The future of the hospitality industry: Customer loyalty

Everyday organisations are busy creating brand loyalty, this in order to let a customer show a kind or commitment towards the quality of a brand. As this reduces market costs, continues profit and creates a competitive advantage.

Many people ask the question if customer loyalty works to create brand loyalty. As many players in the hospitality industry copied the frequent-guest programs (FGP) from the airline industry, this is an upcoming phenomenon. (Tepeci, 1999)

A FGP/loyalty program is a reward program, which is obtainable for customers who do purchase a service or product at that company frequently. This can be coupons, rewards, (advanced) released products or customer free merchandises. (Power, 2015)

Nowadays there are many companies within the hospitality industry who do work with loyalty programs. This, to maintain and satisfy the customer. A few of the big players have implemented these frequent-guest programs into their business model.

Hilton HHonors-points, is a program which counts award stay with elite status. Moreover, points can be gained by staying at hotel, booking with credit card, travel, shopping and changing air miles into HHonors-points. (Hilton HHonors, 2016)

Hyatt Gold Passport, is a program which counts dollars spend to redeem towards, airlines, room upgrades or free nights. Including two elite tiers. (Hyatt, 2016)

Intercontinental: Points never expire; no blackout dates for award bookings; special promotions let you redeem as few as 5,000 points for some rooms. (InterContinental Hotels Group, 2016)

Marriott: Use 33 percent fewer points for hotels on PointSavers list; no blackout dates for award bookings; lets you pay for an upgrade in cash when you book a room with points. (Marriott, 2016)

Starwood: Cash-and-points program lets you make up with cash when you’re short on points; no blackout dates for award bookings; you can get a room for as few as 2,000 points. (Starwood Preferred Guest, 2016)

These customer loyalty programs are important to show customers appreciation, gratitude and show the interest in building a customer relationship.

Research has shown that within the hotel industry average a hotel spends around 35 – 50 million dollar for these loyalty programs. But, the eventual output is 80 + million dollar. Which makes it worth the investment. (Tepeci, 1999)

Moreover, the FGP’s create a separate segment. As you have collected per person special information, to make the next visit more personalized. Companies who are dealing with a proper loyalty program can make the customers wishes come true, without asking questions. This will create a faithfulness towards the brand.

Nevertheless, there are some points of improvement for this program. The FGP system is quite expensive to maintain. It costs lots of time and money. Besides, the frequent guest program users, are highly sensitive for deals and discounts. When competitors offer better prices, these clients will easily shift to the neighbours. Last, some researches show that immediate rewards work better than delayed ones. (Tepeci, 1999)

As explained, customer loyalty does contribute partly to the brand loyalty. As this offers a unique experience with all the customer preferred wishes. But on the other hand there many points of improvement.

For companies of the future, it is important to implement a suitable and well functioning FGP, as the industry is transforming into an experience industry. But even more important is to focus on brand loyalty, as not every guest will stay in your hotel because of the loyalty program.

Biblography

Hilton HHonors. (2016). HHonors-points overview. Retrieved September 18, 2016, from Hilton HHoners: http://hhonors3.hilton.com/nl_NL/explore/points/index.html

Hyatt. (2016). Hyatt Gold Passport. Retrieved September 17, 2016, from Hyatt: https://www.hyatt.com/hyatt/about/our-company/hyatt-gold-passport.jsp

InterContinental Hotels Group. (2016). Wat is PartnerConnect? Retrieved September 18, 2016, from Partnet Connect: http://partnerconnect.ihg.com/

Marriott. (2016). Marriott Rewards PointSavers. Retrieved September 17, 2016, from Marriott: http://www.marriott.com/rewards/marriottRewardsPointSavers.mi

Power, J. (2015). Hotel Loyalty/Rewards Program Satisfaction Report . Westlake Village.

Starwood Preferred Guest. (2016). Starwood Preferred Guest. Retrieved September 19, 2016, from http://www.starwoodhotels.com/preferredguest/index.html?language=nl_NL

Tepeci, M. (1999). International Journal of Contemporary Hospitality Management.

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2 thoughts on “The future of the hospitality industry: Customer loyalty”

  1. The subject of your blog is interesting, but to me it does not give the kind of insights expected. My suggestion is to make a link to the theory from the book, f.e. the relationship policy and retention. And why base a lot of your argumentation on an 17 year old article on a different industry?

    Like

  2. A well-rounded article and supported with additional sources.

    What other benefits do you think big hotels can gain by collecting information from consumer loyalty programs? And how could they utilise it?

    Like

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