The sheer scale of the hotel industry means that hotels are in a constant battle for attention. In this increasingly competitive online booking space, they’re often forced to drive down room rates to incentivize bookings.
For many properties, this practice simply isn’t a sustainable way to do business. The reliance on OTAs has also meant that while hotels increase exposure and distribution, their profit margins are eroded once again by hefty commission fees.
When travelers have endless choice and their pick of deals, how can hotels boost direct bookings without discounting? One way is by partnering with hotel-specific rewards platforms, such as The Guestbook, StayWanderful, and Rocketmiles.
A lot of hotels remain hesitant as to whether these reward platforms really do deliver a return on investment. How much impact do they really have on driving direct traffic and increasing conversions? In the following post, we’ll address that concern against the backdrop of changing guest loyalty.
The shift in guest loyalty
Earning the loyalty of guests to drive direct bookings has become something of an obsession in the travel industry. Marriott and Hilton have both invested heavily in well-publicized marketing campaigns to promote their own loyalty programs. In the OTA space, Booking.com and Expedia have also launched loyalty programs with incentives such as discounted rates and freebies for certain hotels.
Yet traditional points-based loyalty programs don’t hold the appeal they once did. For one thing, the industry has reached saturation point. According to COLLOQUY’s biannual report, U.S. households hold 29 loyalty programs, but are only active with 12 of them.
But there’s something more deep-rooted at play: today’s traveler wants immediate gratification. They live in an on-demand world of endless choice and instant rewards. Accruing points and waiting months (or years) to redeem them suddenly feels deeply out of step with modern consumer lifestyles.
A study by PwC found that 60% of leisure travelers hadn’t redeemed their points in the past year. If the typical leisure traveler takes a vacation once or twice a year, staying loyal to a hotel for benefits they might enjoy in the future lacks the quick appeal most are seeking.
In short, loyalty is becoming hard to engender through traditional means. That’s where rewards-based platforms such as The Guestbook, StayWanderful and Rocketmiles offer a potential solution.
Using these platforms, travelers are incentivized to book direct with a hotel in return for earning cash back on the room rate, or gaining instant rewards to use on things such as airline miles, or services and products with companies including Amazon, Starbucks and Uber.
Yet the big question for hotels is, do these reward platforms deliver a return on investment?
A sound return on investment?
When a guest books direct with a hotel that has a reward-based platform, a hotel might question whether they’re losing money by unnecessarily sweetening a deal. Would that same guest still have booked anyway?
