To rebuild trust with leisure travelers and compete with larger chains, independent hotels need to rethink their core value proposition and reimagine loyalty. Joining a loyalty program network helps independent hotels capture repeat business, reduce operational strain, and drive topline revenue at minimal cost.
With corporate travel continuing to lag behind as the leisure market rebounds, hospitality loyalty programs have shifted focus from business travelers to leisure customers who are looking for more flexibility on how they earn and spend rewards.
“Across industries, loyalty programs used to be very transactional,” said Kristi Gole, vice president, head of product at Global Hotel Alliance (GHA), the world’s largest association of independent hotel brands. “Hospitality loyalty programs focused on business travelers because they traveled more frequently, but these programs have broadened in recent years to capture more of the customer experience, with a focus on branding and engagement.”
While large hotel chains have recentered their loyalty programs on lifestyle rewards, providing customers with redemption opportunities outside of the main hotel product through ancillary spend or partnerships, many independent hotels have struggled to compete or underestimated the value of having a strong loyalty program.
“GHA is on a mission to help independent hotel brands compete globally,” Gole said. “That starts by educating independent hoteliers about the ways a loyalty solution gives them access, reach, and incremental profitable revenue.”
Reassessing the Value of Loyalty
According to Gole, the value of a loyalty program is largely recognized across three key areas: data, marketing, and profitability.
“Loyalty programs collect and store first-party data, which is a critical asset across all teams, particularly with the move to a cookie-less future,” Gole said. “Customer profiles are more complete and the data is higher quality because members are incentivized to keep their contact information up to date — they want to be recognized when they check in, receive credit for their stays, and notifications about their rewards.”
For hotel marketing teams, loyalty becomes the centerpiece of an effective customer relationship management (CRM) system. Loyalty programs engage customers with frequent communication and relevant content because they’re permission-based and deliver ongoing messaging — account summaries tracking toward status, updates showing rewards earned or expiring, new redemption options, and other personalized messages.
“It’s also a closed user group, which helps with rate parity contracts with online travel agencies (OTAs),” Gole added.
According to Skift Research, loyalty members are also more profitable than non-members, contributing 30 percent to 60 percent of room nights. “Compared to non-members, the average daily rate for loyalty members is often 10 to 15 percent higher, even with discounted member rates,” Gole said. “Loyalty programs give new and repeat customers a reason to book directly, with tier qualification and reward earn and burn limited largely to direct channels such as the hotel’s website and app, eliminating fees from third parties such as OTAs.”
A Loyalty Solution for Independent Hotel Brands
Independent hotel groups are proud of their individuality, and customers appreciate and often seek them out — but these groups don’t have the reach or resources to compete with the big chains.
“These largely privately-owned businesses are often not in a position to invest millions, both initially and ongoing, for loyalty technology and program management, along with global CRM and marketing efforts,” Gole said. “GHA lets them tap into one central loyalty platform while maintaining their individuality and personality.”
To that end, GHA brings 40 independent hotel brands and more than 800 hotels together under the banner of one global loyalty program, GHA Discovery, which launched in 2010 as the first loyalty program dedicated to experiential travel.
“When we set out to refresh and transform our offering in recent years, we did extensive quantitative and qualitative research to understand what customers really want,” Gole said. “And we found that they want immediate, seemingly tangible rewards, and flexibility on what to spend those toward. So we created a digital rewards currency. It’s better than points, as it’s more straightforward and more flexible.”
How GHA Discovery Works
GHA Discovery provides one membership number, one tier structure, and one consistent rewards currency for members to earn and burn across all properties. Members can use Discovery Dollars (D$) not only for purchasing room nights but also for spending across the hotel.
“It’s all about helping members indulge in the moment,” Gole said. “They can use Discovery Dollars to upgrade to an opulent room, treat themselves to a nice bottle of wine at dinner, indulge with a massage in the spa, explore a new destination with a curated experience, or save up for something big, like a dream getaway. What members choose to redeem toward is entirely up to them.”
Members can earn 4 percent to 7 percent back anytime they stay within GHA’s hotel network, and they can apply their Discovery Dollars as a form of payment at the time of checkout, with one Discovery Dollar equal to one U.S. dollar.
“Our new rewards currency is generous and transparent,” Gole said. “Unlike points programs which can be complex and difficult to redeem, Discovery Dollars make it easy to understand the value of rewards. The program is also fair and inclusive because it doesn’t just reward elite members. All members can earn Discovery Dollars from day one on their spend across the hotel and track their balance on our GHA Discovery mobile app.”
In addition to revamping its loyalty program with a rewards currency, GHA expanded its membership tiers to offer additional ways for members to progress toward elite status. Members can easily move between tiers and share status with friends or family members. This more flexible tier structure promotes cross-brand stays by rewarding members who explore the GHA portfolio, which brings new customers to the lesser-known brands and hotels at a very low cost of distribution.
“We previously only tracked nights stayed, but now members can upgrade based on nights, amount spent, or by staying at different brands,” Gole said. “The latter has attracted a good amount of attention due to being quite generous — if a member simply stays within three different GHA brands (Kempinski, NH, and Pan Pacific, for example) in a year, he or she will reach Titanium status, which is usually 30 nights stayed or $15,000 spent.”
Beyond rewards, the other key pillars of GHA Discovery include guest recognition and Live Local, an engagement strategy aimed at locals who live near GHA’s hotels.
“For recognition, we learned through our research that room upgrades are what matters most, so we worked with our brands to adjust some of the less-valued benefits as a trade-off for taking additional measures to better deliver on upgrades and focus more on quality. We also kept the main hotel benefits like early check-in and late checkout.” Gole said. “For our Live Local concept, we created benefits for members living around our hotels. Even without a stay, they can earn perks such as spa and dining offers and complimentary access to our pools and beach clubs.”
A Promising Path Forward
Gole said that the initial response to GHA Discovery’s 2021 relaunch has been overwhelmingly positive, both from the alliance’s hotels and their guests.
“From a hotel perspective, staff are excited to have this new reward offering and have reengaged, enrolling more guests and pushing the redemption of Discovery Dollars,” Gole said. “From a customer perspective, we have heard great feedback from savvy travelers realizing it’s easier to progress and retain status, and that the new rewards currency is much more generous. Looking at the numbers, the relaunched program doubled the reward redemption rate and is driving the desired customer behaviors. Discovery Dollars redeemers are 7.7 times more likely to stay cross-brand, with 60 percent of their stays being at a brand different from where they enrolled; they stay twice as long and spend on average 18 to 20 times more in cash than the redemption amount. As for our brands, they are now seeing an average of 17 times bottom-line ROI on the new program, which is 21 percent higher than before.”
GHA Discovery is delivering value for independent hotel brands looking to reward loyal customers and gain new customers at a low cost of acquisition, while increasing their return on investment, and for customers — both travelers and locals — looking for a straightforward way to earn and spend experiential rewards.
“It’s a great way to excite, engage, and motivate them to return again and again.”
The next article in this series will explore how Global Hotel Alliance’s shared technology platform helps independent hotel brands create cost savings, power guest recognition, and drive incremental revenue.