Technology is proving to be something of a double edged sword for the big hotel chains.
On the one hand it’s helping them to engage with guests through easily scalable and cost-effective initiatives and drive loyalty in new ways. Apps and interfaces allow integration with other relevant products and service providers, and encourage customer engagement through multiple touchpoints.
On the other hand, rapidly evolving technology is fueling fierce competition from online travel agencies.
Nevertheless, “employing tech is one of the best ways to drive loyalty for hotel chains,” says Dale Nix, Hospitality Consultant at Avenue9. Indeed, many of the big players, including Hilton, Hyatt, Marriott and Starwood (the latter two will merge later this year) have recently revamped their loyalty programs, driven by digital opportunities, as well as a desire to encourage direct bookings.
The direct-booking push, as manifest in member discounts and other perks, is a reaction to the increasing dominance of online travel agency (OTA) giants like Expedia and Booking.com. In an attempt to wrest back control of their revenue stream, hotel chains have begun offering the lowest rates to members who book directly.
Starwood Hotels and Resorts led the way with exclusive discounted rates and free wifi when booking direct. Marriott’s Rewards members now receive lower rates when booking direct, and also benefit from free wifi, mobile check-in, and an option to earn points or discounts when reserving their room on the chain’s website. Likewise, Hilton has recently introduced discounted rates and online check-in for HHonors members, as well as the existing points program.
Discounts and points alone, however, can be problematic. “Offering points is about buying loyalty,” says Nix. “I define loyalty as an emotive response to a brand.” He uses Jimmy Choo shoes as an example: You don’t buy a pair because they’re on offer. You buy them because you identify emotionally with the brand. “That’s loyalty,” he adds. “By offering discounts, hotels end up cannibalizing their rate.”
The battle for hearts and minds
Luring new members with discounted rates is one thing; engendering enduring loyalty is quite another. “The trouble with points schemes is that you end up commoditizing your product,” says Nix. “There’s not much you can do to separate your own brand identity from any other. I see that happening now with hotels: It’s the same path that the airlines went down a few years ago.”
For the hotels’ part, many are taking a multi-pronged approach to loyalty. “There’s no question that our focus and everyone’s focus seems to be to further enhance and develop the relationships that we have with our own customers,” says president and CEO of Hyatt Hotels, Mark Hoplamazian, in an April interview with Skift. “Increasingly we are rethinking loyalty in a very, very broad way. Not just the program but also what it means to actually extend the sense of our brand and our purpose to those interactions with our guests…” he adds.