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Hotels Need to Rework Loyalty Programs to Capture Millennials

@SamShankman

Jul 31, 2014 7:06 am

Skift Take

Mobile devices and on-demand services from Uber to Seamless are creating a generation more accustomed to instant gratification then the satisfaction of working for reward, and the trend has very real implications for hotels looking to gain millennial travelers’ loyalty from a young age.

— Samantha Shankman

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A young female business traveler enjoys the convenience of a guest-room TV. Getty Images


The hotel guests of tomorrow will no longer be happy to collect and count their points, and wait for the distant future to redeem them for a few nights’ stay.

Hotels looking to create ties with millennial travelers need to give them a taste of what loyalty with that brand means early on, and highlight experiential rewards over points-for-rooms exchanges, suggests a new Deloitte report Winning the Race for Guest Loyalty.

The report argues that because travelers tend to join an average of two or three loyalty programs, hotels need to differentiate themselves by offering “softer rewards” in the form of customized and authentic experiences.

The suggestions are backed by two studies. Deloitte’s survey of 3,000 frequent U.S. travelers found that 66 percent of millennials considered “unique rewards” as a significant factor when choosing a hotel loyalty program.

A separate InterContinental Hotels survey of 10,000 of its loyalty program members found that 49 percent of respondents said the personal welcome they receive from IHG hotels is the top reason they chose to join the IHG Rewards Club.

Challenges for Hotels

Although the potential return on investment — hoped-for lifetime loyalty from millennials whose spending power will continue to grow — would be great, the time and money spent on customizing and tailoring rewards programs could become a major obstacle for brands.

Guy Langford, Deloitte’s travel, hospitality and leisure leader, suggests using data and customer cooperation to make it happen.

“You need to use data and technology to understand your company and provide some level of instant gratification,” explains Langford. “Guests have to feel special today. What things can hotels do to provide a special experience today?”

Guests that are willing to share personal information either through personal profiles or social media are easier to please with welcome bottles of their favorite wine or yoga mats. However, not all guests are willing to share that information.

In that case, hotels can use contextual information including the guests’ age, locations and travel habits to still create a more customized experienced.

As hotels continue to invest in free Wi-Fi and concierge apps, it will be easier and more efficient for them to turn insights about guest behavior into loyalty influencers.

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