Are Loyalty Programs the Most Effective Way to Drive Bookings in 2018?

Do you remember when customers booked with certain hotels because they were loyal to the brand or because they just wanted to earn points?

Most hotels do too, which is why loyalty programs have been such a priority for hotel marketers - who have been relying on these programs to increase customer loyalty, boost direct bookings and create long-standing relationships with guests - in the past decade.

Unfortunately, those days are LONG gone.

An article by Google offered a great deal of insight into the way that today’s consumers research and book travel and what the key factors are that influence that purchasing decision. (Hint: it’s not loyalty.)

The main takeaway from the research shows a very dire picture for the future of loyalty programs: “today’s frequent travelers are not loyal;” in fact, loyalty was fourth on the list of reasons for choosing the travel brands that they did (at 46%).

These findings were also reflected in a recent TripAdvisor study, which showed that “73% of all first [travel] searches worldwide in 2017 were generic with no brand or destination mentioned; in the US, the percentage of generic first searches was slightly lower (63%).”

Oracle’s 2018 global survey gave us even more detail about consumers’ views on loyalty programs – and why they just aren’t as effective anymore: “Consumers are selective when it comes to signing up for loyalty programs and look for real relevance; in fact, 30 percent rarely join loyalty programs, 46 percent only sign up to select relevant programs, and just 24 percent sign up to every loyalty program”.

The Oracle survey also showed an even bleaker picture: “[g]iven the choice to revoke their personal information from hotel brands, more than 80% of respondents said they would.”

That’s a staggering number given how much time and money hotels pour into their loyalty programs every year, especially since many hotels report high success rates on their programs.

Yes, you may have seen a growing number of participants join your brand’s loyalty program in recent years but that doesn’t change the fact that registration (for a loyalty program) doesn’t automatically result in that person being a valuable customer. The number of people who sign up for your program isn’t the metric that truly matters from an operational success standpoint because “seven in 10 hotel loyalty members participate in multiple programs;” as such, what makes a loyalty program successful is whether or not it is converting lookers into bookers.  

Like the Google study, all these statistics reinforce this one simple fact: loyalty is no longer the most effective factor for hotels who want to convert direct bookings.

So, what does that mean for hoteliers?

There are three influential deciding factors for high-value guests when booking travel, and hotel marketers can leverage these influences to boost their property's occupancy and RevPAR.

3^rd Most Influential Factor: Online Reviews

The Google/Greenberg study shows that, before loyalty, online reviews were the third most effective factor in influencing a high-value traveler to book with your property over the competition (50%).

This probably isn’t much of a surprise to most hoteliers, as we’ve all heard many stats, from many different sources, that show that today’s consumers – especially the Millennial generation – are inspired by stories, images and videos of amazing travel experiences shared by friends, families and influencers they follow on social media.

In addition to the influence of social proof and word-of-mouth recommendations, “29% of consumers consider positive reviews as [the] most likely factor to make them book a holiday.” Reviews can be directly tied to an increase in sales, as “the brands that have embraced reviews and recommendations into their online retail strategy can experience an increase in sales of up to 18% -  2% of which is from repeat customers”.

Want to leverage the power of online reviews to boost your direct bookings? Implement these to Dos to start seeing results:

• Every hotel should be adding reviews to their website (surprisingly, 40% of hotel respondents to a Tnooz study said that their property did not share any reviews on their site.
• Recognize the value in ALL reviews, not just the positive ones. Negative reviews give your property the opportunity to show new guests that you do take your guests’ feedback and experiences into consideration – and that you will take action when customers’ needs are not met. For every negative review, you should post an apologetic reply to the reviewer that:
• Let the reviewer know that you value their feedback; thank him/her for taking the time to let you know about the issue.
• Recognize (and thank them for) any positive feedback first and then addresses their (negative) concerns.
• Do not use defensive language or tone.
• Offer the guest the opportunity to contact you directly to discuss the issue further and if warranted offers the guest a small reimbursement on their stay.
• Let the customer know what specific actions you have taken to remedy the situation.
• Invite them back to stay at your property to experience the changes firsthand; if possible, offer them a discount or another incentive to encourage him/her to book with your property again.
• Think outside of TripAdvisor as a source for customer reviews. Reviews on Facebook, OTAs, search engines, etc. are also great ways to show potential guests that all your guests were pleased with their stay.
• Make it easy for guests to see your property’s past guest ratings across multiple review sites/channels by adding a guest review tool into your booking engine.

2^nd Most Influential Factor: EASY-TO-USE WEBSITE

The second most influential factor for potential guests when booking is an easy-to-use website (55%). This response makes perfect sense: the OTAs make it quick and easy for customers to book via their sites, so if your brand.com site (and booking engine) isn’t up-to-par, you WILL lose bookings.

Another important thing to consider when evaluating the user experience on your website is how easy it is to read and use all the functionality of the site on mobile devices. More and more potential guests are booking travel via their mobile device (especially at the last-minute) so if you want to get some of those valuable bookings, your site needs to be accessible anywhere, everywhere and on EVERY device.

While the logic behind this response is self-explanatory, the action items needed are much more than just “improve your website” and “create a mobile responsive website.” To make your website easier to use, you must also update your site’s booking engine, which is the heart of your website’s functionality - and what makes the difference between a booking and an abandoned cart.

Here are some important booking engine updates that your property should be  integrating/undertaking immediately to ensure that all customers are pleased with their direct booking experience:

•  Choose a booking engine that best suits your specific property type to ensure that you are showing the most pertinent info to potential guests. For example, properties that focus primarily on leisure travel will want to highlight packages and offers in the booking engine, versus a corporate/business travel hotel, which would simplify the booking process, offering simple, clear information with minimal frills.
• Ensure that your booking engine is fully integrated into the design and look of your website. Having an obvious difference between the branding and design of your site and your booking engine will make customers less comfortable booking online, as they may make the incorrect assumption that it is a less secure payment processor.
• Many consumers are less tied to specific dates of travel. When booking travel, digital nomads want to find the best possible combination of price and convenience (location, amenities, etc.) so they will often compare rates across a longer period to find the exact combination that they want. By integrating a flexible date tool into your booking engine, you enable your guests to see your property’s room rates and any booking rules for the period around the dates searched, on a calendar, making it easy to compare rates at-a-glance.
• Ensure that website visitors with specific booking criteria and/or agreements (i.e. corporate, group, travel agent, etc.) can easily book a room through your booking engine, without having to contact your reservations team directly.

Most Influential Factor: Customer (Service)

Google’s research reinforces the importance prioritizing customer service: 60% of respondents said that customer service was the most important factor (when choosing a travel provider). By improving customer service - across all touchpoints - at your property, your customers will leave with more positive things to say about their stay, which then results in more positive online reviews.

So, how can you improve your property’s customer service?

Action items:

• Develop a strategy to secure reviews from guests – both during their stay, at check-out and post-stay. It is especially important to get customers’ feedback during their stay so that you can remedy any issues that the guest may encounter before they check out, which can dramatically improve your property’s rankings on online review sites.
• Prioritize the analysis of previous customers’ reviews to identify any ongoing, repeated complaints and use them as opportunities to improve your overall customer service.  
• Respond to all reviews, either negative or positive, on all review sites and especially on your own channels.

So, what’s the takeaway from today’s article? Say “so long!” to points and miles and start using outside-the-box strategies to improve brand loyalty and convert more direct bookings. Improve your website user experience and overall customer service (across all touchpoints) to generate more positive online reviews/ratings; combined, all these improvements will translate into a boost in occupancy, ADR and RevPAR and a decrease in your cost of acquisition.