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hotel customer loyalty

How to build customer loyalty? Programs and tips for hotels and accommodations


Dear WuBookers, customer loyalty is a highly coveted goal in the hospitality industry. Indeed, large hotel chains and small independent properties can also use its mechanisms to their advantage through specific activities such as loyalty software and other initiatives: here’s what they consist of and what benefits they provide to hospitality properties.

Customer loyalty in hotels: 3 key factors

A good loyalty strategy involves several actions and activities, in the long and short term. Although there is no universal formula that applies to everyone (much depends on the type of property and clientele), we can still detect 3 key factors that contribute to reservation recurrence: 

  • global presence, especially online: multichannelling is an essential element to be found by potential customers and pander to their preferences right from the reservation mode. Indeed, this is the first building block to ensure a user experience tailored to the guest; 
  • Customizing the guest’s experience: the second aspect concerns the property’s ability to tailor its offerings and services to the specific tastes and needs of travelers. From the first contact at the front desk (preferably in the guest’s language), to welcome kits, paying attention to guests’ characteristics will make them feel cared for, rewarding the perception of the property; 
  • loyalty programs: these systems incentivize so-called “return stays” (“returning customers”) through reward mechanisms for those who join.

Let us focus on the last of these in particular to get a better look at what they are and what benefits they bring. 

Loyalty programs for hotels and properties

Loyalty programs are very common in the airline industry and, for some time now, have also been quite common in the hospitality sector, especially within large hotel chains. This is because, in general, they are tools capable of generating a lot of revenue for hotels. According to Skift Research, members contribute between 30 and 60 percent of room revenue and tend to pay higher average daily rates (ADR for short) than non-members.

The same study also reveals interesting data regarding the type of travelers: while business travelers continue to represent the hard core of loyalty program members, it is equally true, however, that leisure travelers are showing increasing interest, with percentages growing (from 43% to 47% between 2020 and 2021). 

Moreover, according to what the marketing managers of giants such as Hilton and NH Hotel Group said in a recent interview, loyalty programs are also increasingly appealing to younger demographics, attracting a clientele of under-25s who are particularly sensitive to gifts and convenience. 

hotel loyalty programs

The benefits of loyalty programs

It is no coincidence that the best-known and most popular loyalty programs have been developed by large chains such as Marriott (its famous Marriott Bonvoy) and Kimpton Hotels (which created the famous Karma Rewards, with surprise prizes for customers): the presence of a dense network of properties distributed in different countries allows for structured offers that can be exploited by customers on various occasions.  

However, the benefits for independent hoteliers are not lacking and include: 

  • Increased revenue: an already acquired customer costs less than a new customer, in terms of even just the marketing actions required to attract him. Moreover, because they are enrolled in a loyalty program, they have more interest in booking multiple times at the same property or purchasing extras and additional services to achieve rewards and discounts;
  • increased direct reservations: this is closely related to the first point, and results in reduced brokerage costs for tour operators, agencies and OTAs. By managing direct sales on your site, such as through Zak’s Booking Engine (WuBook’s property management software for accommodations), you avoid commission fees, increasing revenue;
  • improved customer loyalty and retention over time: in other words, a virtuous circle is created whereby the same customer returns, extending their customer lifecycle; 
  • quality of the relationship with customers: loyalty programs make it possible to build personalized experiences (the second of the pillars of loyalty mechanisms we mentioned above), establishing a relationship of trust and affection with customers; 
  • valuable data collection and insights: by analyzing the data and habits of loyal guests, you can gain useful information to intercept new travelers potentially susceptible to the same business leverages;
  • expansion of the business segment: as anticipated, business travelers are more likely than others to take advantage of loyalty programs partly because they are motivated by recurring trips to trade shows and corporate events that are repeated cyclically (so-called “MICE tourism”). That is why this activity could help you expand your customer base by engaging these types of guests as well. 

Deciding whether or not to activate a loyalty program depends on many factors, not the least of which are some important economic evaluations. If, for example, your property receives more than half of its reservations from OTAs and the like, it may be worthwhile to implement a loyalty software program to try to lower this percentage and disintermediate more customer acquisition. Conversely, if travelers from external channels do not exceed 30 percent of the total, you may not need one.

So far we have talked generically about loyalty programs, but how many and what are they?

Types of loyalty programs for hotels

We have mentioned some particularly famous programs that, starting from predefined mechanisms, have been declined on the specifics of the property. More generally, in fact, it is possible to distinguish 2 macro categories of loyalty programs for hospitality.

The points system, also common to other sectors, allows the guest to accumulate loyalty points and thus gain access to rewards of various kinds, such as discounts or exclusive experiences. The points can be associated with actions such as reservation (especially if direct), purchase of extras, but also the distribution of geolocated content on social. A system appreciated especially by business customers. 

Unlike points, which require assiduous attendance at the property to accumulate points, instant rewards are an instant gratification tool. The guest can thus obtain immediate room upgrades, access to relaxation areas, and benefits to spend during the stay (e.g., a free late check-in or check-out). This strategy is especially effective with loyal but less frequent guests.

Freebies can also include activities that do not involve the hotel but its partners, such as meal vouchers at affiliated restaurants or reductions for organized trips and excursions. The important thing is, once again, to select the prize best suited to the clientele, varying it according to their characteristics. 

Tips for taking advantage of loyalty programs

The first thing to do is to analyze the data. This is the only way to gain insight into existing customers and their behaviors, the quantity of returning customers, and any shared aspects that can be exploited to increase the quality (or perception) of service and improve the business proposition, the first step in ensuring customer loyalty.
If you have already implemented a points-based loyalty system, you should periodically inform the customer about the quota achieved and how to redeem it, as well as any expiring points and scheduled renewals (especially if membership in the loyalty program involves a payment).

Prepare an extensive catalog that can satisfy all customers, including original ideas such as exclusive or special experiences. When possible, offer the option of converting rewards into services such as spa treatments, meals, or accommodation upgrades.

Finally, try to make everything as simple as possible. From presenting the program to signing up for it, the process should be smooth and straightforward – no customer wants to waste time when on vacation or busy with work; clarity is the first source of trust!

hotel loyalty guests

How to increase loyalty even without loyalty programs

Although promising and potentially very effective, loyalty programs still require an investment in dedicated software for optimal management and some degree of organization on the part of the property. Before reaching this level of evolution, it is still possible to try to trigger a loyalty process with a series of preparatory actions. 

The first step in incentivizing guests to come back again is to stay in touch with them. Informative and promotional newsletters, but also social postings or Whatsapp messages, are a great way to remind guests that you are there and that they can repeat their stay with you whenever they wish. Of course, everything must be done with measure and only after obtaining the user’s consent to the use of their data, otherwise the effect will be the exact opposite. The reminder works only if it is not insistent and if it is done with respect for each person’s privacy. 

But what to communicate and what to propose in such cases? Loyalty programs can be inspiring: special offers reserved only for those who have already stayed at the property, for example, but also extra services for free or at a favorable price during the overnight stay, or even small gifts at the end of the vacation. Rewards that gratify the guest and motivate him or her to return to take advantage of the benefit gained and repeat the experience. It is important that all these rewards are tailored to the type of guest: business, leisure, luxury, or family customers are not necessarily sensitive to the same things, so it is important to vary the range of possibilities by adapting them to the situation.  

Finally, it should not be overlooked the fact that a loyal customer is, first and foremost, a satisfied customer. None of us would return to a place where we had a bad time. That is why, before even thinking about the next actions, it is important to focus on those actions contemporaneous with the stay. Making the most of each individual traveler’s experience, possibly exceeding their expectations, will help them feel special and at the center of the Staff’s attention.

Moreover, even if they never return, they can still leave a positive review or activate a word-of-mouth referral to their contacts, serving as a living business card for the property.   

Once achieved, customer loyalty in the hotel ensures direct and recurring revenue, as well as guest satisfaction – an important goal that benefits the property in the short and long term.

hotel reception loyalty programs

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