HOTEL LOYALTY
Hotels get nearly half of their revenues from the small segment of travelers who spend about a month each year on the road: frequent visitors make up only 10 percent of all hotel guests but account for 44 percent of
hotel nights . In the early 1980s, hotel chains began to recognize the value of such customers by introducing loyalty programs patterned on the airlines’ frequent-flier model. These programs have succeeded in maintaining the loyalty of people who travel moderately often but are not as effective as they might be with other segments, our research suggests.
The frequent-traveler segment represents $40 billion to $50 billion in revenues each year. These guests spend some of that money in their preferred hotel chains, but their wandering ways leave $22 billion to $27 billion in play. Persuading such people to narrow the field from three or more chains to their favorite two could add seven to ten nights at the chain they prefer. To capture this opportunity, hotel executives must ask, “What do you get the person who has everythingor at least more points than he or she can use?”
Part of the answer might involve changing the way points are redeemed. Even for elite-status members of a loyalty program, redeeming them for free hotel rooms can be cumbersome at popular times and destinations.