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Loyalty programs don't address suitably new guests' expectations

The hospitality industry must rethink its loyalty program scheme as customers needs are shifting

Believe it or not, but the very first loyalty programs date back to the… 18th century (1793 to be exact) in North America when retailers gave customers copper tokens with purchases that could be later redeemed for products on future purchases.

It is in 1886 in the United Kingdom that the S&H Company developed the first ‘modern’ loyalty program with the Green Shield stamps: S&H regular customers received a Green Shield Card; stamps were awarded by the company to its customers after every purchase at the checkout counter of their department stores – a fully ‘stamped’ card would allow clients to get a present or a discount. Similar scheme were developed by a great number of companies in Europe and the USA (in particular grocery stores chains) and were still running until the early 1970s.

In 1929, Betty Crocker introduced the ‘box-top’ concept, where cut-outs were printed on the boxes or packaging of products. Clients would then cut out these coupons, collect them, and then later redeem them for rewards.

Modern rewards programs were introduced in 1981 by American Airlines with the AAdvantage frequent flyer program.

Since then, there is not one airline, hospitality group, or retail chain that doesn’t propose its own loyalty program.

Unfortunately, as I mentioned already in the past, guests are less and less loyal to one brand in particular, and have no problem carrying 10+ cards in their wallet to get advantage from them whenever necessary.

Loyalty programs do not guarantee guests’ fidelity anymore, but are seen in ways to get discounts and free night stays with little to no commitment.

Loyalty programs are becoming an expensive discount scheme!

So much so that the airline and hospitality industries are looking at options to rethink and revive loyalty programs so that customers can find new reasons to like a brand over another, as they used to less than 10 years ago.

This explains also why hospitality groups are so aggressively developing lifestyle hotels: Brand differentiation is more crucial today than it has ever been before. This is exactly what Seth Miller says, editor of the airline-focused passenger experience Web site PaxEx.Aero, when he explains that “the most important thing is that the loyalty programs aren't just about getting passengers on planes or heads into beds. They are really a branding experiment.

The issue is concerning enough to have been the main topic of the recent ‘Americas Lodging & Investment Summit’. The 2022 American Hotel and Lodging Association State of the Industry report, which was published during the conference, declares that “(…) traditional loyalty programs no longer make sense. The most effective loyalty programs will offer more personalized rewards that meet the needs of occasional business travelers and leisure travelers, as well.

Calibri Labs Chief Executive Officer, Cindy Estis Green, explains why hospitality groups had to add new functionalities to their loyalty program mobile platforms: These new features have a dramatic effect on retaining customers, because a lot of the convenience is built within the [loyalty] apps - mobile check-in, keyless entry,… conveniences that are not available to guests not registered with these loyalty programs. Those kinds of things are driven by being a member of the loyalty program.

Proposing keyless entry or mobile check-in is certainly a great convenience to guests. Is it enough to have them prefer one brand over another – in particular when hospitality groups listen to calls from guests asking for hotels to be more digitalized, meaning that sooner or later they will all offer that type of services without the need of being loyalty-registered? The answer is clearly no!

This is the reason why major hospitality groups are revamping their loyalty programs, offering bonuses that were not available before. Take Marriott’s Bonvoy, for instance: Stephanie Linnartz, President of Marriott International, explains that “some of the other businesses we launched over the last couple of years are meant to be complementary to our core business because they make Marriott Bonvoy stickier. As leisure becomes a bigger part of the customer equation, we've wanted to offer these Bonvoy members more things.

Of course, Marriott is not the only group relaunching their loyalty program. IHG Hotels & Resorts, for instance among others, made a similar announcement.

Dorothy Dowling, Chief Marketing Officer at Best Western Hotels, recently announced drastic changes to their rewards offer: [2022 is] the year that loyalty becomes the war platform that we're all focused on. I know what we try to do, and every other brand does. If someone comes in through an OTA, we immediately try to conquest them into our loyalty program and immediately reach out to them after they leave the hotel to try and bring them back.

Until the COVID-19 pandemic, guests’ expectations were changing at a slow pace. Hotels adapted as they always did - some faster, some slower. We were dealing with a slow evolution, in line with generational changes. Now, in our post-pandemic era, we face revolution rather than evolution.
  • Guests expect their hotel to be an emotional experience – hence the rapid spread of lifestyle hospitality

  • Guests expect their hotel to be fully digitalized but still provide a personalized service

  • Guests expect their life choice to be recognized (i.e., vegan) and addressed

  • Guests expect their hotel to be environmentally friendly

  • Guests expect their hotel to offer rates as low as possible with a quality of service as high as possible

  • Guests expect to be rewarded for their business but want the freedom to change brand whenever they feel like

  • Etc.

It’s like squaring the circle!

Running an independent hotel or a hospitality group is not as plain as it used to be: Not so long ago, well designed clean and comfortable rooms, good food and drinks, friendly and efficient service were all that was needed to satisfy guests and ensure their loyalty.

Not anymore. You need a lot more from hotel ambiance, décor to unexpected loyalty-driven perks, and everything in between, to hope to start building some kind of recognition and some level of fidelity from your guests.

As a new hospitality company, at Amsa Hospitality we are lucky enough to be able to design at the same time our ‘Hallmark of Arabian Hospitality’ brands and loyalty program: They are built with the same spirit and the latter was not conceived after the former – they are one. Hence proposing guests the exact type of experience they are looking for.


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