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Loyalty programs are valuable for marketers. They offer information and insights about what customers want, and they help encourage those consumers to repurchase from the same company over and over again, rather than switching to competitors. For hotel chains, these benefits are paramount—but they also are at risk when consumers book rooms through a third-party agent or website like Hotels.com, Expedia, or Travelocity.

Lo-res_184915014-SMany travellers find the convenience of one-stop travel sites appealing, such that they book their flight, hotel, and rental car in one place and with one transaction. They also appear to have embraced the perception that they can get the best prices on all their travel needs when they rely on these third-party sites.

But these habits have created problems for hotels, which no longer get the same level of information about their guests. Furthermore, they usually pay the third-party booking site a fee for each reservation, lowering their overall profits. In an attempt to reverse the trends, many chains are highlighting their branded loyalty programs and the perks that come from booking directly through the hotel’s website. Among those perks, most of these chains promise an even better price than travellers can find elsewhere.

Advertising campaigns make the goals of the hotels clear, by promising “It Pays to Book Direct” (Marriott) or calling on travellers to “Stop Clicking Around” (Hilton). When the hotels’ loyalty program members make their booking directly with the hotel, they earn discounts of up to 10 percent. Some of them also offer a price-matching guarantee, such that if a member finds a cheaper rate elsewhere, they will undercut the better rate by 25 percent.

Price benefits are not the only perks for the loyalty program members though. For example, when users download a dedicated app, some hotel chains allow them to access maps of the specific hotel they will be visiting and select their room. The direct link to the hotel also means that guests can make specific requests, such as an extra pillow or confirmation of the strength of the WiFi signal in their rooms. And of course, loyalty members only earn loyalty points—the very foundation of hospitality loyalty programs—when they book through the hotel. That is, by making a reservation through Orbitz, travellers give up their ability to earn points that they later can redeem for future stays and other perks, like free meals in the hotel’s restaurant.

For customers who are less loyal to any particular brand, many of these perks have little impact. If an infrequent traveller really doesn’t care whether she stays at a Hilton or a Marriott the next time she goes to visit her grandparents, then the price and promotional benefits offered by loyalty programs have little appeal. But that occasional visitor is not the consumer that hotels are really targeting. They want the ones who might be willing to return again and again, to hotels located all over the world. And to get them coming back, the hotels are seeking to find the exact right combination of price and promotion to keep them loyal.

Discussion Questions:

  1. How are hotels enticing customers to book directly with them?
  2. Are these incentives likely to increase direct booking? Why or why not?

Source: Stephanie Rosenbloom, “Where to Find Hotel Deals? Try a Hotel,” The New York Times, May 3, 2016