In the hospitality industry, the idea of guest loyalty has become a key part of revenue generation strategy, especially for direct bookings. Loyalty is more than just staying at a hotel over and over again. It means feeling connected and happy with the hotel brand emotionally and physically. Most studies on this subject emphasise the importance of regular stays and the value of the experiences that forge a lasting bond between the guest and the hotel.
Complementing this is the strategic implementation of loyalty programmes, which have evolved to become more than just marketing tactics. These programmes are designed to recognise and reward guests using various mechanisms like points-based systems, tiered rewards, and personalised hotel offers. They affect guests at every stage of their stay, pre-stay to post-stay, by providing incentives and information to enhance their upcoming visit; during their stay, by providing individualised services and experiences; and post-stay, by encouraging feedback and ongoing involvement.
The evolution of these programmes shows a growing understanding of what makes guests loyal. They’re not just about racking up points any more; they’re about crafting a unique and lasting memory for each guest who comes through the door. This evolution is a response to a more competitive marketplace and a more discerning clientele, looking for more than just a place to stay but also an experience that speaks to them personally.
The Importance of Loyalty Programmes in today’s Hotel Industry
Today, the significance of loyalty programmes in the hotel industry cannot be overstated. They are crucial in enhancing customer retention. The hospitality industry is increasingly focusing on increasing revenue obtained through direct bookings through individual websites. This strategic shift is not just about reducing reliance on Online Travel Agencies (OTAs) but is also driven by the numerous benefits that direct bookings offer. The cost-effectiveness of encouraging repeat business through these programmes is clear, as loyal customers tend to spend more and engage more deeply with the brand.
These initiatives are especially important in boosting direct online reservations. Direct interaction with guests allows hotels to avoid the commissions of online travel agencies, resulting in higher revenue margins and the collection of valuable customer information. The programmes have an impact on all phases of the guest’s journey, boosting pre-stay excitement, enhancing the stay itself through individualised care, and fostering post-stay connections via follow-up offers and communication.
Why should you focus a lot more on a direct booking strategy?
Direct bookings help in avoiding the substantial commissions, typically between 15-25%, charged by third-party booking platforms. By circumventing these fees, hotels can directly improve their profit margins. Additionally, direct bookings contribute to more stable and predictable revenue streams, offering long-term financial benefits. It is crucial that a bigger part of your channel distribution is in the hotelier’s hands.
Beyond financial gains, direct bookings play a crucial role in enhancing customer relationships. When guests book directly, hotels gain valuable insights from customer data, allowing them to tailor their marketing and services more effectively. This data acquisition is a key advantage of direct bookings. Direct bookings are associated with higher repeat booking rates, which underlines their importance in fostering customer loyalty.
The success of direct bookings is heavily influenced by a hotel’s online presence. Website optimisation is, therefore, key, as it could lead to a substantial increase in conversion rates by as much as 30%. Furthermore, there is a growing importance of mobile technology in booking trends, with a 20% higher conversion rate for mobile bookings on direct hotel websites compared to other platforms.
The competition between direct bookings and OTAs is a notable aspect of modern hospitality marketing. The academic discussion lies on how hotels can offer value-added services to offset price parity issues with OTAs. Researchers and experts emphasise the importance of targeted marketing strategies to enhance the appeal of direct bookings with advantages and incentives, particularly when confronted with the widespread market presence of online travel agencies (OTAs).
Boosting direct conversions on hotel websites is a strategy that means much more than just financial benefits. It is about building a holistic approach that combines cost-effectiveness, enhanced customer relationships, technological advancements, and strategic positioning against OTAs. This approach reduces dependency on external booking platforms and cultivates a more direct and engaging relationship with guests, which is crucial for long-term business growth and customer loyalty.
How do Loyalty Programmes help?
When integrated into the hotel’s official website, loyalty programmes serve as a powerful tool to incentivise direct bookings. They reward repeat business and create a sense of belonging and exclusivity among guests. As highlighted by the various metrics and studies, the success of direct bookings is significantly amplified when coupled with well-structured loyalty programmes. These programmes encourage guests to book directly by offering them tangible hotel member benefits, such as discounts, complimentary services, or exclusive experiences that are not available through OTAs.
As mentioned previously, the importance of boosting direct booking conversion is not just about the immediate financial gains or technological leverage; it’s also deeply rooted in the ability to foster a loyal customer base through personalised experiences and rewards. This symbiotic relationship between direct bookings and loyalty programmes creates a sustainable competitive advantage, enhancing both guest satisfaction and business profitability in the long run.
Loyalty programmes also enable hotels to differentiate themselves in a crowded market by building long-term emotional connections. These programmes are not static; they evolve based on guest feedback and changing preferences, making every stage of the guest’s journey—from pre-stay to post-stay—a tailored experience.
Hospitality loyalty programmes have demonstrated positive outcomes across various metrics, significantly influencing customer behaviour and business performance. These programmes, aiming to encourage repeat business and customer retention, take various forms and offer diverse benefits, contributing to their effectiveness:
Enhanced Customer Loyalty: Customers often show loyalty to hotels where they have positive experiences, even if these hotels have stricter policies or higher prices. Superior service leads to repeat visits and customer promotion through social media or word-of-mouth, creating more potentially loyal guests. Research shows that loyalty programs, which include things like benefits, how customers feel, and outside factors, are important for keeping customers loyal to a hotel. This works by making it harder for customers to switch to other options because they don’t find better alternatives or it costs them more to leave a loyalty program.
Points and Tiered Programmes: Traditional points programmes, where customers earn rewards for future benefits, are effective in attracting sign-ups. Tiered loyalty programmes, offering rewards based on spending milestones, are especially popular in the hotel industry. They increase member engagement and give a sense of exclusivity and status, with higher tiers offering better benefits. This gamification aspect makes the hotel rewards programme more exciting and encourages continuous engagement.
Premium Loyalty Programs: Aimed at high-end establishments, these fee-based programmes offer instant gratification and elite status benefits, strengthening relationships with top customers and encouraging repeat visits. However, it’s crucial to balance the exclusivity of these programmes with accessibility to avoid creating too high a barrier for potential members.
Diverse Rewards and VIP Tiers: Offering a variety of rewards, including bonus points, discounts, and free services, caters to different customer preferences. VIP tiers encourage customers to climb the membership ladder, offering increased benefits for higher tiers. This strategy enhances customer retention and engagement.
Leveraging Technology: Loyalty programme software helps manage complex loyalty schemes, especially for independent hoteliers. This technology offers dedicated apps for guests to track and use their rewards, simplifying the loyalty process.
Corporate Rewards: Differentiating rewards for leisure and business travellers, with specific perks for corporate stays, can further enhance loyalty programme effectiveness.
Personalisation and Relevance: Successful loyalty programmes offer rewards and recognise and understand the value of loyal customers through personalised experiences and relevant offers, going beyond mere discounts. There is an obvious and documented financial impact of these programmes on hotel industry performance metrics like occupancy rate, revenue, and operating margin.
Examples of Top Loyalty Programmes
Savoy Group’s SAVOY Club Rewards Programme offers points redeemable for various benefits, with tier-based privileges like room rate discounts.
Novotel, part of Accor Live Limitless, provides a unique programme offering rebates on stays based on points, tier-based benefits, and early check-ins.
Dao by Dorsett‘s loyalty programme emphasises flexible rewards and tier-based benefits such as free breakfast and room upgrades.
Marriott Bonvoy offers elite status levels with benefits such as free Wi-Fi, points bonuses, priority late checkout, and room upgrades. Higher tiers like Titanium and Ambassador Elite offer additional perks like United Airlines Premier Silver Status and Your24 concierge services.
Hilton Honors covers a wide range of properties and offers benefits like member discounts, points toward free nights, and late checkouts. Elite status tiers provide additional benefits like daily food and beverage credits and free premium Wi-Fi.
What is the role of AI in enhancing and optimising Loyalty Programmes?
The integration of AI into these loyalty programmes marks a significant leap forward. AI’s ability to analyse guest data and personalise experiences, transforms the guest experience at every touchpoint. The technology enables hotels to anticipate guest’s needs and preferences, offering tailored experiences during the pre-stay phase, customising services during the stay, and maintaining engagement post-stay.
Virtual concierges and AI technologies, such as the one provided by HiJiffy, are increasingly being used in the hospitality industry to enhance guest experiences and promote loyalty. But how do these technologies benefit hotels, guest loyalty and their loyalty programmes?
Personalised Guest Experience: AI-powered virtual concierges can help you analyse guest data, such as previous stays, preferences, and feedback, to offer personalised recommendations and services. This tailored approach makes guests feel valued and understood, increasing their likelihood of remaining loyal to the hotel brand.
Efficient and Responsive Service: Virtual concierges provide instant responses to guest inquiries and requests, available 24/7. This efficiency improves guest satisfaction, as they receive prompt assistance whenever needed, leading to a more positive overall experience. In HiJiffy’s case, this happens in over 130 languages.
Integration with Loyalty Programmes: AI systems can be programmed to boost loyalty programme membership signups and offer them exclusive benefits, such as room upgrades, complimentary services, or personalised offers. By reinforcing the message, it makes the loyalty programme more valuable to guests and encourages them to keep coming back.
Data-Driven Insights: AI tools can collect and analyse vast amounts of data regarding guest preferences, spending habits, and feedback. These insights enable hotels to continually refine their services and loyalty programmes, ensuring they remain attractive and relevant to their guests.
Automated Check-In/Check-Out: With AI, hotels can offer streamlined check-in and check-out processes, reducing wait times and improving convenience. Loyalty programme members can receive expedited services or mobile check-in options, enhancing their experience.
Customised Marketing Communications: AI allows you to segment guests based on their behaviours and preferences, allowing hotels to send targeted and personalised marketing communications. This can include special offers for loyalty programme members, increasing engagement and repeat bookings.
Feedback Requests and Promotion: AI tools can promote guest reviews and feedback requests, providing hotels with insights into what guests appreciate and what needs improvement. Addressing these areas can lead to better guest satisfaction and loyalty.
Convenience in Services Booking: Guests can use virtual concierges to easily book services like spa appointments, restaurant reservations, or local tours, often with loyalty programme discounts or perks, enjoying a much more automatised approach to cross-selling and upselling
Virtual concierges and AI technologies in hotels enhance the guest experience through personalisation, efficiency, and data-driven insights. By integrating these technologies with loyalty programmes, hotels can foster guest loyalty, encourage repeat visits, and maintain a competitive edge in the hospitality industry.
So the next question is – How is this all applied in practical terms?
Boosting your Guest Loyalty and your Loyalty Programme with the power of Conversational AI
In each section, we will explore different options to boost your Loyalty Programme across the different stages of your guest journey using the power of conversational AI.
Our ultimate goal is to shed light on the extensive range of alternatives available to hoteliers. We are not suggesting implementing every single option, especially because that would be too intrusive and negatively impact the customer experience. However, your strategy will only be successful if you really test and optimise your messaging:
Try messages at different stages of your guests’ journey.
Play around with the content you use: Adapt your tone, message text, images, icons and buttons.
Really make your hotel’s loyalty programme’s main features and benefits stand out. Are you going to focus more on restaurant and spa discounts they can get? Or maybe fast-tracking check-in and check-out processes?
It is really crucial to think about what your guest is looking for during their time at your hotel, but also to provide benefits that boost an experience that maybe they did not know about.
Clicking the button above, you can find some of the examples we have seen work effectively for hotels actively boosting their guest loyalty and loyalty programmes. To make this easier to understand, we’ve broken down the examples by steps in the guest journey. Bear in mind that all of these messages are previously defined on your user-friendly HiJiffy Console.
The Power of AI when combined with trained staff
Leveraging AI in the Hospitality Industry
The incorporation of conversational AI into tools like virtual concierges and chatbots is reshaping the hospitality sector, especially in the context of staff shortages. This technological leap has revolutionised how hotels interact with guests, offering more personalised and efficient services. To harness the potential of these AI systems, ensuring that hotel staff are well-trained is vital.
A well-prepared team can effectively understand and utilise the data and insights generated by AI to enhance guest experiences. This is particularly important in loyalty programmes, where the combination of AI’s efficiency and human insight can significantly enhance the guest’s overall experience. Proper staff training in this area paves the way for a seamless blend of technology and personalised service, essential for maintaining a high standard of service quality.
Elevating Customer Experience Through Staff Proficiency
In hospitality, the customer experience is the most important factor, and loyalty programmes play a pivotal role in shaping it. Training hotel staff to proficiently use AI-driven tools goes beyond technical competence; it also encompasses soft skills and emotional intelligence.
Staff should be adept at utilising AI insights to deliver personalised services, a key element in reinforcing loyalty programmes. For instance, when AI identifies a guest’s preferences, staff should be ready to recognise and fulfil these desires, ultimately enhancing the perceived value of the loyalty programme. This personalised approach, informed by AI but executed by human hands, plays a crucial role in deepening guest loyalty and satisfaction.
Effective Synergy Between Humans and AI
Effective collaboration between human staff and AI systems is essential for a seamless guest experience. Training equips staff to work in harmony with AI tools, ensuring they can complement automated services with a human touch. This synergy becomes especially significant in loyalty programmes, where understanding and responding to guest preferences are central. Staff trained in this hybrid environment can provide a level of service that AI alone cannot replicate, crafting a more gratifying and memorable experience for guests.
Continuous Learning and Adaptation
Regular updates and ongoing training sessions on new AI features and functionalities are fundamental to keeping staff proficient in using these tools. This continuous education empowers staff to leverage the latest AI capabilities for enhanced personalisation and efficiency. Furthermore, consistent training fosters confidence and competence among staff, leading to improved performance and heightened guest services.
In conclusion, training hotel staff to work with conversational AI is a game-changer in the hospitality industry, particularly within the context of loyalty programmes. It’s not just about understanding technology; it’s about enabling staff to wield these tools to provide exceptional, personalised guest experiences. This synergy between human service and AI efficiency represents the future of top-tier hospitality.
Future Trends and Possibilities
The integration of Artificial Intelligence (AI) into hotel loyalty programmes represents an ongoing transformative shift in the hospitality industry. The potential of AI to personalise guest experiences, enhance customer engagement, and predict future trends in guest behaviour is vast and promising, and we are only beginning to take full advantage of its potential.
Personalisation through Machine Learning:
AI’s capacity to analyse vast datasets is a game-changer in the hotel industry. Machine learning algorithms are becoming increasingly adept at anticipating guest preferences by considering various factors, such as past behaviours, demographics, and even real-time data from guest interactions. This level of personalisation goes beyond just offering room preferences; it can extend to suggesting dining options, activities, and even customising the in-room amenities to cater to specific needs and preferences.
As stated previously, the utilisation of predictive analytics is evolving rapidly in hotel loyalty programmes. Hotels are not just relying on historical data but are using AI-driven predictive analytics to forecast future guest needs and preferences. For instance, AI can analyse patterns in booking behaviour and recommend tailored promotions or room upgrades in advance, making guests feel valued and appreciated.
Integration with IoT Devices
The integration of AI with Internet of Things (IoT) devices in hotel rooms is at the forefront of enhancing guest experiences. These IoT devices can adjust room settings like lighting, temperature, and even music based on guest preferences and behaviour. Moreover, AI can leverage data from IoT sensors to anticipate guests’ needs, such as restocking minibars or offering spa services when it detects signs of fatigue or stress.
Speculation and Predictions for the Future of AI-powered Hotel Loyalty Programmes
Seamless Omnichannel Experiences
The future of AI in hotel loyalty programmes is expected to bring about even more seamless omnichannel experiences. AI-driven chatbots and virtual concierges can provide consistent and personalised service whether guests interact through a mobile app, website, social media, or in person. This level of consistency and convenience enhances customer satisfaction and boosts guest loyalty.
Dynamic Reward Systems
AI’s role in loyalty programmes is likely to evolve into more dynamic and flexible reward systems. Traditional loyalty programmes often follow a fixed hotel loyalty points-based model, but AI can enable real-time adjustments to rewards based on guest behaviours. For example, if a guest frequently books last-minute stays, the AI system might offer them unique discounts or promotions in real-time to encourage their continued loyalty.
Enhanced Guest Profiling
As AI technology advances, guest profiling will become more sophisticated. AI systems will continuously gather data from various sources, allowing hotels to anticipate guests’ needs even before they express them. This proactive approach can extend to things like suggesting local activities, dietary preferences, or even anticipating room service requests.
Ethical Use of AI and Data Privacy
As AI becomes more ingrained in the hospitality industry, ethical considerations and data privacy concerns will become of utmost importance. Hotels will need to strike a delicate balance between providing personalised experiences and respecting guests’ privacy rights. Implementing robust data protection measures and obtaining informed consent will be crucial to maintaining trust and compliance with privacy regulations.
The future of AI in hotel loyalty programmes is definitely positioned for significant growth and innovation. The focus will remain on personalisation, predictive analytics, and enhancing guest engagement. As these technologies continue to evolve, they will not only transform how hotels interact with their guests but also how guests perceive and value their relationship with hotel brands, ultimately fostering stronger and more lasting loyalty.
The world of hospitality is undergoing a transformation, with guest loyalty and loyalty programmes playing a central role. We’ve explored the significance of loyalty programmes, the benefits of direct bookings, and the impact of AI.
Direct bookings are essential to reduce reliance on online travel agencies (OTAs) and gain valuable customer data. AI enhances guest experiences and boosts loyalty programme sign-ups, especially through virtual concierges and chatbots.
We’ve also provided practical examples for hoteliers to enhance loyalty programmes across the guest journey. As you can see, the synergy between AI and well-trained staff is crucial for success. Furthermore, the future of AI-powered hotel loyalty programmes looks promising with personalisation, predictive analytics, and IoT integration on the horizon. Hoteliers have the opportunity to create lasting connections and exceptional experiences, ensuring guests return for more.
Which, at the end of the day, is what this industry is all about!
Sources and further reading
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Berezan, O., Raab, C., Tanford, S. and Melnyk, V. (2017). The role of loyalty programs in boosting hotel guest loyalty: Impact of switching barriers. ScienceDirect.
Bombaij, N. and Dekimpe, M.G. (2020). Three decades of research on loyalty programs. ScienceDirect.
Bowen, J.T. and Chen McCain, S.L. (2015). Transitioning loyalty programs: A commentary on “the relationship between customer loyalty and customer satisfaction”. International Journal of Contemporary Hospitality Management, 27(3)
Brown, A. (2021). The Importance of Customer Data in Hotel Bookings. Journal of Hospitality Marketing & Management.
Brown, R., & Patel, S. (2023). Predictive Analytics in Hotel Loyalty Programs. Tourism and Technology Studies.
Davis, L. (2021). Increasing Direct Bookings: Strategies from Industry Leaders. Hotel Management Review.
Davis, L. (2022). AI and IoT: Transforming the Hotel Experience. Journal of Smart Technology in Hospitality.
Dorsett Hospitality International. (n.d.). Dorsett – Your Rewards.
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