Guest loyalty programs, originally crafted to reward valuable guests with upgrades or special treatment, have now devolved into a pricing game.
It started with OTAs offering discounted rates to loyalty members and creating programs for hotels to offer special and sometimes expensive value-adds to be attractive to OTA loyalty members, thereby driving customer loyalty to the OTAs rather than hotel direct. Then big brands like Hilton and Marriott fought back, offering their own loyalty member discounts for booking direct—and spending huge advertising dollars to convince guests to do it.
All this discounting just to win the booking—it’s unnecessary and ultimately unprofitable.
Interestingly, many of these points-based programs have become oversaturated and have lost their appeal. Points systems offer little to no tangible value proposition for most guests, particularly those that don’t travel often enough to earn status with a brand.
Independent hotels are seemingly stuck. They can either deeply discount rooms to try and “win” the direct booking, or continue paying hefty commission checks to OTAs each month.
But what if we told you that the direct booking war between hotels and OTAs is not necessarily a war of pricing, but rather of value proposition?
Today’s digital travelers want instant gratification—they want to know that they’ve got the best deal, not just the best price.
Rewards, not points
In today’s digital marketplace, the first interaction that anyone has with your hotel is generally through the hotel website. That’s the public face of your hotel before your guest steps onto your property—and that’s where you want to win their loyalty first and foremost.
Instead of offering discounts or points for booking direct, why not give instant rewards? These can be simple bonus perks such as free flight credits, dining credits, Uber rides, special shopping discounts, and more.
Imagine a guest is on a trip to Hawaii, leaving from New York. Through free perks offered by booking direct with your hotel, the guest can redeem a free Uber credit on the way to the airport, enjoy free Wi-Fi on the flight, and grab a Starbucks coffee as soon as the plane lands at the airport. Families could redeem a free dining credit from restaurant.com, enjoy a free iTunes movie rental, or read a free Kindle eBook.
These are all perks that increase the value of the direct booking, without reducing the room price. And because these rewards have no official cost attached to them, they don’t break rate parity contracts with the OTAs!
Making instant rewards a part of the booking process
Companies like Stay Wanderful have begun to develop such instant reward programs for hotels, offering guests access to numerous perks and benefits at no additional cost to the hotel. (The hotel instead pays a minor commission fee on bookings made through the program.) Major independent U.S. hotel groups like Highgate Hotels, Menin Hospitality, and Kokua Hospitality have been taking advantage of such programs.
The instant rewards program uses a script that integrates easily and seamlessly into the hotel website, via a pop-up that guests can click on to access their rewards. Hotels don’t need to build out a separate members-only section for their website or create special member rates in their CRS to use the program.
By making instant rewards a part of the existing booking process, instead of one where a customer must sign in with a password (and even confirm their email, if they’re new!) before they can access loyalty offers, hotels can simplify the steps needed to conversion. The less steps to booking, the higher the conversion rates.
The results have already been promising. After implementing Stay Wanderful’s instant rewards program, one NYC hotel saw their direct website conversion rate jump more than 50%, shifting a significant portion of booked revenue from OTA to the direct channel—without having to offer a discount!
Win customer loyalty from the get go
Independent hotels can’t just compete in a race to the bottom when it comes to discounted pricing in the name of “loyalty.” It’s time for some fresh new ideas and ways of reshaping the way guests see value in their booking and in their relationship with the hotel. Instant rewards offers one solution that is win-win for both guest and hotel.
Editor’s Note: This is a guest post from Vipul Anand, Head of Lodging at Stay Wanderful. To learn more about instant reward programs for independent hotels, join us for our webinar on guest loyalty.
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