Locking Down Loyalty

The future of loyalty programs may lie in the hotel room door. That was the suggestion at the Hospitality Industry Technology Exposition & Conference in Orlando in June, when SAFLOK introduced Reggie, the prototype of the locking company's new online registration service.

Even though SAFLOK hasn't sold Reggie to any hotel company yet, it's eager to hook up with one or more so it can link Reggie to loyalty programs. Here's its reasoning:

The future lies in handheld devices, like mini keycard encoders or personal digital assistants packing radio frequency identification (RFID) chips that carry personal data and open doors

Frequent business travelers who most benefit from loyalty programs probably carry PDAs and want convenience and continuity, the principles driving Reggie — and those programs.

For now, Reggie works via a mini keycard encoder. It might well be integrated into a PDA eventually, however. Reggie allows self check-in and -out while on the move. Designed to link to a hotel's property management system, it aims to be a loyalty program enhancement.

When road warriors access a hotel's website, they'll book a room, then encode their own Reggie credential on the day of their arrival, programmed to the appropriate check-in time. The locks will not allow access until then, allowing the property. linked via PMS to SAFLOK's server, to ready the room for the guest.

“The front desk employee uses the encoder to generate the appropriate key,” says Ernie Mitchell, SAFLOK's director of engineering. “That key is specially encoded for the appropriate room number, check-in and check-out time.”

The market for such an enhancement could be major.

Colloquy, a loyalty-marketing consultancy, estimates 92.4 million people are members of hotel loyalty programs; by far the biggest industry for these is airlines, with 254.4 million in frequent-flier programs. Colloquy also notes that across all such programs, totaling 1.3 billion members, the “active participation” rate is only 39.5 percent. Recognition and reward are cornerstones.

“Recognition is more important in many cases than free flights or free stay,” says Bill Carroll, senior lecturer in the School of Hotel Administration at Cornell University.

Senior executives who travel a lot want their preferred pillow and favorite bottle of wine when they get to the room. A trucker, however, is likely to want rewards currency “for a free family vacation when he gets off the road,” Carroll says. Carroll, who consults to various brands, says comparing loyalty programs can be tricky because “consumers differ in what they value.”

THE GUESSING GAME

Choice and customer focus are critical, suggests Steve Sickel, senior vice president, multibrand and relationship marketing for InterContinental Hotel Group.

“Instead of managing the customer relationship, quite a few programs manage their expense line,” says Sickel. They strip points from members who are inactive over a certain time, “and a lot of programs are shortening that window.” People see points “as no different from cash in a bank account. They're very offended when they take them away.”

Among programs in which points expire are those of Starwood, Hilton and Red Roof. Policies also differ on the number of free rooms chains make available to loyalty program members and on high-volume days to which free rooms don't apply.

Choice and control are crucial.“Think about the iPod effect. The iPod is not only a cool gadget, it also allows music lovers to listen to exactly the music they want in exactly the sequence they want at exactly the time they want to listen,” Sickel says.

InterContinental offers a variety of rewards and recognition through Priority Club and Personal Shopper, Sickel suggests. “Rather than give you a bigger menu, we're saying, ‘you choose it and tell us what you want and we'll find it,’” he says.”It's putting the power in the hands of the member instead of the program.” Members of Priority Club, for example, can apply points to free stays at “virtually any hotel,” not just an IHG-related property.

Other brands are expanding their programs in other ways. Hyatt is spreading the Gold Passport program to the private firm's new flags, Hyatt Place and Hyatt Summerfield Suites. Most brands are going global in language — this spring, Wyndham Hotel Group's Trip Rewards launched a website in Germany in German and, for one in China, in Mandarin — some partner with local businesses and some, like Accor's Motel 6, don't offer the programs. “Brands that are well-positioned don't need to differentiate themselves by being part of a mass loyalty program,” says Carol Kirby, executive vice president and chief marketing officer for Accor North America. “If you take the extremes of Ritz-Carlton and Motel 6, each has very clear positioning for the customer.”

Most brands have an array of options. Starwood Preferred Guest, for example, offers both recognition and rewards. “We work hard at appreciation of members who stay with us frequently, because they are probably exhausted from travel and like that emotional connection,” says Robin Korman, Starwood Hotels and Resort's vice president of loyalty marketing. “We work hard on the recognition piece. All programs basically offer points; the differentiator is the human factor.”

Proprietary customer relationship management software keeps Starwood current on SPG member preferences, enabling it to send members an e-mail prior to arrival offering special spa or tee times. The chain's Moments program incorporates auction technology to offer “once-in-a-lifetime experiences,” like special Super Bowl packages and VIP rock concert seating.

At Marriott, too, offerings have become more specialized and personalized, suggest Holly Mendelson and Anna Lorch, directors of marketing for Marriott Rewards. Marriott's Dream Rewards Tracker allows Rewards members to list and tie their dream rewards to points. Marriott's e-folio lets Rewards members receive bills automatically via e-mail and cuts the need for a paper trail.

PUTTING IT ALL TOGETHER

“The more upscale the brand, the less likely it is to offer reward programs and the more likely it is to offer recognition programs,” says Peter Yesawich, chairman and CEO of Ypartnership. “The more affluent the traveler, the less responsive he or she is to reward programs. Points-and-miles hounds are probably more concentrated in the two-, three- and, to a certain extent, four-diamond properties.”

Flexibility is key, says the consumer trends expert, citing Wyndham's TripRewards, which lets members use points for “pizza from Pizza Hut and home improvement goodies from Home Depot.

“I think the frontier is it [a rewards program] becomes a seamless currency, like money,” Yesawich says. “Redemption options will grow, so I can use points to pay my utility bill. That may be years away, but…”


For more information and related articles, go to LHonline.com

THE BIG IDEAS

Connect technology with loyalty programs

Get ready for devices that enable consumers to check in while on the road and accumulate points at the same time.

Offer a mix of recognition and rewards

Rewards are great currency; what makes it even better is the human touch.

Make your program flexible

The more open-ended the loyalty program, the more applications it has and the more consumer-friendly it becomes.

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© 2014 Penton Media Inc.


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