

Do Loyalty Programs Still Matter?

By David McMillin, Staff Writer

Remember when you used to focus on racking up those extra hotel points and frequent flier miles so you could cash in for your reward?

Well, it seems that those days are over for the majority of travelers. According to a recent survey from global consulting firm Deloitte, travelers have almost forgotten the concept of loyalty. The results show that just eight percent of respondents are always loyal to the same hotel brand, while just 14 percent always book on the same airline.

“It’s clear that travel brands need to up their game if they want to drive genuine loyalty among consumers,” Adam Weissenberg, vice chairman, Deloitte LLP and U.S Travel, Hospitality and Leisure leader, said in a statement. “With heightened competition and eroding customer loyalty, hotels and airlines, now, more than ever, need to focus on enhancing and personalizing the consumer experience.”

However, there are plenty of barriers to establishing that element of personalization. The survey shows that 63 percent of respondents do want to engage with hotels and airlines via social media. Additionally, a whopping 80 percent of respondents have never downloaded a mobile app from a hotel or an airline.

“Some these travelers may be unwilling to engage with big brands due to the perceived nickel-and-dime approach that has taken hold across the industry over the past few years,” Carolyn Clark, vice president, marketing and communications, PCMA, says. “It’s hard to feel like there’s a true personal element when consumers are asked to pay more for checking their bags on flights or accessing Wi-FI in their rooms.”

“As extra fees pile up across the entire industry, being loyal to a brand doesn’t seem as important,” Clark adds. “If the experience is the same, consumers will use costs as their key benchmarks and decision trigger.”

Redefining Loyalty

While those extra fees may frustrate travelers to the point that free hotel stays and free domestic tickets don’t matter, it’s important to recognize that loyalty programs have evolved to offer a much wider range of rewards. For example, frequent fliers on American Airlines can redeem their miles for everything from identity theft protection to VIP gala events. Other airlines have followed suit, creating partnerships with plenty of companies to create more compelling offers.

Here at PCMA, members can take advantage of another unconventional reward opportunity: Hilton and Starwood both give meeting professionals the ability to pay for their membership dues with rewards points.

In addition to tangible, redeemable rewards, loyal customers can also benefit from treatment that has no real price tag. In a CNBC documentary last year, David Roberts, senior vice president, global revenue management, Marriott, the hotelier admitted that Marriott will always keep a few hotel rooms available for their most loyal customers - - even if the hotel is “sold out.” Having access to that secret block of rooms is certainly a benefit for the weary traveler.

Communicating the Value of Loyalty

Redefining loyalty is only part of the equation. As the costs of hotel and airfare continue to increase, it’s crucial that travel companies effectively communicate the added value that they bring to the table.

“Travelers know that a lower price might just be one click away at an online travel agent,” Clark says. “It’s up to hotels and airlines to create a strategy that reinforces why their brands are unique enough to warrant making reservations with them time and time again.”

That strategy begins with shaping an experience that travelers will want to turn into a routine. Deloitte’s survey reveals that there are many additional elements beside price and points that matter to hotel guests including free Wi-Fi, free parking and ease of check-in.

For more insights into the evolving preferences and needs of today’s travelers, click here to read the full report from Deloitte.

1 Comment

  1. 1 Mark 19 Feb
    Great read! Loyalty has gone out the window and it is now all about pleasing the asset managers of the hotels versus the customers who reach into their pockets to support them. The brand that figures out first that taking care of the customer is priority they're the ones that will come out on top and outperform their comp set on the STAR reports.

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