Loyalty programs directly influence, increase occupancy

By: Mark Lomanno

As booking options in the lodging landscape continue to evolve and expand, hotels have been forced to adapt to changing market conditions. Consumers are increasingly booking online to the tune of 42% of all hotel reservations in 2016 being booked via online distribution channels. In response, hotel brands and operators have been dedicating significant resources to encourage those consumers to book directly with the hotel. The benefits of having consumers book directly are obvious. First, reservations made directly with the hotel are considerably less expensive than those booked through an indirect channel using a third-party intermediary. Second, direct reservations keep the hotel as the single point of contact with the guest, thereby avoiding any third-party intermediary communication, and often confusion, between the hotel and its guests.

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Over the years, much of the OTA marketing message has been centered around positioning the intermediary channel as the go-to resource to strike an opportune deal and receive discounts on hotel rates. Since early 2016, one of the primary efforts embraced by many lodging companies is to rewrite the script in terms of where the ‘best deals’ and ‘best rates’ are available.  These ‘book direct’ campaigns are a mode of industry education to inform consumers about the hotel distribution environment and to drive home the point that loyalty members are held in high regard by the hotel brand and thus will receive the best rate available in the market. To gain access to the book direct promotion featuring the lowest room rate offered, guests are required to either be a current loyalty member or complete the brief loyalty application while in the reservation booking flow. Thus, in addition to driving more direct bookings through the promotion of the loyalty program, it has also had the positive effect of increasing loyalty program membership. As such, in many ways, brand loyalty programs are effectively the new system contribution, a mechanism by which the hotel company’s brand equity can directly influence and increase the occupancy of their properties.

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