Advantages and Disadvantages of Loyalty Programs in Hotel Industry

Loyalty programs in hotel industry are one of the marketing strategies to gain more customers. The loyalty program focus to give rewards to your frequent and best customers.

The hotel industry chooses to implement a loyalty program to convert new customers into loyal customers.

Traditionally, many businesses use rewards programs such as earning points, discounts, and offers to customers to make purchases. Hotel Industry is also using gift cards, rewards, coupons and etc for loyalty programs.

When any new hotel comes into the market and some are running from the last decade they want to do the marketing for their growth.

New hotels want new customers and old hotels want to retain the old ones with some new referrals. For this purpose, the loyalty program came into the picture.

A hotel loyalty program is usually free to join and may have several levels. To attract new members to join the plan, new members may be offered benefits such as free internet access, free dinner, etc.

This ensures that the guest has the motivation to join the plan even if they do not want to attain the next level of prizes they can still have a few benefits.

If the customer wants some extra services/benefits they can earn a few more points and reach to the mid-level and higher.

Hence, the need for the loyalty program is to attract customers for the hotel’s growth.

Loyalty programs in hotel industry are needed to gain profit in the business. Therefore there are multiple perks of the hotel loyalty program. Let’s know each advantage one by one.

Boost Customer Retention

Loyalty programs make customers feel important, which encourages them to keep using your product or service.

Loyalty programs, in general, are intended to retain more clients by rewarding them for making recurrent purchases with a specific brand. A higher cost is required to get new customers than it does to nurture an existing one.

As a result, most marketers create a loyalty program to boost customer retention and encourage extra purchases.

Increase the Number of bookings

Accommodations provide incentives to consumers who book hotels in advance. Customers who book hotels receive discounts and complimentary amenities.

Customers are more inclined to return to a hotel that provides excellent service.

When a consumer is satisfied with the basic services, they are more likely to spend money on the hotel’s other facilities or services. As a result, hotel income grows.

Improve Customer Data

Hoteliers can obtain valuable information about their client’s spending habits, interests, and preferences through hotel loyalty programs.

This information can then be used to create personalized offers that will elicit immediate interest and purchase. Additionally, client data can be used for advertising and communication.

Relevance and personalization

The more information you have about a consumer, the better you will be able to customize services that are more useful to the customer.

The entire guest experience has been transformed. Loyal clients are separated based on lifetime spend, and hotels give big spenders VIP service.

The hotel loyalty program not only targets high-spending consumers but also existing customers who do not usually spend a lot of money.

Form Community

The hotel loyalty program creates a network of devoted customers who can be encouraged to participate in focus group surveys and provide honest feedback. They can also identify areas for improvement and provide valuable input via social media.

Like every coin has two sides therefore loyalty programs in hotel industry also have. Now here we will tell you about the disadvantages of loyalty programs in the hotel industry.

Extra Work To Make Loyalty Rewards

To manage a good hotel loyalty program, many working hours are required to track loyalty points, redeem them, answer questions, and so on.

This necessitates good staff training. Furthermore, if you are creating customized offers for your loyal clients, you must examine individual data and stay current on their changing wants and interests.

Marketing and operating expenses

To make a rewards program more effective, you must invest in marketing. This raises both marketing and operational expenditures.

The luxuries provided by the loyalty program, such as free internet, hotel upgrades, early check-in, late check-out, and so on, increase operational costs.

Complaints from guests

Although loyalty program users receive preferential treatment during their stay, when something turns out badly, they are vocal about it.

They may wind up leaving unfavorable feedback on social media or complaining to personnel. To keep a hotel safe from such situations, the hotel loyalty program manager must devote additional time to keeping loyal members satisfied.

Lack of coherence

There is a high probability that the quality of service, facilities, and quality won’t be consistent throughout all of a hotel chain’s properties.

The likelihood is that the loyalty program won’t be successful because certain people may not have the same degree of infrastructure.

Meeting Expectation is Challenging

A regular visitor to the hotel anticipates consistently excellent service. Additionally, the demands placed by each member of the hotel loyalty program will increase, as the number of members gets high.

The administration of the hotel finds it extremely challenging to satisfy everyone’s needs and interests.

So, we can say that increasing the business and the growth of the hotel loyalty program is a very good marketing strategy. It will not only be useful to get new customers but also helps in maintaining the existing one.

But to have a profitable loyalty program hotels need to be regular and consistent in the quality and services. That will require extra manpower with extra working hours.

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