12 Pros and Cons of Hotel Loyalty Programs

Do you stay mostly at the hotel when you travel?

Do you choose the same hotel brand on every visit?

It is a general behavior of a customer that they buy the product from the same brand if their purchase experience was good.

The same goes for the hotel stay too.

If your first experience at a certain hotel brand is good, you always prefer to stay under the same hotel brand if you are given a choice.

This shows your loyalty to the hotel brand.

And this is what all hoteliers want from a customer.

To reward such customers, the hotel introduces hotel loyalty programs.

In this article, I will tell you what hotel loyalty program is and twelve pros and cons of hotel loyalty programs.

So, let’s find out.


What are Hotel Loyalty Programs?

Hotel Loyalty or Reward Program is one of the marketing strategies used by hotel chains. The program tends to attract and retain customers at their hotels. It is more commonly targeted at business travelers and frequent hotel guests. Hotel Loyalty Program offers discounts, room upgrades, access to different facilities of the hotel, etc. In return, customers prefer the specific hotel brand for their stay every time.

Most of the hotel loyalty programs are free to enter and have different tiers of the program. You might be offered free Wi-Fi access or minibar access to make you sign up for one such program.

Like every other loyalty program, it also comes with rewards that can be redeemed for different service offers i.e. room upgrades, free nights, free parking, discounts, etc.

Top 3 Hotel Loyalty Programs

  1. Marriot Bonvoy
  2. Wyndham Rewards
  3. World of Hyatt

Pros of Hotel Loyalty Program

1.   Guest Recognition

Through loyalty programs, hotels will be able to keep a check on frequent guests and make sure that they are well treated at all hotel brands.

2.   More bookings, more revenue

Hotels offer perks to make customers book hotels in advance. Discounts, free facilities are offered to customers who book hotels. When customers get a good service at the hotel, they are more likely to return. Once a customer is satisfied with the basic services, they tend to spend more on other facilities or services of the hotel. In this way, revenue from hotels increases.

3.   Rich data

With the help of hotel loyalty programs, hoteliers get rich data about their customers’ spending behaviors, interests, preferences, etc. This data can then be used to make personalized offers that will hit an instant liking and purchase. Also, customers’ data can also be used for promotions and communication.

4.   Personalization and relevancy

The more you know about a customer, the better you can personalize the offers that are more relevant to the customer. The whole guest experience is revolutionized. Loyal customers are segmented by lifetime spend, and hotels give VIP treatment to big spenders.

The hotel loyalty program does not only target big spenders but also regular customers who do not necessarily spend big.

5.   Incentivized behavior

Some hotels reward loyalty points to customers when they use the spa, bar services, or eat in the hotel restaurant, complete a guest survey, or even for using the mobile app of the hotel for check-in or check-out online. In this way, the loyalty program turns out to be more beneficial for the hotel as well as the customer.

6.   Community

The hotel loyalty program forms a community of loyal customers who can be invited for focus group surveys and they will give you honest feedback. They also suggest areas of improvement and can give their valuable feedback on social media.

Cons of Hotel Loyalty Program

1.   Administration costs

To run a successful hotel loyalty program, a lot of man-hours are required to keep track of loyalty points, redemption, answering queries, etc. This requires proper training of the labor involved. Also, if you are designing personalized offers for your loyal customers, then you need to analyze individual data and keep up with their changing needs and interests.

2.   Cost of redemption

Loyalty points are a liability on a hotel’s balance sheet. Therefore, taking care of them is a tiresome task. At times, you have to give up paying guests over the loyalty program members when they ask for redemption. Also, some customers accumulate points at a less desirable property and then ask for redemption at a more desirable property which creates an imbalance.

3.   Marketing and operational costs

To make a loyalty program successful you need to spend money on marketing. This increases marketing costs as well as operational costs. The perks offered under the loyalty program i.e. free Wi-Fi, room upgrades, early check-in late check-out, etc. leads to an increase in the operational costs.

4.   Guests complaints

Even though loyalty program customers are given special treatment for their stay but if something goes wrong, they tend to be quite vocal about it. They might end up writing negative reviews on social media or complain to staff. To keep a hotel safe from such incidents, the hotel loyalty program manager needs to dedicate extra time to keep loyal members happy.

5.   Lack of consistency

When a hotel brand has lots of properties, there are high chances that the level of service, amenities, and quality may not be consistent. Some might have not the same level of infrastructure therefore; chances are that the loyalty program may not be a success.

6.   High expectations

A frequent customer of the hotel expects the service to be always top-notch. Also, the more the members in the hotel loyalty program, the greater will be the expectations from each member. And catering to everyone’s demands and interests gets really difficult for hotel management.

So, as you read above the hotel loyalty program may sound great and have many advantages, but it can create problems for the hotel brand if not successful. To get more knowledge about hotel loyalty programs, you can check Suites & Lobbies. It is a website that reviews different hotels, hotel loyalty programs, hotel credit cards, etc. So, do give them a try and sign up for the best hotel loyalty program.


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