How Hospitality Companies Can Break the Mold on Travel Loyalty Programs

Hospitality rewards have always been one of the gold standards in customer loyalty programs. And they remain highly valued by travelers. Accenture’s latest cross-industry analysis found that hospitality’s Loyalty Dividend (an objective measure of how much customers value a loyalty program) is still well above other sectors such as restaurants, retail and car rental.

AN INDUSTRY IN FLUX

The challenge in the short term, however, is maintaining this leading position. The dynamics of the travel industry are becoming increasingly complex, especially as it recovers from the once-in-a-generation disruption of the pandemic.

The mix of who’s traveling, how, and why has been in flux ever since. In particular, the proportion of leisure travelers has grown. And because this customer segment typically travels less frequently, it means it’s harder for the same numbers of customers to earn loyalty status under existing point-based programs.

At the same time, customer needs and expectations about loyalty rewards are changing. And alternative market players such as hotel booking aggregators are also now offering their own rewards programs.

LEAN IN TO LOYALTY

All this rapid change means that static points-based rewards programs are in danger of losing their relevance. Growing numbers of travelers are looking for faster, more flexible rewards that are more relevant and usable right away.

To maintain a strong loyalty dividend, therefore, hospitality rewards programs will require a post-pandemic reset. Companies will need to ensure they’re still targeting the right travelers, in the right way, with the kinds of rewards today’s customers actually want.

In getting started, there are three priorities to consider.

#1 THE POWER OF NOW

For leisure customers in particular, the idea of gradually accumulating loyalty points with a view to spending them on a high-value future reward is less appealing. Today’s travelers increasingly want to be able to see and spend their points as they earn them.

Developing accessible app-based “earn and redeem” programs should therefore be a priority. This kind of transactional redemption model enables travelers to get real-time updates on their points and status. It also allows them to spend points on smaller, simpler “microburn” purchases. Typical examples would include a room-service meal or a drink at the hotel bar.

To deliver that model, hotels will need strong, seamless, user-friendly real-time digital user experience, personalized to the needs and expectations of each individual traveler, supported by a strong cloud-based backend and a powerful data analytics platform.

#2 FLEXIBILITY MY WAY

Today’s travelers also want greater choice and flexibility in the way they redeem loyalty points. As hotels look to fend off competition from brand-agnostic aggregator platforms, they should consider broadening the focus of their redemption partnerships—even to partners outside the travel ecosystem.

They should also consider extending flexibility to the ways customers can qualify for loyalty status. That might mean allowing travelers to achieve higher levels of status via their points, not only via the number of nights they stay per year. Meliá Hotels International’s loyalty program is one example of this happening already.

Again, deep, real-time data insights—behavioral and attitudinal as well as demographic—are key to delivering this flexibility. That data is also a critical prerequisite for personalization, enabling hotels to hyper-personalize rewards and experiment with innovative loyalty experiences.

#3 TRIED AND TRUE EXPERIENCES

Customer loyalty ultimately rests on the reliability and consistency of the overall experience with the brand. Hotels should therefore consider increasing the scope of a loyalty strategy to include a holistic consideration of all a traveler’s touchpoints across the entire customer journey.

That includes prioritizing areas not traditionally tied to loyalty operations, such as omnichannel customer service. It can also be valuable to think how the loyalty experience can provide benefits that make members feel special and valued, such as luxury experiences and excursions.

MAKING REWARDS TRULY REWARDING

It’s important to recognize today’s customer expectations aren’t set in stone. Given the highly dynamic nature of the travel and hospitality industry, it’s certain that the mix of traveler needs and desires hotels must satisfy will continue to shift and evolve.

That’s why hospitality needs agile data and platform capabilities that allow them to continuously reassess the strength of their Loyalty Dividend, and then adapt loyalty programs to ensure the business is investing in the rewards that today’s travelers actually desire.

The ultimate objective is to make sure loyalty rewards keep delivering value, not only for travelers, but for the business too.

ABOUT THE AUTHOR

Liselotte De Maar, managing director and global strategy lead for Accenture's travel practice. In this role she helps clients to design a seamless travel experience, drive efficient operations and create value from new business models.