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Hotels Encourage Direct Booking In Exchange For Loyalty Points — But Millennials Aren’t Biting

A personalized loyalty points program that responds to customers’ on-demand desires could be the solution.

In the competitive age of online booking, hotel chains from Hilton to Marriott are increasingly requiring that a customer book directly in order to obtain loyalty points.

This is a clear bid to incentivize travelers away from the likes of Expedia or TripAdvisor — as well as to drive app adoption — but results have been mixed; for some demographics, and Millennials in particular, the decades-old loyalty club model is passé and hardly a reason to overlook the savings that come from Priceline.

“It’s a tricky transitional period,” Christopher K. Anderson, a faculty member at the Cornell University School of Hotel Administration, told The New York Times. “The world of digital selling is more complex for hoteliers.”

The Millennial Loyalty Model

The on-demand economy has conditioned consumers to expect programs and services to fit into their lifestyle, not the other way around. After all, who wants to wait for a cab in the rain when you could call an Uber to your doorstep?

Research indicates that Millennials have begun to view loyalty programs in much the same way. If a hotel not only makes membership easy, but also provides rewards fairly immediately — a custom experience or discount after a few stays, for example — they’ll participate. If not, the view is largely: who needs it?

“Membership is a failure for younger people on an operational level,” said Loren Gray, founder at Hospitality Digital Marketing. “They don’t want reward far in the distance; immediacy is key. If they’ve visited several times, they want to see something for that – otherwise they don’t care.” Perhaps customers have always held this view, but with competitive booking services offering price breaks — not to mention the rise of Airbnb — they now have the ability to demand it.

Gray pointed to the experience at Citizen M, which offers extras like free on-demand movies, as an example of a chain doing well at turning Millennials into repeat customers. Hilton, on the other hand, does better with the customer aged 35 and older who is traveling on business, a group of travelers who are readily downloading the hotel’s app in a bid for loyalty points. Both of these demographics — as well as dozens of others — are important, so how can hotel chains take a targeted, customizable approach to encouraging both loyalty and direct booking?

Taking A Tailored Approach

Many hotels already understand that they have to customize their marketing efforts, especially when it comes to targeting mobile ads. Gray posited that loyalty shouldn’t be any different.

“We have to consider the advancements in technology,” Gray said. “We need to create a tailored relationship; if you’re an infrequent traveler, the rewards system should be based on the percentage of the times that you stay at my hotel out of the times you travel.” In other words, if someone only travels twice a year but stays at a Hilton both times, that should count for something, even if they aren’t racking up the type of points that a frequent business traveler would.

“Even if I’m a once a year visitor, make me think of you and make me want to return on that basis,” Gray concluded. “Build loyalty around an individual relationship, just like you would with ads or app communication or anything else.”

So, for the business traveler, maybe that means that more visits are still required to reap bigger membership rewards — but little “extras” can personalize their stay each time, from cookies in the room to a welcome note spotlighting area attractions. It certainly takes work to customize the experience of each type of traveler, but as retailers already know, this kind of effort pays dividends.

With a customized loyalty points program that enables a traveler’s life and makes them actually want to belong, direct booking and native app use is likely to rise.

We’ve all heard of giving customers “something they can’t get on Amazon.” The key to success for hotel players just might be giving visitors something more tailored than they could ever get from Expedia.

About The Author
Lauryn Chamberlain Lauryn Chamberlain @laurynchamberla

Lauryn Chamberlain is the Associate Editor of GeoMarketing.com. A New York City based journalist, she specializes in stories related to retail, dining, hospitality, and travel.