Loyalty programs are nothing new to the airline and hospitality industries, dating back to the early 1980s when American airlines launched AAdvantage, one of the world’s first traveler loyalty programs. Hotel chains quickly took the plunge, with holiday hostel and Marriott being credited with the first hotel loyalty programs in 1983. Since then, loyalty programs have not only been an effective marketing tool to increase guest loyalty, but also to increase repeat customers and hotel revenue.

According to a study by Phocuswright. Meanwhile, according to a study by Cornell University Hospitality Research Center, hotel loyalty programs accounted for a 57% increase in room revenue. Loyalty program members booked more than half of Marriott’s global room nights from 2019 to 2021. Additionally, some U.S. airlines, such as American Airlines, have placed more emphasis on their loyalty programs than the company itself, which allowed them to obtain guaranteed loyalty. debt during the pandemic. As a result, loyalty programs have become one of the most effective tactics in a hotel operator’s marketing arsenal, helping them differentiate themselves from the competition. To compete with large hotel chains, independent hotel alliances such as Global Hotel Alliance (GHA) and Favorite Hotels and Resorts also launched their own multi-brand and shared loyalty programs.

Customer preferences, expectations and behavior, as well as market dynamics, have changed drastically over the years, prompting hotel companies to reconsider their loyalty programs. This has been especially true after the pandemic. To retain customers during the pandemic, most hospitality businesses, including hilton and IHG, offered refundable cancellations, extensions to redeem earned benefits, and reduced eligibility requirements. However, even with destinations such as the Maldives embracing loyalty and rewards programs to capitalize on pent-up demand, hotel companies need to tweak and revamp their guest loyalty programs even more to stay relevant in the post-COVID era. .

For starters, most of these programs are currently aimed at business travelers; However, with leisure travelers driving the post-COVID recovery, hospitality companies need to move away from traditional transactional point-earning models that relied on the “spend more, earn more” strategy. A more experience-based and customer-focused approach, providing members with additional ways to earn and spend rewards points rather than just free nights, is the need of the hour.

Some companies are already redesigning their loyalty programs to meet changing consumer demands. For instance, Radisson allows members to buy points, while others like Hyatt have partnered with financial institutions to offer co-branded cards. Meanwhile, some companies have gone a step further and partnered with retailers and lifestyle brands to allow their members to earn and redeem loyalty points beyond the travel experience. For example, Marriott has partnered with Uberso that Marriott Bonvoy members can earn points on eligible Uber rides and Uber Eats orders in the United States. The company also launched the Marriott Bonvoy Moments program, giving members exclusive access to world-class sporting events, concerts and exhibitions. Accor also continues a similar experience-based loyalty program.

In India, Taj’s The InnerCircle program has been integrated into the new program Aunty Neu platform, which is currently home to several brands, including AirAsia India, IHCL, Qmin, BigBasket, Chrome, Starbucksand Tata CLiQ among others. This will give InnerCircle members more ways to earn points as well as the ability to use their loyalty points as they wish on the platform. A customer, for example, can use the points earned on an AirAsia ticket purchase to pay bills on Tata CLiQ or even purchase a Taj holiday stay or vice versa. In the meantime, it will help increase the visibility of the IHCL brand with current and potential customers. Additionally, the company gets a 360-degree view of members’ spending and buying habits outside of the core brand, allowing it to personalize experiences and offers, resulting in increased conversions, revenue and brand loyalty. Other Tata Group companies, such as Vistara, Air India, Tanishqand Tata Motorsas well as external brands from other companies, are expected to join the platform in the future, creating a fully integrated loyalty program that could be a game changer in the country’s loyalty program ecosystem.

Loyalty programs with impossible-to-reach reward levels and free stays will soon be a thing of the past. Flexibility in earning and spending rewards points, greater personalization and instant rewards will become increasingly important in the future, especially for Millennials and Gen Z customers, requiring a complete overhaul of hotel loyalty programs to meet their growing needs.

Mandeep S Lamba
President (South Asia), New Delhi
+91 (124) 488 5552

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