Hotel Loyalty Programs Fail to Drive Loyalty
Deloitte’s, A Restoration in Loyalty, the study makes “it clear that travel brands need to up their game if they want to drive genuine loyalty among consumers,” said Adam Weissenberg, vice chairman, Deloitte LLP and U.S. Travel, Hospitality and Leisure leader. “With heightened competition and eroding customer loyalty, hotels and airlines, now, more than ever, need to focus on enhancing and personalizing the consumer experience.”
Deloitte’s survey that provides insights into consumer travel behavior and loyalty program satisfaction. Surveying over 4,000 travelers and conducting two in-depth focus groups with frequent business and leisure travelers, this research uncovered a steep decline in consumer loyalty to travel brands. Only eight percent of survey respondents indicated they always stay at the same brand of hotel brand, while just 14 percent of survey respondents always fly on the same airline.
The decline of the hotel rewards programs
Considering that most travel brands consider reward programs as the cornerstone of consumer loyalty, such programs ranked low in importance for influencing consumer travel (20th out of 26 attributes for hotels, and 19th out of 26 attributes for airlines) – well behind value and past experience. Only 55 percent consider loyalty programs of high importance when choosing airlines and 45 percent consider loyalty programs of high importance when choosing hotels.
Furthermore, the survey found that most consumers believed even grocery stores had much more innovative and ultimately rewarding loyalty programs – just over half of survey respondents said they are satisfied or very satisfied with their hotel loyalty program (56 percent) and airline loyalty program (53 percent).
The pragmatic traveler
The state of the economy continues to affect consumer travel habits, with value for money ranking as one of the most important considerations when booking hotels and flights. The survey found consumers seek value for money, comfort and location when choosing a hotel, while on-time arrivals and departures, safety and value for money are the most important factors for choosing an airline. Consumers are no longer craving the luxury of premium class, particularly when it comes to domestic travel – 64 percent of consumers said they fly economy on domestic flights for business (46 percent for international), while 79 percent fly economy for leisure on domestic flights (66 percent for international). The price of gas continues to have a strong impact – 61 percent of respondents said gas prices had some effect on their travel plans.
It’s not all about smartphones and social media
According to the survey, 63 percent of respondents never want to interact with a travel brand via social media and 44 percent never visit social media and review sites for travel. Additionally, 80 percent of respondents have never downloaded a hotel or airline app to their smartphones. Meanwhile, nearly half of survey respondents (49 percent) have used flash sale sites, to follow discounts on travel. In fact, the majority of consumers are still using tried-and-trusted methods to book travel reservations – 61 percent use hotel and 59 percent use airline websites most frequently. What really matters to consumers when being engaged by travel brands is a secure and easy purchase process, email discounts and the latest news.
At a time where consumers are more likely to show loyalty to a soda brand than an airline, what can travel brands do to combat this?
“Travel brands need to be more innovative and clear in communicating their product and service offerings,” added Weissenberg. “For example, Deloitte’s research showed that while earning and redeeming points are the most important attributes for choosing hotel and airline loyalty programs, travel brands should focus on enhancing the customer experience, making rewards personally meaningful, encouraging loyalty with unexpected rewards if they want to boost consumer engagement, and ultimately building long-term customer relationships.”
Develop a blueprint to reinvent hotel loyalty programs
The research points to two over-arching and compelling conclusions:
- The best-case scenario is that hotel loyalty programs as they are constituted today have either little or no impact on travelers’ purchase decisions, and, worst case, these programs drive undesirable brand-switching behavior.
- Hotel brands and owners that choose to instead build differentiated loyalty programs and a customer experience that anticipates and integrates priority customers’ personalized needs have the potential to capture incremental market share, as indicated by these facts:
- Roughly 30 percent, on average, of hotel loyalty members are “at risk” of switching their preferred brand
- Nearly 50 percent, on average, of hotel loyalty members’ annual hotel spend is not with their preferred brand
Filed under: Loyalty Marketing