Why Aren’t Hotels Referring Friends

/Why Aren’t Hotels Referring Friends

Why Aren’t Hotels Referring Friends

|2019-09-12T12:40:58-05:00September 11th, 2019|

By Larry Mogelonsky, MBA, P. Eng. (www.hotelmogel.com)

Common to modern apps as an incentivization tool for gathering new users, hotels should start to think of ways that they can drum up new business by prompting happy customers to refer their properties to other guests, either through digital or other ‘low tech’ methods.

First, though, it’s important to note why these peer-to-peer systems work so well, particularly when deployed in a way that’s convenient for guests – that is, via email or mobile. Via a system of credit reward, you subtly encourage a user to be a brand advocate within his or her social group while also motivating this same user to spend more on your products. It’s a win-win; you get new trial via also capture more revenue from our existing customer base.

Putting any sort of ‘recommend a friend’ policy into practice first requires a senior-level dictum as to what the exact offer will be. And remember that, for this to work, the offer must extend both ways to the current guest and to the friend.

While you can make this a discount off the nightly rate or an exclusive gift to either parties, I would recommend that you keep it simple and utilize a credit system. That way you aren’t compromising top line revenues or going out of your way to source some physical good at an extra cost. Moreover, resort credits, food credits, spa credits or whatever else have a strong tendency to run into overages and to incur incremental trial of your onsite amenities.

As an example, suppose you design a promotion whereby if a guest recommends a friend or family member and that second party stays for two nights or more, both the original guest and this new customer receive the one-time, round number of $50 in property credit that can be applied during their next stays to anything besides the room rate.

The total cost here of $100 will easily breakeven once you consider that for both parties to redeem their respective rewards, they must first fill guestroom inventory at substantially higher ADRs than the credits themselves. Then you must also consider the services utilized to render the rewards consumed. If the recommended party is a couple that stays for the minimum of two stays, the $50 credit will barely cover a meal in your signature restaurant, especially when alcohol purchases are thrown in the mix.

Thus, this credit will not only increase top line revenue for ancillary onsite services such as F&B or spa by boosting overall utilization but will also pad the bottom line because the credit will likely never cover the full bill. The only question that remains from this example is whether $50 to each party is enough to effectively spur them into action. After some initial testing, this number may require some adjustments to better fit your target audience.

Once you have solidified the promotion, the next two steps are first how to communicate it to guests and then how to track its consumption. To the latter, any PMS can be set up to house a promo code and ask for a myriad of verifications. And for the former, a primary action is to train your front desk teams so they know to prompt guests at checkout about this incentive, and then support these associates with appropriate marketing materials and reminders pushed out through email folios, guest satisfaction surveys or electronic newsletters.

There are many ways to make this promotion work, and if you would like to decipher what’s best for your specific property, then let’s chat.


This article may not be reproduced without the expressed permission of the author.
Editor’s note: To discuss business challenges or speaking engagements please contact Larry directly.

About Larry Mogelonsky

One of the world’s most published writers in hospitality, Larry Mogelonsky is the principal of Hotel Mogel Consulting Limited, a Toronto-based consulting practice. His experience encompasses hotel properties around the world, both branded and independent, and ranging from luxury and boutique to select-service. Larry is also on several boards for companies focused on hotel technology. His work includes five books “Are You an Ostrich or a Llama?” (2012), “Llamas Rule” (2013), “Hotel Llama” (2015), “The Llama is Inn” (2017) and “The Hotel Mogel” (2018). You can reach Larry at [email protected] to discuss hotel business challenges or to book speaking engagements.

Contact: Larry Mogelonsky

[email protected]/

As the first news aggregate for the hotel industry, Hotel-Online is the industry’s must-read daily news source for everything hotel curated for busy professionals. Sign up today for industry news delivered to your inbox.