letters spelling out the word loyalty

A record number of loyalty program members should help hotel brands lower their customer acquisition costs, increase direct-to-consumer engagement and offset any occupancy shortfalls during an economic downturn.

NB: This is an article from CBRE

Direct access to a base of loyal customers is a benefit to owning and operating a branded hotel. Loyalty members can help drive occupancy during off-peak periods or weaker economic conditions. Loyalty members redeemed a record number of points in 2022 that were earned and saved during the pandemic.

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Publicly available loyalty program metrics of five major U.S. hotel brands suggest that it may take may take more points than in the past to book certain hotel rooms, which is consistent with record-high average daily rates (ADRs), or that more guests are booking stays at resorts, all-inclusive properties and more expensive destinations in prime locations.

An analysis of several metrics suggests that average loyalty program members may be less valuable than they were in the past. This may not be true of top-tier members.

Over the past 10 years, room nights, loyalty members, loyalty program liabilities and redemption revenues may have been influenced by accounting changes, brand mergers & acquisitions, dispositions, rebranding and dynamic point pricing. Efforts were made to check for outliers, but this analysis should not be considered same-store.

Assessing the loyalty landscape

The number of loyalty program members has been growing faster than total room supply over the past 10 years, helping to expand the potential base of guests and reduce customer acquisition costs. Although this trend would be expected to increase the occupancy contribution from members, their share actually held relatively steady at 47% over the past five years. This suggests that either 1) the average member contributes less in terms of occupancy, 2) the pandemic-led shift away from traditional business travel to leisure travel has resulted in less brand stickiness or 3) there has been a temporary disruption in loyalty member booking patterns driven by the pandemic. If the shift is temporary, we expect to see growth in occupancy contribution as trends normalize.

Read rest of the article at CBRE