Hotel loyalty is weak, study finds
By Kelly Monaghan
Got a beef with your bank, your cable company, your cell phone company, an airline? Most of us have a gripe against at least one of these. So why do we keep using them?
The simple reason is that changing can be just too much of a hassle. That airline might be the only one that serves your market. And if you’ve set up automatic payments through your bank, switching to another bank could be a nightmare. It’s called the “pain of disconnect” by marketers.
But as a recent New York Times column by Joe Sharkey points out the same does not hold true for hotel loyalty programs. Most frequent travelers, especially business travelers, carry a stack of hotel loyalty cards, so it’s a simple matter for them to switch from one to another as the spirit moves them.
Consequently, it behooves hotels to pay attention to these folks who are, virtually by definition, their best customers.
Sharkey cites a study by consulting group CG42.com that attempts to determine which hotel brands are most vulnerable to having holders of their loyalty cards switch allegiance. Turns out it’s most of them. Of the nine hotel groups studied, six of them were more or less vulnerable to defections. (Note that a hotel “group” might encompass a number of separate “brands.”)
While this might seem like something of primary interest to hotel groups, travel agents should also take note.
Hotels can represent an extremely valuable stream of income for home-based travel agents.That’s especially true at the high end, but even modestly priced hotels pay commissions and offer a way for travel agents to serve (and profit from) clients who don’t do all that much high-end travel.
In fact, I have been intrigued to learn that some students of the Home-Based Travel Agent Success Course do extremely well in this niche. For some it is their primary source of commission income.
How can that be when cruise and tours are the “sexy” moneymakers for most home-based travel agents? Well, consider wedding planners as just one example. All those visiting friends and relatives are going to need a place to stay. Then, too, companies (or savvy employees within companies) have realized that all of those overnight stays by traveling salespeople and executives could be producing commission income to offset some of the expense.
So how does this “brand vulnerability” for hotel groups affect travel agents? Here are some thoughts:
First, you need to be aware of it. Check out the CG42 report (or at least the snippets they share online). How many of your clients are “loyal” to which groups and which brands within those groups?
Make sure you enroll everyone you book in that chain’s loyalty program. Be sure to keep of record of their membership number. Do this even if you can’t ever imagine that client ever using that hotel or brand again. As Fats Waller said, “One never knows, do one?”
Of course, you should ask new clients what loyalty programs they belong to and record their member information. Do it for existing clients, too, if you haven’t already. I probably shouldn’t have to remind you to include their loyalty number when you book them!
Learn about the various hotel loyalty programs from the hotel web sites. Join them yourself. Ask your clients about the hotel loyalty programs they like. Why are they loyal to Brand X? What are the perks that appeal most? Use this intelligence to advise all your clients.
If a traveler switches hotel loyalty they most often do so because of some bad experience. Often times the travel agent has little control over that, but it is your responsibility to keep yourself up to date and advise you client accordingly.
Hotel quality varies from property to property. This is less of an issue at the higher end of the scale, although older properties can have issues. With moderately priced properties, such as those in the Choice Hotels portfolio, variation in quality can be extreme. In cases like this, recommend only properties you know are up to snuff or rely on review sites to make informed choices. Or should I say quasi-informed guesses? Interpreting those “unbiased” reviews is a bit like the ancients examining bird entrails to make predictions. At any rate, the point is: Do your homework.
If you can’t vouch for a property 100% by all means tell your client. Most people will appreciate an honest disclaimer like “I can’t absolutely guarantee you’ll like this one. Quality at this chain can vary greatly from property to property. But it is close to your business meeting and it is the chain you book most often. If you’d like to spend a little more, Hotel X is excellent and only costs a bit more.” You get the idea.
Be alert for opportunities to move your clients up the value/quality ladder. As you gain more familiarity with the hotel segment you will begin to notice, perhaps surprisingly, that two adjacent properties representing an “expensive” brand and a “cheap” one will cost almost exactly the same. Many clients will be surprised to know that a chain they though was out of their price range is actually quite affordable and they will thank you (and remember you) for setting them straight.
If you have a client who has been racking up loyalty points by booking with you don’t be afraid to suggest that on the next trip they take advantage of a free night or two. The share of mind you gain can be worth more than the commission you lose. Hint: Suggest this for a “personal” trip as opposed to a “business” trip. Business trips might be reimbursed by the employer or the traveler might be self-employed, which means the expense is tex-deductible.
Those loyalty points can also be used to lengthen a trip on which you are making a commission from other sources. They can even be used to create a justification for a trip that might otherwise not happen! Be creative.