Are Hotel Loyalty Program Members Actually Loyal Customers?

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phocuswright.com

Hotel chains' major initiatives to drive more travelers into their loyalty funnel appear to be resoundingly successful. Phocuswright's annual U.S. Consumer Travel Report has tracked continuous growth in hotel loyalty program membership since the chains launched their direct booking campaigns.

The rise of member-only rates and perks such as free Wi-Fi have been nibbling away at rate parity and helping hotel brand sites and apps compete with online travel agencies (OTAs), according to Phocuswright's latest market sizing and forecasts of the U.S. online lodging market.

But are these campaigns creating truly loyal customers who develop a relationship with the brand and return to book again and again? As part of an extensive traveler study conducted with Bing, Phocuswright asked U.S. travelers how likely they would be to shop and book hotels and booking channels outside of their loyalty programs if they found a slightly better deal or location? The answer: The vast majority of program members shop outside, and would book outside.

Not surprisingly, hotel program members with more status are more likely to stay loyal. Half of members with elite status stick with the brand. However, the challenge for hotels is that there are so few elite program members. Let's be honest: Hotel loyalty program members have become anything but "loyal." Hotel brands are effectively paying travelers to join, and commoditizing the concept of loyalty in the process.

True brand loyalty – the emotional connection between customer and company that directly drives repeat business, even at premium price points – remains elusive and incredibly difficult, for all travel brands.