Hotels are right to prioritize loyalty schemes over rate reductions during and after COVID-19 pandemic, says GlobalData

Major players in the hotel industry are using loyalty schemes in order to create value for their customer base and increase demand during and after the coronavirus (COVID-19) pandemic.

Ralph Hollister, Analyst, Travel & Tourism at GlobalData, offers his view:

“Instead of advertising future room rates at discounted prices, offering perks through loyalty schemes means that hotels can protect their pricing and margin strategies.

“Providing added value instead of price reductions such as offering reward extensions, as Hilton have done, or following IHG’s lead and lowering the entry requirements for their next loyalty tier, should lead to more customer loyalty. Some companies such as Kempinski Hotels are granting bonus nights to loyal customers if their stays were interrupted by COVID-19.

“Customers with time on their hands during this period of travel restrictions and social isolation, could be tempted to research a competitor offer making these strategies good business sense.

“Frequent travelers are the backbone of any major hotel company’s customer base often making up the majority of customers qualifying for ‘elite’ membership schemes.
Hotels will therefore be wishing for a swift return to normality in order to welcome back this loyal and profitable part of their customer base.

“While no one can predict when that might be, companies should continue to improve and develop their loyalty schemes during the pandemic to maintain customer engagement and loyalty.”

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