After years of complaining about online travel agencies (OTAs) and how they have inserted themselves in the relationship with their customers, most major hotel brands have identified loyalty programs as the tool to re-engage directly with their customers, but for many of the industry’s owners and operators, their efforts so far fall short of the goal.
While hiding discounted rates behind a password and requiring travelers to join a loyalty program to access them has clearly resulted in an increase in direct bookings, it has come with unwanted discounting and additional costs. Some savvy industry veterans point out that the more effective these programs become, the more these rates will be seen as the ‘de facto’ retail rates. They even remind of us a time when the only difference between a customer paying our highest rack rate and a discounted ‘corporate’ rate was their willingness to stay on the phone a little longer.
Basically, as an industry, we are once again forcing our guests to change their behavior, versus making them want to, and all to get a discount, as if we are somehow going to beat the OTAs at the game they invented. Many of the seasoned hotel people I speak to feel we never will. One poignantly stated, “Let’s face it. The OTAs build websites and we carve ice.”
They also say all is not lost and agree that loyalty is likely the key. As one of the hoteliers stated:
“In the face of all this technology, we have to reconnect with the fact that we are innkeepers. When a customer eats breakfast at my Marriott, every Marriott hotel in the world has the opportunity to know what that person likes to eat for breakfast. Expedia does not.” He went on to say: “Consumers are loyal to value, not just price. Hotels have to win by knowing them better and caring about them. Think about it in terms of your own loyalty. You might go out of your way to save a little on a tank of gas, but you’ll practically kill yourself for a true friend.”
Scott Dahl is a Senior Lecturer in Revenue Management at Ecole hôteliere de Lausanne with more than 30 years’ experience in the hospitality industry. He is one of several EHL faculty members teaching in the advanced online certificate program, Driving Hotel Revenues.
At a recent panel discussion at EHL on luxury, panelists spoke about the issue of loyalty. It’s considered to be the ‘holy grail’ of hospitality – how to keep your customers close and make sure they come back to your hotel again and again. Many hotel chains have loyalty programs, but as panelists highlighted, loyalty in hospitality can be fickle.