- Loyalty programs need to go beyond instant discounting to humanize the guest experience
- Discounts aren’t enough for hotels to call a loyalty rate a loyalty rate
- Hotels shouldn’t worry about technology replacing positions, but focus on automated technology that elevates guests experiences
- Hotels with the greatest success take automated efficiency and fuse it with human intuition
As an industry, we have debated tirelessly over the pros and cons of focusing on driving more direct bookings. One can argue just how profitable direct bookings are in relation to the alternative. Hotels are being hit with countless solutions to help them drive more of the business they want. There are now price comparison tools, consumer behavior dashboards and OTAs facilitating hotel loyalty program sign-ups. The available solutions—and the data that drives them—have quickly become vast and various, but how do you decide to prioritize that data, and arguably more important, how do you decide what strategy will achieve your end goal of maximum profitability?
One thing not in question is that all of these options in technology elevate how hotels can service their guests, which means those benefiting the most are the guests themselves. Guests are now more willing to share more about themselves to ensure their perfect experience; a case that remains the same for business travelers and leisure guests alike. We are just starting to scratch the surface in providing guests with a menu of options to meet their specific needs. Whether it’s in the form of a room away from the elevator or AR technology that acclimates them to their room, the bottom line is still your bottom line.
When leveraging today’s vast and various data to build a marketing and revenue management strategy, here are some key considerations to achieving your ideal business mix:
Loyalty: Currency That Is No Longer Current
We’ve seen major initiatives by hotel brands to drive loyalty programs with reported success. The loyalty push, however, is really just a means to an end. Are these campaigns marketing or revenue management efforts? While the answer may be a bit of both, the end goal is still better revenue results and higher profit. The area of concern shouldn’t necessarily be whether a hard-fought-for direct booking is a better piece of business than an OTA booking. There are circumstances where either may be “better,” and either situation may be worth equal time, energy and resources.
What is true, however, is that a loyal guest is one you do not have to continue to spend money on to acquire. Historically, creating loyal guests involved a variation of a points program that eventually rewarded them with complimentary hotel stays. Most agree this system must adapt with the evolving traveler, but does instant gratification (otherwise known as instant discounting) drive loyalty? Will millennials continue to shop around, and are you now giving an already loyal guest an unqualified discount just to keep staying with you?
These are important considerations when building a loyalty initiative. What hotels should also consider is what their initiative consists of and who they are targeting. As an example: Guest A is a seasoned business traveler toward the end of their career, loyal to your brand to a fault. They book their business trips directly with your hotel, and then leverage their various loyalty benefits to also book direct for personal vacations. Since this traveler has very little, if any, price sensitivity, what benefit does a hotel or this guest have in receiving an additional 10% off their stay and are they even aware they are receiving it?
Guest B is the up-and-coming millennial. They are at the infancy of a career that will end up spanning over decades of business travel. The lifetime value of this guest is extraordinary, making them a prime candidate to be converted into a loyal consumer of your brand. Is the instant gratification of a 10% discount—for a rate they won’t be paying for out of pocket—enough to capture their lifetime loyalty or will you secure them once at the discount only to leave them shopping around for the next trip?
While a loyalty program is a revenue management initiative, it still needs to humanize the guest experience. Instant discounts aren’t enough to call a loyalty rate a loyalty rate. Strong considerations for the marketing strategy, booking experience and stay experience need to be made. When a guest decides to stay with a hotel, an entire life-cycle of opportunity emerges to interact, learn and, in turn, convert that guest into a loyal customer – whether they booked direct or through a third party, on a discount or at a premium rate.
Man & Machine, Not Man vs Machine
The challenge in any optimal revenue strategy is not just identifying the ideal guest and offer, but also executing that strategy. As stated earlier, the solutions available are growing at an exponential pace. Whether it’s a distribution tool or a robot delivering room service, recent industry tradeshows will have shown you to expect more and more machines. Will technology eventually replace a given position within the hotel? Rather than thinking about how technology will replace humans, hoteliers should consider how automation can help them elevate their guest experience and allow employees to be more strategic and insightful in their interactions, whether it’s directly with a guest or setting a pricing strategy online.
There are innovative solutions available for a variety of guest scenarios and preferences. For a guest that prefers not to speak with anyone to check in, there are mobile apps, keyless entry and secure payment options to achieve that. However, just because one weary business traveler prefers to get straight to their room doesn’t mean all guests want a check-in experience with a robot. A chat bot can recite breakfast hours but when a guest is looking for a unique and memorable brunch, they want to speak with a human.
This same sort of rationale should be applied to revenue strategy. Machine-learning technology can organize and analyze data in seconds, and in more sophisticated systems will automatically deploy business decisions based on that analysis. The critical component is that a human is still there to validate that action and alert the machine to things it may not anticipate. However, this automated and streamlined process allows for the human to focus more time and energy on forward-looking strategy instead of historical reporting, data entry or rate distribution.
As guests continue to use the digital marketplace to enhance their experiences, more data points are created and enriched with real human insights. Hotels that will have the most success will be those that are able to take the automated efficiency of machine and marry that with the human intuition of true customer service. Albeit vast and various, available technology solutions are out there for hotels to build a cohesive marketing and revenue management strategy to achieve optimal profitability. Just remember, the guest is the driving strategic force and it is an ever-changing and dynamic ride we take with them.
Blake Madril joined IDeaS in 2014 with over 10 years of experience in hospitality operations, marketing, sales, technology and revenue management. In his most recent role with IDeaS Blake is responsible for global initiatives that support the market strategy and messaging for IDeaS’ extensive suite of revenue management solutions and services ultimately aimed at helping hotel executives maximize profitability for their hotels. He is a strong advocate for the discipline of revenue management and the convergence of hotel data solutions and job functions to bring the best experience possible for both hotels and their guests.
Prior to IDeaS Blake held positions at properties and hotel management companies that ranged from front office operations to sales and catering and multi-property revenue management. He has worked with global hotel brands and affiliations such as Hilton Worldwide, Intercontinental Hotels Group, Wyndham Hotels & Resorts, Preferred Hotels & Resorts and Global Hotel Alliance, as well as luxury independent properties and limited service inns.
Blake holds a diploma in Business Administration from California State University, Fullerton and is currently based out of the IDeaS headquarters in Minneapolis, MN where he is a frequent blogger and evangelist for the optimization of total profitability for hotels and resorts.
An avid enthusiast of all things '90s and sitcoms, Blake recently took home 2nd place in a Saved by the Bell trivia contest. Words spoken right after accepting his trophy: "I'm so excited."
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