The big tech drive to encourage loyalty

Article by Natalie Holmes
woman internet payment hold credit card in a hotel bedroom
Image credit: Shutterstock

Technology is proving to be something of a double edged sword for the big hotel chains.

On the one hand it’s helping them to engage with guests through easily scalable and cost-effective initiatives and drive loyalty in new ways. Apps and interfaces allow integration with other relevant products and service providers, and encourage customer engagement through multiple touchpoints.

On the other hand, rapidly evolving technology is fueling fierce competition from online travel agencies.

Nevertheless, “employing tech is one of the best ways to drive loyalty for hotel chains,” says Dale Nix, Hospitality Consultant at Avenue9, part of JLL Group. Indeed, many of the big players, including Hilton, Hyatt, Marriott and Starwood (the latter two are expected to merge later this year) have recently revamped their loyalty programs, driven by digital opportunities, as well as a desire to encourage direct bookings.

The direct-booking push, as manifest in member discounts and other perks, is a reaction to the increasing dominance of online travel agency (OTA) giants like Expedia and Booking.com. In an attempt to wrest back control of their revenue stream, hotel chains have begun offering the lowest rates to members who book directly.

Starwood Hotels and Resorts led the way with exclusive discounted rates and free wifi when booking direct. Marriott’s Rewards members now receive lower rates when booking direct, and also benefit from free wifi, mobile check-in, and an option to earn points or discounts when reserving their room on the chain’s website. Likewise, Hilton has recently introduced discounted rates and online check-in for HHonors members, as well as the existing points program.

Discounts and points alone, however, can be problematic. “Offering points is about buying loyalty,” says Nix. “I define loyalty as an emotive response to a brand.” He uses Jimmy Choo shoes as an example: You don’t buy a pair because they’re on offer. You buy them because you identify emotionally with the brand. “That’s loyalty,” he adds. “By offering discounts, hotels can end up cannibalizing their rate.”

The battle for hearts and minds

Luring new members with discounted rates is one thing; engendering enduring loyalty is quite another. “The trouble with points schemes is that you end up commoditizing your product,” says Nix. “There’s not much you can do to separate your own brand identity from any other. I see that happening now with hotels: It’s the same path that the airlines went down a few years ago.”

For the hotels’ part, many are taking a multi-pronged approach to loyalty. “There’s no question that our focus and everyone’s focus seems to be to further enhance and develop the relationships that we have with our own customers,” says president and CEO of Hyatt Hotels, Mark Hoplamazian, in an April interview with Skift. “Increasingly we are rethinking loyalty in a very, very broad way. Not just the program but also what it means to actually extend the sense of our brand and our purpose to those interactions with our guests…” he adds.

Online check-in and other such exclusive member benefits are only the tip of the iceberg. Access to curated experiences has become the norm among big hotel chains, as the wider travel industry shifts its focus from products to experiences.

Hilton has approached the points vs loyalty dilemma by allowing members to redeem points on exclusive experiences under their @Play banner. Current opportunities include a sumo lesson and seats to view the grand tournament for visitors to Tokyo, and a private concert by indie band JR JR at the Hilton Toronto. Such a memorable experience can create lasting emotional connections to a brand, and serve to foster a sense of loyalty that goes much deeper than a discount.

Branded experiences are also offered by the likes of Marriott (including Ritz-Carlton), who have just introduced more exclusive features for its members. Their “experiences marketplace”, a lot like Hilton’s @Play platform, lets members bid on intimate or immersive experiences like cooking classes and in-room music gigs. Also on the cards for Elite members is a dedicated concierge service that helps guests plan their travel. Additionally, Gold, Platinum and Elite members receive that most coveted of amenities: Guaranteed late checkout until 4pm.

In a related moves pillared by tech integration, Intercontinental, Starwood and Hilton have all partnered with Uber, variously amalgamating app functionality, encouraging cross sales, and points accumulation opportunities—all available exclusively to loyalty program members, of course.

Big Data, big opportunities

To create a truly personalized guest experience, hotels need to collect as much information as possible about each individual. “One of the things that loyalty can do, and how technology helps, is that we’re able to gather the finer details about our guests,” says Nix. “If you encourage guests to use the loyalty program at every touchpoint, you start getting a really good picture of the buying habits of your customer, such as recency, frequency and value of the spend, and the portion of the customer’s wallet that each of these entities are getting.”

At present, the biggest challenge is processing all the data and turning it into actionable steps. It may be a work in progress but as emerging technology become mainstream, the opportunity to convert data into truly tangible value will be employed by savvy hotel brands, to everyone’s benefit, says Nix.

Not only can hotels use big data to identify and target their model customer—that is, the guest who provides highest value, but also provide guests with better service.

“Guests look for personalization, recognition and status,” concludes Nix. “We can provide those things at very little cost if we get it right. It’s about creating that seamless guest journey, from booking, to staying, to paying and beyond. We have to make it easy for the guest to say yes—and it doesn’t have to be through points.”

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