SkiftX recently published Soft Brands: Weighing the Risks, Rewards, and Realities, in partnership with TravelClick. The Insights Deck takes a close look at today’s soft brand business landscape and the risks and rewards of joining one.
Consumer loyalty plays an integral role in the hotel industry, both for client retention and for encouraging direct bookings. Building loyalty is especially important for independent hotels, who struggle to compete with online travel agencies (OTAs) to drive direct bookings. But without the backing of a major global brand, traditional loyalty point systems that reward guests with free nights or complimentary services have been inaccessible. Today, independent hoteliers are approaching loyalty programs in non-traditional ways, and despite their more limited resources, are getting increasingly creative to build guest loyalty.
To find out how independent hotels are rethinking loyalty programs, SkiftX spoke to Marius Zachariasen, vice president, marketing and innovation, at First Hotels. First Hotels has 60 hotels across Scandinavia, and recently launched its own “First Member” loyalty program which rewards members with “FirstCoins” to spend on future purchases at the hotel. We also spoke to William Koo, chief revenue architect of wJw Hospitality Consulting & Marketing Services, who recently oversaw Waikiki Resort Hotel’s integration with The Guestbook, a cash back hotel loyalty program that rewards members for booking direct at independent properties.
Both Zachariasen and Koo agree that when it comes to loyalty programs, large hotel chains have some major advantages over independents –– the main benefit being that their much larger budgets can both advertise the programs and power the back-end infrastructure to run and grow them. However, Zachariasen and Koo have found creative ways to work within the constraints of independent budgets to create programs that align with the needs of their properties and guests. They’ve also set out to improve on certain aspects of traditional points programs with their own approaches to guest loyalty.
As Zachariasen explained, “We’re much more transparent compared with the traditional system.” First Hotels realized that guests often have issues with the complexities and redemption process offered by loyalty programs. Knowing this, the team at First Hotels decided not to limit redemptions with blackout night restrictions. This creates a clear cut program where guests can redeem their rewards at any location at any time, as long as there’s available inventory –– even on holidays. First also allows members to keep their points and status for three years. “That’s something that differentiates us from our competitors, who usually downgrade inactive memberships after a year or two,” said Zachariasen. “We also fully compensate our hotels when rooms are booked with points. This gives our general managers incentive to embrace and promote the program since there are no economic downsides for them.”
Koo stressed that though corporate hotel brands boast large enrollment numbers when it comes to their point-based loyalty programs, this doesn’t necessarily mean that people are using the programs regularly. This pushed him toward integrating Waikiki Resort Hotel with The Guestbook, which provides immediate gratification to the guest upon booking. “Guests benefit immediately after booking by receiving rewards through cash back, gift cards, and charitable donations, which is more consumer friendly compared with a traditional point system,” he said. Since the hotel integrated with the The Guestbook in November, its online direct business has increased by over 300 percent and its online direct booking share has grown about 8 percent, according to Koo.
While all large brands have established loyalty programs, smaller brands and independent hotels have lacked the resources and solutions to offer the same loyalty benefits for their guests online. However, both Koo and Zachariasen have found new solutions to offer competitive programs for their hotels. Koo explained, “The Guestbook has a plug and play system that requires no upfront cost, no tech investment, and doesn’t require an entire department to run it. Meanwhile, First Hotels leverages TravelClick’s integrated hotel loyalty solution, Reward and Redeem, to power their proprietary end-to-end First Member program.
Maintaining a loyalty program in-house also helps hotels understand who their customers are through the guest data they help collect. Zachariasen explained how First Hotels’ loyalty program has strengthened their guest data. “We don’t see one channel as being better than another –– the channels each offer something different, whether it’s a booking through an OTA, direct on our website, or through a corporate agreement. But we believe our loyalty program can help us strengthen some of the channels where we have less consumer data and use that information to build a better experience.”
At the end of the day, independent properties should think about their loyalty programs in terms of economics, distribution, and guest services. While the major global brands have long had a stronghold of loyalty, alternative solutions are proving that there are other options out there that can be adapted to fit the specific needs of independent properties and their guests.
Download the SkiftX Insights Deck, Soft Brands: Weighing the Risks, Rewards, and Realities, to learn more about today’s soft brand business landscape, the risks and rewards of joining one, and how the concept may evolve in the future.