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4 Steps to Evolve to a Next-Generation Hotel Loyalty Strategy

by Joanna DeChellis, Contributing Editor |

There are two types of hotel customers: those who are fiercely brand-loyal and those who aren’t. But as hotel loyalty programs evolve (or don’t evolve in many cases), customers on both sides are finding that sticking with any one hotel brand simply because they might get faster Wi-Fi, free parking or accumulate more points no longer makes the most sense.

Instead, the vast majority of hotel shoppers seek a different type of incentive: members-only discounts.

In Duetto’s latest whitepaper, Examining the Future of Hotel Loyalty, we offer strategies for hotels that are ramping up their loyalty efforts, moving beyond points-based programs to create value through pricing strategies that not only drive loyalty, but also drive direct bookings and, ultimately, more profits.

“If your customers care more about the money they can save than the points they can earn, shouldn’t your hotel focus on the price it can offer valuable guests to ensure their loyalty?” the whitepaper asks.

For forward-thinking hoteliers who answer yes, new Revenue Strategy solutions can take those companies down the path to personalized pricing, which rewards guests with dynamic discounts that truly reflect how much they contribute to a hotel’s bottom line.

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Here are four easy steps to help begin building a next-generation hotel loyalty strategy:

1. Know Your Guest’s Value

Each guest brings something different to the bottom line, and in order to develop a better loyalty program, it’s critical to know how much each is worth. First, determine the guest’s value based on whatever metrics you’re tracking, including but not limited to frequency of stay, total spend on property or booking patterns. Then begin to leverage this information much like casinos do to incentivize repeat business.

2. Segment Those Guests According to Profit

Once you’ve identified how much each guest in your loyalty program is worth, it’s time to divvy them up into tiers based on value. (Hint: the more tiers you have, the better you’ll be at driving profits.)

“The top tier — in which guests receive the most aggressive discounts off the publicly listed best available rate — likely includes the guests who tend to book an expensive room type over peak dates and those who reliably spend on ancillaries on property,” the whitepaper explains. “The lowest loyalty tier might be where your hotel puts the guests who always opt for the lowest-cost rooms and dates, even if they’re relatively frequent visitors.” 

3. Start Reinvesting in Your Guests

Because each guest has a different value, there is no one-size-fits-all reinvestment solution. Instead, the reinvestment rate (i.e. the percentage a hotel should apply as a discount to the room rate based on the customer’s daily value) can flex and be treated like any other discount to further maximize profits while promoting loyalty and rewarding the most important guests.

4. Train All Departments to View Loyalty Differently

When all the key players within a hotel are on the same page with regards to your loyalty strategy, everyone wins. RMs can apply smart discounts and drive profits. Sales and Marketing teams can drive direct bookings and eventually create personalized offers. Both front desk staff and customers can view personalized fenced rates to further build confidence in delivering the optimal room rate.

Ultimately, your highest-value—and likely most profitable—guests want to be rewarded with a price they can only get by logging on and booking directly with you.

Learn more about how to deliver that reward here.

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Joanna DeChellis, Contributing Editor

Joanna DeChellis, Contributing Editor

Content Contributor at Duetto
Joanna joined Duetto in May 2015 as a Contributing Editor with more than a decade of writing, editing and graphic design experience for both print and online trade publications. She is passionate about driving content innovation through blogs, e-newsletter and social channels.
Joanna DeChellis, Contributing Editor
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Joanna DeChellis, Contributing Editor

Joanna joined Duetto in May 2015 as a Contributing Editor with more than a decade of writing, editing and graphic design experience for both print and online trade publications. She is passionate about driving content innovation through blogs, e-newsletter and social channels.