Loyalty programs redux

USA Today reports that hotel loyalty programs "have spent the last six months rolling out bonus offers and discounted award stays." That is part of a larger effort focused almost entirely on discounting as the paper reports that "discounted rates have been a big part of the strategy, especially at
higher-end hotels. But additional amenities, room upgrades, resort
credits, and deals offering a free night after a certain number of paid
nights have also become standard at many properties." Along those lines one major company, Omni Hotels launched a "72 hour sale" that offers as much as 40% off while Carlson Hotels offered a "discount" of 25-50% fewer points to book an award stay.

However, what many seem to miss, in the frenzy of discounting and cornucopia of extra points is the value-exchange that lies at the heart of a good rewards program. For starters, the communication overload that results from enrolling in a value program begins with reams of material expensively wrapped along with the obligatory card, a somewhat anachronistic approach given the instantaneous nature of data availability at hotel PMS systems. And it is safe to assume that few, if any, adherents of programs actually carry the additional plastic card. In that regard, it is pertinent to note that most Millennial or Gen Y customers prefer communication via text messages or social-networking sites. But the larger issue may be the cookie-cutter program outreach across demographics: millennial to senior; few, if any, programs seem to want to target their offers by segment.

Building new customers should (and is for many) be the primary focus of hotel majors and emulating Starbucks' strategy for this holiday season could be one useful way of going about it. The giant coffee retailer is "is
merging its rewards cards into one free program, as the coffee
chain aims to tap a rush of post-holiday traffic for steady
patronage. The company tends to see millions of gift card recipients in
its stores in the days following Christmas each year. By
launching the new rewards program on Dec. 26, the company expects to persuade "those
often-infrequent visitors to become loyal members." And being no slacker when it comes to communications the company looks to step up "direct communication with customers
when the economy turned in late 2007, with good results. Its
rewards programs give the company more information about
customers and an avenue for sending personalized promotions." Sounds like a good template to emulate for any hospitality reward program.

Published by

Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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