Loyalty-club members' habits good for hotel performance

Categories: Building Guest Loyalty
As published in: Hotel & Motel Management
Date: February 16, 2004
Author: Jonathan Barsky, Albert Lin

Members of hotel loyalty programs are almost twice as likely to return to a hotel compared to nonmembers. Beyond the repeat hotel business these programs encourage, club members typically spend more per room, are less sensitive to price increases, and are more satisfied with their hotel experience.

Hotel loyalty programs are growing. Based on results from the past four quarters of the Market Metrix Hospitality Index, these club memberships have grown by almost 12 percent and are having more of an influence on hotel-brand selection.

Based on 35,000 quarterly customer evaluations, the index provides results and brand rankings for 134 hotel brands, 21 airlines and 11 car-rental companies. The index includes an evaluation of hotel loyalty programs.

According to the latest MMHI results, members of hotel loyalty programs are almost twice as likely to return to a hotel compared to nonmembers. Beyond the repeat hotel business these programs encourage, club members typically spend more per room, are less sensitive to price increases, and are more satisfied with their hotel experience.

But competition among industry offerings has increased, and the average frequent traveler belongs to multiple loyalty programs. To understand these customers and identify ways to retain members and attract more people to the clubs, we examined the profiles of members and nonmembers of hotel loyal programs. Here are some differences between the groups.

• The percentage of all guests who indicated club membership is "very important" when selecting their most recent hotel stay increased steadily throughout 2003 with a 25-percent annual increase. Features such as points transfer and instant redemption combined with no blackout dates and no point expiration are making it faster and easier for members to redeem points.
• Frequent travelers (15 or more roomnights per year) are four times more likely to consider club membership very important when selecting a hotel. Frequent travelers represent more than 50 percent of all roomnights sold in the United States.
• Among frequent travelers, club members have considerably higher incomes, pay slightly more per roomnight, stay more nights per year in hotels and are more tolerant of price increases compared with nonmember hotel guests.
• The average profile of a frequent traveler who joins a loyalty program is a 47-year-old male traveling on business. He stays 31 nights per year in hotels, is very brand loyal, pays an average of $103 per night (but would pay another $11 before switching brands) and has an annual income of $104,000.
• Loyalty-program members are much more likely to make their reservations online than nonmembers. Loyalty-club members use the Internet 43 percent of the time to make their hotel reservations. Nonmembers go online 32 percent of the time to book their hotel rooms.
• Fifty-nine percent of loyalty-club members use the hotel's or brand's Web site to make their online reservations. Nonmembers use these Web sites only 27 percent of the time.

Jonathan Barsky and Albert Lin work for Market Metrix LLC (MarketMetrix.com), a firm that provides customer and employee programs for the hospitality industry. For more information, call (800) 239-7515.