Why Hotels Have Loyalty Programs

Why Loyalty Members Matter #

I wanted to write a quick post about why loyalty programs matter for hotel companies - the value prop for hoteliers.

Members are more likely to book direct. #

When you book through online travel agencies such as Expedia.com or Booking.com, the hotel you are staying at can pay anywhere between 10% to 30% in commission for your business.

Independent hotels typically pay between 15% to 30% whereas big brands often pay lower, somewhere between 10% to 15%.

So if you’re spending $100 on a room booked via Expedia, the hotel is giving about $15 right back to Expedia. Depending on your perspective, this may not seem fair. That’s why for hoteliers, getting you to book direct via a brand website is key to growing profit margin.

Members tend to stay longer and spend more. #

Across all industries, nearly 80% of customers say loyalty programs make them more likely to continue doing business with a brand or company.

It makes sense when you think about it - if there’s a perk gained for continuing to do business with someone, why not continue to use them?

And the data does show that members stay more frequently and spend more than when compared to non-members. This is especially true for business travelers.

Member data helps increase marketing and promotional effectiveness. #

When you sign up for a loyalty program, you typically provide your name, address, e-mail, and phone number.

These are very helpful data points from a marketing standpoint. The hotelier now better understands where its travelers are coming from, they can derive your socio-economic status based on address, and they can now target market you for promotions with your e-mail address.

And like Spotify or Netflix, the more you stay and use the service, the better your travel patterns are understood and the better you can be marketed to.