Redefined Personalization, Instant Rewards and Technology are the New Pillars For Guest Engagement
By Ellis Connolly
We are officially on the eve of a new year, already moving through the holiday season at the signature blink-and-you-might-miss-it pace that is seemingly synonymous with this time of year. From Thanksgiving celebrations to Christmas festivities, end-of-year reflections, and year-ahead preparations, our personal and professional calendars are likely brimming with activity and commitments. But this year, perhaps more than any other, feels especially monumental, as 2022 was not only the year the world returned to relative normalcy – it was the year the hospitality industry finally roared back to life.
Of course, this industry is nothing without its traditions, and we can’t conclude this pivotal year without first paying lip service to the trends it produced and, more importantly, the trends we expect to dominate in 2023. Specifically, we want to look at the loyalty segment of the hospitality industry to identify the foremost trends expected to turn legacy loyalty on its head in favor of a new kind of loyalty next year.
1. Guests Crave Personalization and Connection
If the theme of 2021 was ‘the new normal,’ the theme of 2022 was surely connection and experiences. After two years of pandemic-related closures and limitations, it seems we found our post-pandemic redemption through rekindled connections and in-person moments shared with friends, family, and even the brands we purchase from. Consumer values have been recalibrated to embrace life after the pandemic in new ways, and hotel loyalty programs are expected to adjust accordingly.
To this effect, the Qualtrics (Nasdaq: XM) 2023 Global Consumer Trends Report revealed that consumer loyalty will be won through personal connections, not pure efficiency. “The human desire to be heard and understood is universal, especially in today’s digital world,” said Bruce Temkin, head of Qualtrics XM Institute. “With all the economic, political, and medical uncertainties over the next couple of years, organizations need to get even better at recognizing and responding to shifts in customers’ thinking and feeling to retain their loyalty.”
Simply put, travelers are no longer content to demonstrate loyalty towards brands that fail to offer a personalized experience aligned with their values. Guests want to feel connected to the hospitality brands they book with. Hotels can capitalize on this preference by curating personalized, value-driven loyalty programs that make guests feel seen, heard, and understood. Now, more than ever before, hotels should look to encourage emotional loyalty and treat guests as valued members of their community rather than transient customers.
2. Loyalty Programs will Reign Supreme as Cookies Come to an End
In case you missed it, Google plans to phase out third-party cookies by 2023/2024 as part of its “privacy sandbox” program for Chrome. While this is great news for consumers who are increasingly wary of the digital capture of their data, it is expected to be a shock for brands that rely on that data capture to curate a personalized customer experience. Fortunately for hotels, modern loyalty programs represent an ethical and effective way to capture guest data through the power of incentivization.
The best part? Data gleaned directly from guests in exchange for rewards and perks is more likely to be authentic and accurate than second and third-party data. In 2023 (and beyond), loyalty programs are expected to become a key revenue driver for hotels and airlines with the help of comprehensive, AI-powered technology.
3. Delayed Gratification is Out; Instant Gratification is In
Consider this: In a recent survey of nearly 3,000 US adults, 45% of Millennials said technology has made them more impatient than they were five years ago. Millennials have been dubbed the generation of “instant gratification.” Moreover, 80% of millennials and 68% of non-millennials say they would be more than willing to enter a premium loyalty program of their favorite companies if offered and if the benefits and perks are valuable.
Travelers today don’t only expect personalization and convenience from hospitality brands – they also expect more tangible rewards. While loyalty systems of the past have exclusively relied on the promise of delayed gratification via a volume-based model, new-age loyalty platforms work to abandon that framework entirely. Loyalty platforms like Laasie offer instant, personalized rewards in place of tiered point systems, allowing guests to ‘cash in’ on their curated selection of reward options the moment they book.
4. It’s Time to Break the Loyalty Mold
To be frank, many loyalty ‘perks’ traditionally offered by hotels are as impersonal as they are predictable and boring. In many cases, guests will continue to save and accumulate their loyalty points to hit a higher, more exciting tier of rewards, only to have their points expire before being used. But do loyalty rewards have to be that way? Can’t we look beyond a free bottle of champagne or an extra night at the hotel to offer guests rewards that surprise them, excite them, or help to solve problems?
Finally, it’s time to break the traditional loyalty mold. Moving beyond the confines of a one-size-fits-all points system, hotels can redefine what loyalty rewards look like, in addition to what guest behaviors are rewarded. Should a booking decision be the only action rewarded by hotels? Certainly not, and hotels are now leveraging their loyalty programs to inspire engagement with guests at various touchpoints, such as leaving a review or offering feedback, or even rewarding them for making responsible choices while traveling (i.e., actions that empower environmental sustainability). In fact, sustainability is one of the foremost hospitality trends heading into 2023 and using this new framework, hotels can incentivize guests to be engaged visitors to their property and citizens of the world.
5. FOMO is Alive and Well in the Experience Economy
With two years of varying degrees of social isolation finally behind us, travelers around the world are exhibiting an undeniable appetite for in-person experiences. Now, more than ever, people place more value on experiences than material goods, especially when booking a vacation. To this effect, some of the key search and click growth trends Microsoft saw in 2022 were as follows:
- Searches for Tour Operators are up 45% compared to 2019
- Searches for Tourist Attractions are up 14% compared to 2019
- Clicks for Concerts and Music Festivals are rebounding to pre-pandemic levels
- Events, Shows & Cultural Attractions click-through rates are up 86% year-over-year (YoY)
- 22% of travelers say they plan to experience more guided cultural activities than they had pre-pandemic
As you might have guessed, this is excellent news for hospitality and, more specifically, hotel loyalty programs. With experiences increasingly coveted and sought after by guests around the world, prospective travelers are plagued with repeated pangs of wanderlust and FOMO (fear of missing out). Hotels can capitalize on this trend by offering share-worthy, experience-based rewards to guests that not only establish an emotional connection between the property and the guest but also create FOMO in prospective travelers who hear about it.
We learned the original rules of hotel loyalty, and in 2023, it’s time to break them. Modern loyalty platforms are dynamic, exciting, personalized and can delight guests. In turn, guests are given a better on and off-property experience, while hotels forge stronger connections with guests, generate business-defining insights, and maximize conversion rates.