Loyalty Programs Must Move Beyond Discounts
Loyalty programs have become a more valuable tool for every type of hotel as the Book Direct movement has increased momentum. They are seen, especially by major chains, as the natural progression to gain a longer term value from the guests. After working so hard to persuade guests to book directly for the first booking, hotels wants to encourage the guest as much as possible to come back directly again and again.
In pursuit of that, hotels have been initiating loyalty programs left, right and center since the book direct movement took off strongly nearly 2 years ago. Major chain hotels rely on points- based rewards programs, but those aren’t as practical if you don’t have a global profit portfolio for guests to stay at. Just as importantly, rewards points can feel slow to come to guests.
With that in mind, smaller chains and independent hotels are, in many cases, trying to promote different types of loyalty programs.
However, many of these programs, especially those run by independent hotels, are based on simple discounts. These discounts are unlikely to be sustainable in the long run, and there’s a strong argument to be made that their usefulness is limited even in the short run.
Here are the major problems with discount-focused loyalty programs for independent hotels, and an alternative to focus on instead: value-based, tangible rewards.
The Problem With Discounts
While discounts may suit in the short term, creating quick bookings and raising your profile briefly, there are two issues with this approach:
The financial pressure of discounting rates as a long term strategy
Focusing on price alone as the main benefit, instead of creating a memorable value proposition
Price alone will work short term, but in the long term it becomes stale quickly.
If your customer has nothing other than a good discount to focus on when they stay at your hotel, it won’t persuade them to come back. Instead, they will move onto a competitor who is offering them more benefits and a better experience for their money.