Why hotel loyalty programs aren’t driving direct bookings

Imagine you have a friend whom you know quite well through regular lunch dates. Then you bump into them somewhere else, outside of the restaurant, and they act like they don’t know you at all. Ouch. What happened to the relationship you spent all that time building up?

It sounds a bit far-fetched, but that’s the way many hotel loyalty members feel when they don’t book direct.

By now, every hotelier knows that online travel agents (OTAs) can have a significant impact on profit margins, and that driving more direct bookings is essential. The challenge is figuring out how to actually convince guests to book direct – and loyalty programmes seem the obvious solution.

Are you really rewarding guests for booking direct?

Most major hotel groups are trying to change guests’ booking behaviour through rewards (like points or membership benefits) which are only available on transactions made through the hotel’s own channels.

So why isn’t this approach working? I did some informal research – digging through consumer comments and reviews of hotel loyalty programmes – to see where hotels are going wrong and how they might be able to improve.

You don’t have to read many reviews to get the sense that most consumers aren’t happy about the current state of hotel loyalty programmes (take a look at the comments on this article for some examples of guests’ frustration).

Their biggest complaints? Small print that prevents them from getting their points, programmes that aren’t worth the perceived cost savings of booking through an OTA, and the sense that hotels are trying to squeeze more money out of them for very little in return.

Ultimately it comes down to the guest experience and perceived value for money. Guests don’t feel like they’re being rewarded for booking direct, they feel like they’re being punished for not doing so. And that doesn’t make for a good guest experience or long-term loyalty.

Where is the loyalty?

From the guest’s perspective, booking through an OTA doesn’t represent a lapse in their loyalty to a particular brand. But the hotel’s response to this behaviour certainly does look like a lapse – in the hotel’s loyalty to the guest, that is.

Whether they lose the perks associated with their membership tier or simply miss out on the opportunity to earn points, many guests feel their loyalty to the hotel brand itself is forgotten when they plan their stay through a third party site.

Direct bookings are essential for boosting profit margins and sustaining your business long-term. So what are hotels supposed to do?

We believe the answer is two-fold:

1. Make booking direct a better experience, that adds value to the guest’s stay, and
2. Avoid isolating loyalty members when they do book through a third party.

Hotels need to offer something through the booking process that OTAs can’t – a personalised experience based on their relationship with the guest. A tailored experience (plus relevant rewards) will build emotional connections better than points and discounts alone. And it’s these connections that will drive true loyalty.

In fact, in a recent study, 40% of business travelers and 27% of leisure travelers said receiving a personalised experience had an impact on their choice of loyalty programme.

This could be remembering the room they had last time, extra amenities they used, or any other special requirements and offering these again during the booking process. A property with extra services like a restaurant, spa or leisure facilities might also offer direct bookers priority seats at dinner or a free glass of champagne during their spa treatment.

Adding value for every member

At the same time, hotels must stop throwing the guest relationship out the window when a loyalty member books through a third party.

Sometimes OTA bookings will still be a loyalty member’s preferred (or only) choice – e.g. for a business group visiting a conference or a guest booking flights and a rental car all at the same time.

Of course, giving the same rewards regardless of how someone books isn’t practical, or effective at driving direct bookings. But what if hotels recognised and thanked their loyalty members no matter what? They still chose your hotel over your competitors, after all.

In this example, Lucy’s loyalty doesn’t go unrecognised but there are clear additional benefits to booking through the hotel in the future. And for many guests, this is what is so often missing when it comes to booking direct – real value for them.

Patrick Bosworth, of Duetto, put it nicely in a recent article on Tnooz:

“For the vast majority of consumers who aren’t road warrior business travelers, there’s never been an incentive to book direct. In fact, there have only been incentives not to, because sites like Expedia and Booking.com provide a better user experience, more choices, and the marketing message, true or not, of having lower prices. Hotels simply offering rate parity did not really address anything of value for the consumer.”

Experience beats discounts

Sifting through guest comments on travel blogs and articles, you’ll find plenty of anecdotal evidence that tangible benefits (rather than points) will motivate people to book direct – things like access to an exclusive lounge, free parking or faster WiFi.

Forrester analyst Emily Collins, interviewed in a recent New York Times piece, said that while discounts matter, consumers “overwhelmingly say they want special treatment and offers not available to others in a loyalty program… They come for the perks, but they stay for the experience.”

And comments from the study above back this up, with respondents saying that things like recognition of their loyalty, a welcome gift in their room and a pre-stay email asking if there’s anything they need will add value to their experience. If this personalised customer journey is only available when booking direct, that can be a strong incentive.

Hotels need to find a balance between incentivising customers to book direct and not isolating those that don’t. Overall, guests want to feel pleased, valued and cared for when they stay with you, especially if they’re a loyal member. The message hotels need to send is: “We value your business no matter how you book – but booking direct will get you extra perks.”

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To do any of this well, having the right technology in place is essential. The right data and the ability to apply it to your loyalty programme is key. And that’s exactly what our Horizon Loyalty Hub is designed for.

Learn more about how Horizon can help your hotel drive greater loyalty and more direct bookings.