What are hotel loyalty programs?

A hotel loyalty program is a program that offers rewards, deals and discounts to guests in order to drive loyalty. They are fairly common in the accommodation industry. 

A recent Harvard Business School study discovered that customers spent 40% more on their sixth purchase than their first, showing the longer a customer is loyal the more they will spend.

The best way to capture and reward these long standing customers is with a loyalty program. Independent hoteliers can have a lot more flexibility with their schemes than larger chains because they have the freedom to be creative and personal with rewards.

Whether you are building your first program or improving your current program, B&B loyalty programs should be easy to join and simple.

Loyalty programs vary, with some offering discounts and others offering specific perks. The type of loyalty program that you choose will depend on the expectations of your guest market segments as well as the needs of your individual business.

Why are hotel loyalty programs important?

Hotel loyalty programs are important because loyal customers are important, particularly in such a highly competitive industry as travel.

The first hotel loyalty programs, delivered in 1983 by Holiday Inn and Marriott, were wildly successful. But as the loyalty program landscape developed, many guests found that the benefits of remaining loyal to a particular hotel brand were not worth it in order to sacrifice higher room rates or various amenities at different locations.

These programs quickly became bogged down with rules and regulations that motivated more travellers to head to OTA websites in order to find out more about the hotels that offered discounted rates in their chosen destination. The perceived lack of value and inability to cash in on rewards led to a dwindling interest in loyalty programs, and often led to a decrease in brand loyalty amongst guests.

But for small, independent accommodation providers, this loyalty lull represents an opportunity, as many larger chains are pouring fewer resources into their programs. When loyalty programs are done well, when they’re custom-crafted and offer genuinely exciting rewards, they can be incredible for generating revenue. 

Why your hotel needs a loyalty program

Loyalty programs make travellers feel as though they are getting a better deal. By offering an enticing rewards program, you can give a potential guest the reason they need to choose you over a competitor, not just once but again and again.

When’s the best time to implement a loyalty scheme at your property? Right now, since the sooner you start, the sooner you can enjoy the benefits that such a program can drive.

Types of loyalty programs in the hotel industry

1. The Points System

This is the most common system where customers earn a certain number of points per purchase. For example guests may earn points for booking their room, then earn subsequent points for extra purchases.

This program should have no expiry date and should include a very broad range of ways to earn points to give guests the impression they’re winning while they spend.

The points system can also be used to encourage guests to book direct on your website and to act as brand ambassadors, for example:

  • Award 10 points for booking a room at your B&B or 30 points for booking directly through your brand website
  • Award 10 points for ‘liking’ your Facebook page and 30 points for sharing a post about your B&B to Facebook or Instagram during their stay.

Customers can then swap these points for rewards (the more points the more valuable the return) which are usually something within the B&B like a free breakfast, an upgrade or a massage.

2. The Instant Rewards

41% of millennials joined a loyalty program because it was easy to earn rewards. This is because the benefit of joining could be seen straight away ensuring they didn’t get lost in complicated rules.

This system is particularly useful with millennials because it guarantees a return from the beginning and provides instant gratification. So simply joining this scheme should offer a reward, like a free beer or wine at your restaurant.

The instant reward scheme can be used increase revenue and benefit your small business by using tactics such as:

  • Free meal for members when they recommend a friend to stay
  • 10% off for members when they leave a review on TripAdvisor

3. Partnership Rewards

This can be more complicated than the first two but is a great way to build brand awareness and entice more return customers with exciting offers. It involves partnering with local travel, tourism and hospitality businesses to build a specialty rewards system.

The main goal is to partner with a company that provides a service your customers need. For example, giving them 20% off their meal at a great local restaurant, or half-price tours.

This will bring in more customers for both parties, and by advertising on both business websites you build your backlinks and improve SEO ranking.

Tips to improve your hotel’s loyalty program

Looking to enhance your current program? The following tips can help!

Keep it simple

The best loyalty programs are easy to understand. They don’t feature complicated maths or endless loyalty tiers. Simple and effective programs include ‘earn and burn’, book 10 nights and get one free, or those that offer a set discount.

Partner with businesses

Consider extending your rewards beyond your hotel. Form partnerships with aligned businesses – tour companies, day spas, restaurants – and trade loyalty rewards with them.

Go online

Loyalty members tend to be more engaged when they can track their progress within your program, so set up a member portal that allows them to do just that. This is particularly important for points-based ‘earn and burn’ programs.

Personalise the rewards

The most successful loyalty programs are those that treat each member as the unique person they are. By personalising your rewards, you’re more likely to get members excited about earning them!

Instant gratification

Earning rewards should never be a grind. Offer incentives early and often in order to keep members interested in your program.

Create loyal guests with Little Hotelier

Little Hotelier is an all-in-one hotel property management solution that gives you the tools you need to drive guest loyalty. In the process it can increase your bookings by 46% and your hotel revenue by up to 43%!

  • Complete control from your front desk: Not only does Little Hotelier’s front desk tool grant you a clear view of your business, it also allows you to automate and customise communications to ensure that every guest enjoys white glove service.
  • Enhanced guest engagement: With GuestJoy, our dedicated guest engagement feature, every guest will enjoy a smooth, seamless and greatly enhanced experience at your hotel.
  • Encourage more direct bookings: Most loyalty programs require guests to book direct, saving you the 15-25% fee commonly charged by OTAs – cash that you can use to fund the deals and discounts that drive your program. And with Little Hotelier’s booking engine, taking reservations through your website has never been easier.

By Dean Elphick

Dean is the Senior Content Marketing Specialist of Little Hotelier, the all-in-one software solution purpose-built to make the lives of small accommodation providers easier. Dean has made writing and creating content his passion for the entirety of his professional life, which includes more than six years at Little Hotelier. Through content, Dean aims to provide education, inspiration, assistance, and, ultimately, value for small accommodation businesses looking to improve the way they run their operations (and live their life).