Hoteliers running loyalty programs often use member rates as an incentive to attract more guests.
NB: This is an article from Triptease
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However, with Online Travel Agents (OTAs) continuously undercutting hotels across all regions and offering highly popular loyalty schemes of their own, it’s becoming increasingly difficult to compete cost-effectively. Large, blanket member discounts of 10% (or more) have become common.
We explore how hoteliers can strike the right balance between building guest loyalty and staying competitive in today’s price-sensitive market.
“Member rates feel like a marketing gimmick”
A recent report from PwC’s 2024 Holiday Outlook suggests that while 63% of consumers plan to spend less this holiday season, many still view loyalty programs as essential for maximizing value through rewards. Research from CBRE supports this view, showing strong growth in loyalty scheme membership.
On the other hand, findings from McKinsey’s 2024 survey on travel loyalty highlighted a sharp drop in guests’ willingness to recommend hotel loyalty programs to friends or colleagues. There could be many reasons for this, including growing skepticism toward the true value of member rates. Some travelers feel that OTAs still offer lower prices. As one user shared in an open forum, “Why bother with loyalty programs when I can almost always find a cheaper rate on platforms like Expedia or Hotels.com?” Other users labeled member programs as a “marketing gimmick,” leaving them feeling like they’re “paying more by sticking to loyalty programs”.
Hoteliers still believe in the value of loyalty programmes
Regardless of this mixed picture, and potential guest skepticism as to the value of members-only prices, loyalty programs still offer significant benefits to hoteliers.
But it’s not all about room rates. They also find value in the first-party data and long-term relationships loyalty schemes help build.
So it’s win/win, surely? Attract more people with low prices and leverage the resulting data for more future revenue.
In truth, capturing direct bookings with member rates is only a win if your discounting strategy can be managed in a way that doesn’t leave money on the table. And for all too many hotels – whether due to resource, data or technology limitations – blanket member discounts that punish the bottom line, often running at 10% or more across the board, are today’s norm.
So assuming loyalty schemes are here to stay, however the public may feel about them, hoteliers face a crucial choice: sacrifice profitability by sticking with inflated, undifferentiated member rates, or explore alternative pricing options and focus loyalty efforts on more efficient incentives.
