Are Loyalty Programs the Most Effective Way to Drive Bookings in 2018?
October 11, 2018 1:19pm
By Mark Lewis-Brown, CEO & President at Vertical Booking USA
Do you remember, back in the day, when customers booked with certain hotels because they were loyal to the brand or because they just wanted to earn points? (I’m showing my age here!)
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 (give or take a few years).
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 much more selective and look for programs with real relevance: 30 percent rarely join loyalty programs, 46 percent only sign up to select relevant programs and 24 percent sign up to every loyalty program.”
The 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 (guys, there’s a serious disconnect here. What’s up?!).
Yes, you may have seen a growing number of participants join your brand’s loyalty program in recent years (after all, “29 percent of millennials plan to sign up to every loyalty program”) 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?
What are the three most influential deciding factors for high-value guests when booking travel?
And how can hotel marketers leverage these influences to boost their property’s occupancy and RevPAR?
3rd 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 “…retailers and brands that have embraced reviews and recommendations into their online retail strategy see 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:
2nd 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:
And the MOST Influential Factor When Booking Travel is…
CUSTOMER (SERVICE) IS KING
In my most recent article about eliminating hotel fees, I emphasized the importance of prioritizing customer service and Google’s research reinforces the importance of that strategy: 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 (see the synchronicity of the whole cycle?!). Win, win, win…
So, how can you improve your property’s customer service?
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.
After all, who are we to argue with Google’s (VERY accurate) insights?! (#ilovegoogle)
Tags: mark lewis-brown,
hotel loyalty programs
Vertical Booking is a leading, global reservation technology provider with hotel clients in more than 108 countries worldwide, offering solutions translated into 29 different languages and usable in all currencies. No matter the size of the property or group, Vertical Booking can provide a customizable reservation solution that supports the entire guest booking cycle, including a booking engine, GDS distribution, channel manager, OTA rate comparison tool and a reservation call center application, all through one unique dashboard. Because the solutions are module-based, hotels can customize the platform to only pay for the tools needed, keeping the suite of products affordable for everything from small boutique hotels to large groups and independent chains. Vertical Bookings solutions eliminate manual reservation input, inventory tracking and are fully integrated using 2-way XML connection, to ensure access to real-time reservation data.
To find out more, please call +1.503.343.4263, send us an email at email@example.com or visit us online at www.verticalbookingusa.com.
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