Hotel loyalty programs offered by chains and independents are growing in popularity

Airline frequent–flyer programs are becoming less attractive to customers. It's hard to get a flight for free. With hotels, you can redeem the points much more easily. Hotel loyalty programs are getting easier to use and more generous, often with no blackout dates. Consumers are signing up to earn free hotel rooms, upgrades and other perks.

With improved benefits and guest–friendly rules, hotel loyalty programs are increasingly becoming one of the primary reasons for selecting a particular hotel. Loyalty programs now rank fourth among reasons why consumers select a hotel (the top three reasons are "Location", "Price", and "Past Experience"). Across the industry loyalty program membership is on the rise and the percentage of "Elite" members in these hotel programs rose sharply in 2011 (up 5%). This is good news for hotels because members of these programs are more likely to recommend the hotel, spend more per room, and are less sensitive to price increases compared to non–member guests.

Measuring loyalty program effectiveness

One measure Market Metrix uses to evaluate the success of a brand's loyalty program is called "Loyalty Program Effectiveness". This measure identifies the percentage of guests who say that their loyalty program membership was a primary reason for choosing that hotel.

In 2009, 32.7% of guests said that the loyalty program was a primary reason in deciding where to stay. That number has grown to 34.5% in the first half of 2011. Among the major chains, the most effective programs in the hotel industry are Hilton HHonors, Starwood Preferred Guest, and Marriott Rewards. Starwood's Preferred Guest has seen the biggest improvement (+5.9% to 37.7%) in the past three years. Industry wide, approximately one of every three members of a hotel loyalty program said their membership was "Very Important" in hotel selection.

In the Hilton Honors program guests can "Double Dip" and accumulate points and airlines miles simultaneously with their hotel stay. Similar to frequent flyer programs there are various tiers of membership. Diamond VIP, the highest tier level, offers members access to the Executive Level lounge at Hilton Hotels, Guaranteed 48–hour reservations, a dedicated "Diamond VIP Desk" which members can call for priority reservations and travel planning, a dedicated VIP check–in line, best available room pre–assignments, and special in–hotel amenities such as upgrades and arrival amenities.

InterContinental Hotel Group's Priority Club Rewards is growing in popularity. With its low point requirement for free rooms, generous promotions and 4,500 hotels worldwide, the points needed for free rooms and other perks are relatively easier to earn than with other programs.

Wyndham Rewards is attractive to budget travelers with more than 6,500 hotels under such brands as Days Inn, Super 8, and Travelodge.

Guests love Marriott's rewards program. For example, Marriott rewards are easy to redeem, have no blackout dates and can be used for airlines, cruises, car rentals and more.

Starwood's Preferred Guest program, offering rewards at Westin, Sheraton, W, Four Points, and other brands, is especially well–liked for the rewards offered to its elite status members and often provides benefits more generous than other high–status programs. Guests can qualify for free rooms based on less expensive stays in U.S. hotels, and then get free nights at more expensive spots like Rome, Florence, and Milan. In addition, the program lets guests combine paying cash and points for stays.

Smaller hotel chains are developing successful loyalty programs of their own, and in many cases outperform the major chains in program effectiveness. Global Hotel Alliance, a collection of 12 luxury brands with more than 300 hotels, created a loyalty program called GHA Discovery that rewards frequent guests with experiences instead of points (wine tastings at a local vineyard, hot air balloon rides, etc.). Stash Hotel Rewards allows guests to earn points for free nights at nearly 150 independent hotels across the country. And Voilà Hotel Rewards, a points–based program for upscale independent hotels, has about 235 hotels in its network. These efforts reflect a growing trend to help independents and smaller chains compete with the big guys.

However, with the growing acceptance of social media, more hotels (especially independents and smaller hotel groups) are looking beyond loyalty programs to create "advocates" who will post positive reviews on TripAdvisor and other sites. In a future article we will examine how to increase your number of advocates and examine the differences between loyalty and advocacy.

About Market Metrix

Clarabridge’s customer experience management platform helps hundreds of the world’s leading brands understand and improve the customer journey. Powered by the industry’s most sophisticated customer analytics engine, Clarabridge collects and transforms all forms of customer feedback into intelligence, allowing businesses to activate the voice of the customer across the enterprise. Industry leaders including PetSmart, United Airlines, L’Oréal USA, Virgin Active, Rackspace, and ADP use Clarabridge insights to inform key business decisions. The result: happy, loyal customers.