Do you remember the days when you walked into a coffee shop to get your morning delight, cappuccino, or a strong double-shot espresso to kick off your day? Then, mid-way of serving your drink, the barista asks if you happen to have a loyalty card. You then hand over a classic paper card to receive your bean stamp. How many of those got lost, and how many of those got forgotten to be used or stamped? There is no doubt that some are still using this old-fashioned method for loyalty acquisition and customer retention, but is it effective? Do customers get what they want, and what DO they want? Let’s look into the subject of customer loyalty and explore what it means in today’s fast-moving environment.

Understanding Loyalty

In simple words, loyalty is a continuous relationship between a company and a customer. It occurs when a customer willingly returns to a company for repeat business over competitors. Loyalty is usually a result of a previous pleasant experience. Customer perceived value, brand trust, customer satisfaction, repeat purchase behaviour, and commitment all contribute to a person’s level of attachment to a brand. Loyal customers often become superfans or ambassadors, spreading positive word-of-mouth recommendations and driving brand affinity.

Did you know that, on average, around 65% of revenue comes from repeat business from already existing clients?

(Investopedia, 2023)

The Role of Customer Loyalty in the Hospitality Industry

In the hospitality industry, word of mouth plays a significant role in acquiring new customers. A Nielsen survey revealed that when making a purchasing decision, 88% of people trusted recommendations from friends and family more than any other form of advertising. Brand loyalty can drive brand affinity through positive word-of-mouth recommendations. The UK loyalty market is also expected to grow by 10.2% annually, reaching $9.02 billion in 2024 and $12.67 billion by 2028 (Businesswire.com, 2023).

What Do Hotel Visitors Want?

Extensive research conducted by Global Hotel Alliance (GHA) on ‘What travellers want most from loyalty programs‘ revealed interesting insights. The study analysed more than 4000 visitors from 94 markets. GHA includes 40 hotel brands (such as Kempinski, Anantara and Bristoria hotels), which, in summary, include over 800 hotels in over 100 countries. Among the respondents:

• 55% expressed a desire for access to perks and benefits
• followed by relevant discounts (45%),
• feeling valued (44%),
• and good value for money (37%).

Preferences varied depending on the region and culture, with quality being most important in the UK and Germany and good service and value for money ranking highest in Thailand and India.

A study by Auriemma Group on US hotel visitors found that desired benefits include room upgrades, complimentary food and beverage, occasional free hotel stays, flexible check-in/check-out options, and free Wi-Fi. Notably, 49% of respondents preferred experience-based benefits over spend-based benefits.

Need to remember that different age groups and income groups will have diverse views of value to them. For example, the Gen Z bracket is more drawn to personalised benefits and digital engagement through content on social media and mobile, while millennials are more interested in monetary savings and benefits. Households with income higher than $150,000 (considered as high-income households) are more drawn to tangible value and are 5-10% more engaged with their loyalty schemes than people at lower income levels (BCG report, 2024). 

A striking 61% of respondents indicate that their loyalty is affected when a company’s actions and ethics align with their own values.

(Forbes, 2023)

The Importance of Service Quality

In today’s competitive business landscape, hotels must prioritise the quality of service provided to guests. Exceptional service not only drives customer satisfaction but also maintains a positive and sustainable corporate reputation. According to Richard L. Oliver’s expectancy-disconfirmation theory, meeting or exceeding customer expectations leads to satisfaction, while falling short of expectations results in dissatisfaction. Providing satisfactory service and meeting customers’ needs is vital for building loyalty.

When designing their loyalty strategy, hotels should consider the whole experience they deliver and aim to elevate it in order to increase customer satisfaction and drive loyalty. Consumer satisfaction has three levels: pleased, contented, and complacent. Customer trust is strongly linked to loyalty and satisfaction and can be improved through honesty, integrity, commitment, and principle. Customer loyalty is formed by consistently sustaining client happiness and satisfaction, shown by faithfulness, continuousness, solidarity, repetition, and redone (Balushi and Musa, 2023). 

It is important to note that hospitality businesses cannot thrive just with loyalty programmes; their core elements are service and experience. Loyalty must be earned and cannot be bought. Customers expect the service to be fast and any complaints to be dealt with in a timely manner. 90% of customers want an immediate response to customer service questions, with 60% expecting a response within 10 minutes. (HubSpot Research)

Types of Loyalty Schemes

According to Hotelmanagement.net, a recent article, ‘Guest loyalty programs provide, but they cost’, shows that hotel loyalty programs help decrease custom acquisition costs, increase direct customer engagement, and decrease room occupancy shortfalls during off-peak or economic challenges. The same research highlights that loyalty membership sign-ups for significant brands have grown by a staggering 35%, meaning that hoteliers now have a vast database that they can use to encourage repeat visits. 

Hotel businesses can implement loyalty schemes to promote revenue growth and improve loyalty among repeat visitors. Some common types of loyalty schemes include (Businesswire.com, 2023):

• Points programs
• Tier0based programs
• Mission-driven programs
• Gaming programs
• Free perks programs
• Subscription programs
• Community programs
• Refer a friend programs
• Paid programs
• Cashback programs
• VIP programs
• Value-based programs

Big hotel chain names like Mariott and IHG, Hilton are among the top of the best hotel loyalty apps available on the market right now. They offer a points-based system where customers can earn points not just via their hotels but also from partner sites and have exclusive member deals. For example on the Mariott Bonvoy app guests can grow their loyalty status and get more perks with each visit. Basic tear rewards include free Wi-Fi, exclusive member offers (including partners), instant access discounts and perks. You can explore a range of hotel loyalty schemes and apps in this White Label Loyalty article.

Top Loyalty Programs

For hoteliers to understand which program is right for them, they need to know their customers inside out. It is essential to ask for customer feedback and track sentiment to find correlations in the opinions and then to target with personalised marketing campaigns.

A popular method in loyalty schemes is the points-based system. Global Hotels Alliance research has shown that guests prefer a points-based system where they can see a direct monetary value to the benefit and the points they can exchange. GHA report shows that 73 % of guests use their points for their holiday stays.

Another report, ‘The state of Loyalty 2023′ by iSeatz, states that over recent years, there has been a trend in an increase in guests earning and paying with loyalty points. This could be related to the rising inflation and interest rates; therefore, visitors sign up for loyalty programs in search of discounts, deals and ways to save money. Guests value their money more than they did before the pandemic. Therefore, their expectations and needs have grown.

A research from BCG highlights that people keep on joining new loyalty programs but are more likely to be less loyal and engaged. This means that the competition for their time and attention increases. The same research has taught us that people are the most loyal to paid memberships like Netflix, Amazon Prime, and news outlets as they are most likely to return for the perks. As an example, Amazon Prime offers members a free next-day delivery which is a good money saver and convenience for the customer. 

Personalisation and Innovation

We previously predicted in our 2024 Hotel Trends: Embracing the Future of the Hospitality Industry blog that personalisation will be one of the trending topics this year and onwards. It is anticipated that businesses, including hotels, will be investing in loyalty programs as it is trendy for younger generations and offer personalised offers (Businesswire. com,2023). The same as in advertising, people want to have personalised, tailored offers, otherwise they lose interest. Have you ever been frustrated by constantly receiving communications from a brand that you bought from, but the majority of offers are not for you? When did you stop viewing their comms? In fact, 40% of consumers say that they are frustrated by irrelevant content and offers (Marigold,2024). The more customers use the loyalty offers, the more personalised they will get. This will drive innovation and growth.

Another trend is on the rise – the upselling and unbundling of ancillaries (iSeatz, 2023). Unset options support personalisation and preferences, such as room floor, dining or spa procedure choices or even activities. Artificial Intelligence can assist in analysing returning guests’ patterns and offering personalised offers based on similar behaviours. For-Sight’s CRM provides analytics in returning guests’ patterns, allowing you to tailor personalised offers based on similar behaviours. Additionally, the platform offers the ability to segment your guests and create targeted communications, which further enhances your personalisation approach. To achieve precision and save time, you can consider using Artificial Intelligence. Within For-Sight Marketing Hub, hoteliers can access Winston AI for workload reduction through smart copy and cross-channel support.

Collecting Data

You will need to collect relevant guest information to send communications across multiple channels—from emails to WhatsApp messages or push notifications. These points of contact will serve as reminders to your guests about your brand’s existence, reaching them through even more channels. Research shows that individuals must have at least ten touchpoints with a business before deciding to engage in a transaction.  Balancing convenience and technology with the preference for in-person communication is crucial, particularly when considering different age groups. We need to remember that younger generations expect convenience, speed, and accuracy with the help of Technology; however, we need to be mindful of older generations who still prefer in-person communication.

For-Sight has recently partnered up with Inspire Loyalty, which is an innovative loyalty programme designed specifically for hospitality. They provide easy-to-apply branded loyalty solutions to collect powerful data, enhance customer experiences, increase visitor numbers and repeat direct business. Encourage returns through a branded loyalty website featuring exclusive member offers. A points-based programme to reward, engage and recognise your guests. When integrated with For-Sight, hoteliers can leverage segmentation to create targeted multi-channel communications for members and automate transactional messages.

Effective Marketing Communications

What is interesting is that the GHA report uncovers that the majority (70%) of the respondents prefer communication via e-mail. In the last 12 months:

• 54% of consumers have purchased from e-mail channels,
• 44% from social media ads,
• 43% from social media posts,
• 26% from SMS
• 22% via mobile apps (Marigold, 2024).

More importantly, consumers want to receive information on personalised offers and discounts, their loyalty account balance and how they can spend it as well as new hotel additions to the programme. The respondents are not interested in venue events, so this would not be their main reason for converting.

In fact, 79% of consumers say they are more likely to engage with a personalised e-mail that is customised to their preferences (Marigold, 2024). You can gather preferences by asking the guest directly (whether it’s a pre-stay e-mail survey or a small quiz during the booking process) it will give you valuable data which, when used properly, won’t go unnoticed and appreciated by customers. On the right, the chart displays the most preferred rewards by consumers in exchange for personal information. You can read more about first-party and zero-party data on our previous blog: First-Party Data: A Game-Changer for Your Hotel Business.

Top travel brands such as IHG use urgency and personalisation tactics to win customers. These could look like ‘limited’ time offers, ‘selected for you” personalised offers, or sign-ups to exclusive deals like ‘Black Friday sale’. 

 For-Sight offers advanced messaging features that can help you create on-brand personalised email communication with customers. By using our platform, you can gather in-depth data about your audience, automate targeted messaging, save time on marketing activities, and build brand loyalty. Improve your customer journey and service satisfaction with For-Sight. If you are no expert in email marketing campaigns – don’t worry – we are. Get our expert team to build them for you. Enquire today!

Did you know that its four to five times more expensive to obtain new customers than maintaining brand-loyal customers? 

(Forbes,2022)

How to win back hotel guests?

Switching to competitor’s loyalty programs has become a regular occurrence if compared to two or three years ago, to be specific 5-10% more. More than 35% of interviewed consumers said they plan to discontinue some of their memberships in 2025. In comparison, EU consumers are less embraced to l loyalty programs than US consumers but they are more engaged when they are (BCG report, 2024). Another research from Marigold (Relationship Marketing Trends, 2024) , has found that 37% of interviewed consumers were less loyal or switched to competition last year. Still, they are more likely to participate in loyalty programs this year. So what can hoteliers do to win back their customers and boost loyalty?

1. Offer more appealing discounts and offers at for the right segment at the right time and channel
2. If the attrition is due to service/product, invest to improve the quality of those
3.  Offer services and products that customers want and care about. Know your member base at every point of their journey. When was the last time you asked your customers for feedback on your range of products and services?
4. Do your company values fit within the present, is sustainability part of it? People’s sense of care for nature and the environment has grown rapidly in the past five years.
5. Research shows that guests value early and exclusive access offers as they believe they are getting a good deal for their money.
6. Look out for partners that share similar goals and aspirations to offer more opportunities to your guests as well as your hotel. 
7. Do you want to do something more engaging? How about a prize draw to get your visitors excited? 

The Role of Sustainability

Sustainability practices play a crucial role in attracting and retaining loyal customers. GHA’s “Green Collection” hotels, known for implementing sustainable practices, have seen growth, generating 49% of revenue. Building a positive brand reputation and loyalty is a top priority for business leaders in today’s economic environment. Specifically, the China market is seeking good sustainability practices as they find it important. Customers also seek transparency and safety. They want to make sure that the business will keep their data protected and that there are no hidden clauses. Transparency and safety build trust.

Conclusion

In conclusion, customer loyalty is a crucial driver of business success, especially in industries like hospitality. By understanding guest needs, implementing personalised loyalty schemes, and delivering exceptional service, hospitality businesses can foster long-term relationships and drive revenue growth. By implementing technology and reporting, businesses will be able to dig deeper to understand their customers and create strategies that will boost revenue growth and loyalty. Unlock the full potential of your hotel business with For-Sight CRM and Marketing solutions. Our cutting-edge technology empowers you to gain valuable insights into your guests. This allows you to tailor your services, boost customer satisfaction and drive revenue growth by bringing all of your data streams under one roof. Don’t miss out on this opportunity to take your hotel to the next level.

Other references

Hussain, M. (2021). Mediating Role of Customer Satisfaction in Determining Service Quality and Moderating Role of Switching Barriers on Customer Loyalty (Doctoral dissertation, CAPITAL UNIVERSITY).

Huang, M. H., & Trusov, M. (2020). Customer satisfaction underappreciation: The relation of customer satisfaction to CEO compensation. International Journal of Research in Marketing, 37(1), 129-150. https://doi.org/10.1016/j.ijresmar.2019.06.001

Al Balushi, A.A. and Musa, H. (2023) ‘Analysing the impact factors of customer loyalty among small and medium-sized hotels (SMSHS) in Dubai’, International Journal of Professional Business Review, 8(5). doi:10.26668/businessreview/2023.v8i5.1816.