Hotel loyalty programmes: are they worth it?
Hotel loyalty programmes have been around now for 35 years. Holiday Inns introduced the first programme way back in February 1983, had a brief change of mind in 1986, and then reinstated it.
Marriott introduced theirs in November 1983, and can therefore claim to have the longest continuously running programme. Nowadays, virtually everybody in the business, from budget hotel chains to elite luxury brands, are fighting to win your loyalty.
So why have loyalty programmes become so popular with hotels?
The main reason is to increase repeat business by reducing your price sensitivity, or to be more exact, your sensitivity around cost and total value. In other words, they provide an incentive for business travellers – and those booking on their behalf – to choose a hotel that is not (necessarily) offering the best deal. Like air miles, they are designed to be “psychologically attractive, even addictive” to customers.
And they certainly do work from the hotel chains’ perspective. One leading hotel group stated it had proven conclusively that when a member joins its programme, they give on average 36% more “share of wallet” (to use the marketing jargon) than they did the year before they enrolled. One of the reasons for this is that holders of loyalty cards are more likely to book directly with the hotels, i.e. they often do not even consider the alternatives.
Loyalty schemes usually involve a “tiered” status system. The more you stay with a particular chain, the more points you accumulate and the further you can move up the status hierarchy. In theory, that should mean more, and better, rewards (such as free upgrades, free breakfasts or, ultimately, free stays). Against this you need to consider the following:
- Once you are in a loyalty programme, the hotel chains have less incentive to offer you truly great deals – especially as you are more likely to book directly. In fact, it makes more sense for them to offer the truly great deals to new customers in order to win them over from the competition
- Unlike actual savings with real money, the points you collect have an expiry deadline and they have no exchange value
- Loyalty schemes are subject to change – the rewards may be (and frequently are) downgraded over time
- Lack of comparability. There are so many programmes, if you do the hotel booking in your company you could spend days of research simply trying to work out who offers the best!
- Some hospitality marketers refer to the tier system internally as “hurdle” programmes. With good reason. You have to jump several hurdles before you can attain the worthwhile rewards, and there is no guarantee that extra hurdles won’t be added!
- The terms and conditions for redeeming points for rewards are often restricted. E.g. the free stays might be limited to dates or locations that are inconvenient (watch out for the words “subject to availability” in the T&Cs)
- Some of the more valuable “perks” for loyalty members soon cease to be perks: a good example is “free wi-fi”, which is now pretty much ubiquitous
- Loyalty schemes have attracted fraudsters and because points are not real currency, the authorities are less likely to take such fraud seriously
- Privacy: with any loyalty scheme you have to provide personal details, and these may be passed on to third parties. So, you can probably expect a lot of unwanted contacts and spam emails (the EU’s upcoming General Data Protection Regulation may reduce this risk in future)
- How many cards should you carry? If you restrict yourself to just one or two, or even a few, that will limit your flexibility in choosing hotels. On the other hand. if your wallet is crammed with multiple loyalty cards, that is going to limit the number of points you can accumulate with any one of the programmes. And, as mentioned above, the points do expire so you may never reach the “elite” status
Roomex presents all the best hotel booking options through a single platform, for you to choose the one that suits you best – preferred suppliers and loyalty programmes being one consideration among many.