Because of the recession, American consumers are still at the phase when they are cautious about spending. They want to derive value from each dollar they shell out. Many hospitality revenue management companies operate under this concept. So they offer loyalty programs to encourage people to spend. But the question is, does this method really work?
Loyalty programs are nothing new in the hospitality revenue management industry. In the past, it has proven to be effective although it is certainly tricky to implement. In today’s business climate, using hotel loyalty programs to increase RevPAR and achieve profit optimization has only become trickier. Hotels.com, which commissioned the survey, points out that there are shortcomings that had been identified using this technique.
Some of the most obvious problems include its heavy restrictions, complicated fine print, and big redemption requirements. Majority of travelers would not be able to meet these requirements. In fact, only frequent business travelers, who are not looking for these deals anyway, benefit from it. Based on the survey conducted, travelers said that:
• 93 percent want to see improved terms on their travel memberships
• About half said that they were not able to use their benefits last year
• Around six out of 10 people want less restriction on how benefits can be used
• One third of those surveyed said that the bonus is not as great as was advertised
• More than a quarter dislike the fine print attached to their membership
If hotel revenue managers want to be more competitive and increase RevPAR, taking a second look at their loyalty programs may be worthwhile. It provides customers with a sense of value and “being special” at a reasonable cost to the hotel. In addition, if these clients really become “loyal”, then yield management can drastically be improved over the long term. This can increase hotel sales and boost profitability: the two things all revenue managers aim for.
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