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TO EARN MILLENNIALS’ LOYALTY, HOTELIERS WILL HAVE TO OFFER SOMETHING MEANINGFUL IN RETURN

04 Apr 2014

by Amina Elahi

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For hoteliers the world over, traditional loyalty programs are failing to secure a following among choosy younger travelers, which begs the question: What else they can do?

The answer, according to some, may still lie in loyalty programs — pending a successful transition into the digital age. According to recent study by Phoenix Marketing International, just one in four members of a hotel’s frequent guest program actually download the associated app. It’s not due to a lack of awareness either. Many properties have signage and employees evangelizing digital enrollment options. Instead, it’s a question of value.

Hoteliers must convince the older, wiser and perhaps more cautious Gen Xers that parting with personal information is not only safe, but worthwhile. Likewise, Gen Yers need to believe that racking up points will pay dividends. In both cases, securing the devotion of these travelers is dependent on how you answer “What’s in it for me?’

Today’s burgeoning sharing economy — which has an estimated worth of $26 billion — has already figured out how to respond. Vacation rental services such as Airbnb, HomeAway and VRBO use competitive pricing and quirkiness to make up for what they can’t offer in loyalty program amenities. In the place of a starred hotel that lacks personality, these sites can offer a property with décor — and a DVD collection — that reflects the specific tastes of the traveler. Faced with this kind of lifestyle play, how can the staid loyalty programs of traditional hoteliers compete?

MAKE IT EASY FOR GUESTS TO EARN PERKS

“I’m not slave to my loyalty program, yet the loyalty program is slave to me,” said Chaotic Moon Studios EVP John Fremont, summing up user expectations. To Fremont, priority number one is ensuring the experience of earning and redeeming rewards is seamless.

If a guest frequents the on-site fitness center, for example, there should be a smoothie waiting when he finishes his workout. Hoteliers should aim to increase the number of opportunities, while building the infrastructure that allow customers to earn, whether at the bar or in their own rooms. With valued rewards and a simple enough way to accrue them, guests should do exactly what the hotel owners want: Stay put and spend.

Hotel apps are yet another opportunity for companies to track and reward on-premise spending. Consider, for example, that top chains such as Conrad and W hotels allow users to order room service through their proprietary apps. If your hotel offered such a service tied to a loyalty ID login, tracking spending would be a cinch.

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MAKE IT EVEN EASIER FOR GUESTS TO ENJOY PERKS 

Providing more ways to rack up points isn’t worth much, according to Fremont, unless users believe they can reasonably cash in. “If I have to invest and think consciously about how I plan out my purchases or experiences, just to simply get paid back,” he said, “most likely I’m going to go the path of least resistance — I’m not going to do it.” As such, offering simpler, more attainable rewards such as free in-room Wi-Fi is more likely to increase participation.

Caesars Entertainment, which owns the eponymous Las Vegas hotel and a number of casinos and properties throughout the world, is among the companies currently transforming an existing card-based loyalty program into one that relies more heavily on mobile apps, starting with its biggest properties.

Play by TR, the latest app from Caesars, entices younger guests to pledge their digital allegiance by providing everything from personalized offers to booking services. The beauty of it, said Chaotic Moon project manager Matt Patterson, is the majority of features are available even to those who aren’t logged in.

“When you sit down at a restaurant, you see two prices on the menu and all it takes is asking your server to discover the lower price is for members,” Patterson said. Confronted by the price difference, and surrounded by signage advertising the Play by TR app, Caesars hopes customers will download and enroll.

DON’T LET THE COMPETITION OUTDO YOU

Hotels are not alone in the quest for customer loyalty, with booking sites also joining in the fun. Take Orbitz, which launched a rewards program in late October that allows users to immediately earn Orbucks that can be used to reduce the price of one’s next booking.

The company rewards mobile users by offering them five percent back for hotel stays booked through the app, compared to three percent back for browser bookings. Flights and vacation packages earn one percent. Sources close to the company, though, said the program has not lived up to expectations, but it may be too soon to say whether the new loyalty efforts will be successful in the long run.

As previously mentioned, businesses driving the sharing economy are behind in the loyalty game — but that may soon change. Although HomeAway doesn’t currently offer a rewards program, an upcoming partnership with booking giant Expedia could give consumers a new way to earn points for staying in someone’s home.

With everyone from booking sites to apartment-sharing services vying for customers’ attention, hoteliers must provide value in ways only they can — by enhancing a patron’s stay with exclusive opportunities. These might be as valuable as a free upgrade or as simple as a discount, but whatever they are, they must make users believe they are getting more than what they paid for.

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