Article in Mobile Future, General, Mobile, Marketing and Growth categories.

The Economics of Loyalty: How Mobile Apps Contribute to Hotel Revenue Growth

Explore how enhanced loyalty programs and mobile integration by Fueled can boost guest retention and increase revenue in the hospitality industry.

The hospitality industry is faced with a challenge: retain customers and cultivate loyalty, or lose out to emerging competition. In 2023 alone, the hospitality industry lost out on nearly 450 million bookings to Airbnb from would-be hotel goers.

In an increasingly competitive landscape, maintaining guest loyalty has become more crucial than ever. Loyalty programs are not just a tool for retaining customers; they are a strategic asset that can significantly impact a hotel's bottom line. According to a study by Solonis, guests enrolled in loyalty programs provide a higher lifetime value, spending on average 22.4% more than their non-loyal counterparts.

Furthermore, these loyal customers tend to have longer stays, with a 28% increase in duration compared to sporadic guests. This data demonstrates the importance of not only attracting guests to loyalty programs but also ensuring their continued engagement and satisfaction to foster long-term relationships, and maximize revenue.

Despite the importance of retaining loyal guests, an outsized number of hotels have failed to update their loyalty programs alongside evolving guest expectations. An indicator of the reduced impact of outdated loyalty tactics are the "millions of points that are laying dormant" in some programs, such as airline or hotel clubs. This is according to Robert Wollan, Senior Managing Director and global lead of advanced customer strategy at Accenture Strategy. As he says: "You have to really look at whether you're suffering from the loyalty illusion – that it worked before so it will keep working – or is it time for a fresh look?"

This then begs the question: in what ways are hotels today falling behind in their loyalty programs?

Low Program Adoption Rates

Oracle Hospitality recently conducted a survey on a wide range of hotel guests. Despite recognizing the potential benefits offered by loyalty programs, nearly 58.7% of survey participants reported they do not belong to any loyalty program.

In the same survey, many participants cited the amount of information required to join loyalty programs as a reason for not signing-up. Loyalty program onboarding usually exists as a separate process from check-in and booking, even though much of the information required is the exact same. More work, and an extra sign-up for the guest ultimately means many will decide it’s simply not worth it. Furthermore, it’s unlikely that leisure travelers will want to spend their limited free time going through a lengthy onboarding process. This is especially important when you consider that the most significant challenge reported by loyalty program managers is attracting new members, according to surveys by iSeatz.

Lack of Perceived Short-term Value

For our project with MGM Resorts International, Fueled interviewed a wide range of hotel guests from casual visitors, to top tier loyalty program members. One of our key findings was that guests don’t perceive loyalty programs as offering enough immediate or short-term value.

This is further supported by data In the survey by Oracle Hospitality. Nearly one third of participants said they don’t join loyalty programs because it takes too long to earn rewards. Further participants stated that the path to earning and utilizing rewards was also unclear. If guests see no immediate benefits, and don’t understand the path to earning long term rewards, their decision to not sign-up is understandable.

Data Silos

A further issue the industry faces is the siloing of data. Hotels often have access to large amounts of information on customer behavior, purchase history, and preferences. Unfortunately, much of this data exists on separate platforms like CRMs, point of sale systems, booking systems, and property management systems.

Due to this lack of integration between data streams, it’s impossible to synchronize analytics. Without this synchronization of data, hotels are missing out on opportunities to improve their loyalty program. For example, hotels could use this information to personalize loyalty program reward offerings, or marketing messaging, making the programs far more attractive to individual guests.

Yet, as it stands many hotels have yet to integrate their data effectively. As Kevin Edwards, Business Development Director at Alliants says: “The traditional CRM has afforded hotels years of data, but, as with many other aspects of a hotels' operations, it suffers from siloing. It is often only available to one department, rather than all.”

The App Advantage

Mobile apps are one of the most effective ways to drive loyalty program engagement and adoption.

Onboarding in your mobile app experience can significantly reduce friction. Mobile apps have a number of highly valuable features that incentivize guests to download. Room keys, on-demand check-in, and more are all highly valuable features that provide users a direct pipeline to loyalty program adoption. Apps can allow hotels to efficiently combine the check-in and loyalty program onboarding process. This seamless onboarding means significantly less friction for guests, and significantly greater participation in loyalty programs.

Furthermore, mobile can show your guests a clear path to their progress towards earning, and using loyalty program rewards. This visibility fosters a sense of achievement and anticipation, encouraging further engagement. By integrating reward tracking directly into the app, guests are constantly reminded of the value they gain by being loyal customers.

This not only enhances the guest experience but also strengthens the relationship between the property and its guests, making the loyalty program an integral part of the travel experience. As stated in an iSeatz 2023 loyalty program report: “to maximize engagement, travel loyalty providers must offer inspiring, exclusive, and varied travel options that can be easily booked via a single digital platform.”

With proper implementation an app can also gather data from users as part of a single, seamless flow, and intelligently route it to a wide array of systems. It can help connect every aspect of your property from core hotel operations, to rewards, marketing, security, and concierge. By gathering and consolidating data, hotels can personalize loyalty programs and marketing efforts to be more tailored and effective.

After reviewing primary data and interview sources, iSeatz came to the conclusion that: “These numbers clearly show that loyalty programs with travel rewards should invest in their booking platform’s ability to tailor content around a user’s needs. This can help increase conversions, thereby reducing points liability and creating a more relevant and valuable user experience that encourages engagement and drives growth.

By implementing a travel rewards platform with extensive personalization capabilities, dynamic content presentation, and a recommendation engine, loyalty programs can achieve their conversion and engagement goals quickly, driving more revenue and per-member spending.”

Conclusion/CTA:

To stay competitive in the evolving hospitality landscape, hotels must adapt their loyalty programs to meet shifting consumer expectations. By leveraging mobile technology, integrating data sources, and offering clear, immediate value to guests, properties can significantly increase loyalty program adoption and engagement. At Fueled, we specialize in auditing and enhancing digital experiences to ensure that your hotel's app not only meets but exceeds the demands of modern travelers.

Interested in how Fueled can transform your hotel's digital experience?