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Oct 15, 2024

4 ways hoteliers can optimize loyalty | Hotel Dive

Hotel loyalty programs are not just a tool for customer retention — they are a strategic asset that can significantly contribute to RevPAR. The following is a guest post from Mo Chaar, chief

Hotel loyalty programs are not just a tool for customer retention — they are a strategic asset that can significantly contribute to RevPAR.

The following is a guest post from Mo Chaar, chief commercial officer at Givex. Opinions are the author’s own.

Over the 2023 holiday season, 45% of Americans said they were more inclined to stay in hotels this year compared to last year. Now that we’re in 2024, hoteliers must utilize all resources available to start the year off on the right foot.

Effectively using hotel loyalty programs can be critical in this endeavor. These platforms, once simple reward point systems, have evolved into comprehensive tools that significantly improve guest experiences and boost revenue, especially during peak times.

Here are some ways hotels can optimize their loyalty program strategies to best tap into this demand.

Hotel loyalty programs have transformed significantly, transcending the traditional focus on points and discounts. They now play a vital role in enhancing the guest experience through custom-tailored rewards, which are designed to meet each guest's unique preferences and enrich their stay.

Central to this evolution is the realization that contemporary travelers yearn for extraordinary experiences. This has led to a shift in loyalty program strategies towards offering unique, location-specific experiences and rewards. For example, a hotel in a historically rich city might provide its loyalty members with exclusive guided tours of lesser-known historical sites, immersing them in the local culture.

Hotels can also leverage the power of social media to boost loyalty. Some 75% of leisure travelers use social media for travel planning, according to American Express Travel’s 2023 Global Travel Trends Report.

Offering personalized experiences that guests are eager to share online can turn them into brand advocates. This enhances the hotel's marketing reach and adds value to the loyalty program.

A 2021 McKinsey & Company report found that 71% of consumers now expect personalized interactions.

For hotel owners, personalization entails understanding guests' preferences, past behaviors and even minor details noted during previous stays. With data analytics, hotels can craft highly targeted offers for their loyalty program members, ranging from custom packages to special promotions for frequent guests.

The integration of AI and predictive analytics is also reshaping guest interactions and loyalty programs. These technologies enable hotels to anticipate and cater to guest needs proactively, offering personalized incentives that encourage deeper engagement with the loyalty program, ultimately boosting customer loyalty and opening new revenue opportunities.

Modern hotel loyalty programs play a crucial role in unlocking various ancillary revenue streams, as well. Integrating rewards with on-site amenities, such as exclusive dining events or customized spa services, adds a sense of exclusivity and value.

Forming strategic partnerships with external travel-related services also expands the reach of loyalty programs. Collaborations with airlines or car rental services, for instance, offer an extended ecosystem of rewards, encouraging guests to use these services alongside their hotel stay and thus generating additional revenue.

A strong tech infrastructure, especially cloud-based mobile technology, is essential for successful loyalty programs.

Mobile apps provide a convenient way for guests to manage their loyalty program, from tracking points to accessing personalized offers. Incorporating efficient and secure payment systems, such as contactless payments and mobile wallets, is also vital, catering to the expectations of modern travelers.

The integration of the Internet of Things in hotels can further personalize guest experiences. Smart room features, linked to loyalty program profiles, enhance the stay with tailored settings and automated services, from personalized welcome messages to streamlined check-in and check-out processes.

Augmented reality (AR) is another tool that can introduce an interactive and captivating element to the loyalty experience. It enables guests to take virtual tours of hotel accommodations or amenities — or even get a glimpse of nearby attractions — adding an innovative layer to the loyalty program.

Plus, the incorporation of chatbots and AI-powered customization can provide guests with personalized suggestions and support, enhancing their engagement with the hotel's digital interfaces and making their experience more streamlined.

The path forward for hotel loyalty programs is to create comprehensive guest experiences. These programs should be viewed as strategic assets, significantly contributing to a hotel's revenue and reputation.

By focusing on personalized experiences and embracing technological advancements, hotels can develop loyalty programs that resonate with guests and foster lasting relationships. This shift requires seeing loyalty programs not merely as marketing tools, but as fundamental elements of the guest experience and overall hotel business strategy.