Guest retention refers to the strategies and efforts that encourage guests to return to your property after their first stay.
NB: This is an article from Little Hotelier, one of our Expert Partners
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It’s about building lasting relationships through personalised experiences, loyalty programs, and consistent engagement.
Understanding the concept of guest retention in hospitality
In the hospitality industry, guest retention is the foundation of long-term profitability. Small properties, like B&Bs and boutique hotels, thrive on repeat business. Retaining a guest costs less than acquiring a new one and often leads to higher spending per stay.
Engaging with guests post-stay through follow-ups, special offers, or simply ensuring they feel valued helps transform a one-time visitor into a loyal guest. This strong connection also promotes direct bookings, reducing the need for OTAs (online travel agencies) and saving on commission fees.
Why is hotel guest retention important for small properties?
For small hotels, building loyalty among guests creates a steady, reliable flow of bookings, even during off-peak seasons. It’s particularly valuable when larger competitors rely heavily on mass marketing and OTA bookings, making it harder for smaller properties to attract first-time guests.
By focusing on retention, small hotels like yours can develop a loyal customer base that chooses to return due to positive experiences, personal touches, and special incentives.
Hotel guest acquisition cost vs guest retention
The cost of acquiring a new guest is substantially higher than retaining an existing one. Between marketing campaigns, OTA commissions, and promotional offers, guest acquisition can eat into your profit margins. In contrast, retention strategies are more cost-effective – repeat guests are more likely to book directly, and you don’t have to spend as much on marketing to re-engage them.
- Acquisition costs: These include advertising fees, OTA commissions, and introductory discounts, which can be as high as 20% of the booking value.
- Retention costs: Often include loyalty rewards, email marketing campaigns, and small perks like room upgrades, which are far more affordable.
Key steps of the guest retention process
Understanding how to implement guest retention strategies can significantly improve loyalty and drive business growth. Here are the essential steps to follow:
