Hospitality Industry Shifts Focus from Points to Personalization in Loyalty Programs

What's Happening?

The hospitality industry is undergoing a significant transformation in how it approaches customer loyalty. Traditionally, loyalty programs have been centered around points, perks, and predictable upgrades. However, recent insights from industry leaders like Mike Coscetta, President of Mews, suggest a shift towards personalization. Research indicates that seven out of ten travelers prefer personalized experiences over traditional rewards, and 82% of loyalty members express frustration with legacy programs due to issues like expiring points and poor redemption value. The industry is recognizing the need to evolve loyalty programs to offer more meaningful and personalized experiences, rather than relying solely on points as a currency.

Why It's Important?

This shift in loyalty programs is crucial for the hospitality industry as it seeks to enhance customer satisfaction and retention. Personalized experiences can create stronger emotional connections with guests, leading to increased advocacy and brand loyalty. By moving away from transactional loyalty programs, hotels can foster deeper relationships with their guests, encouraging repeat visits and positive word-of-mouth. This evolution is not only beneficial for guests but also for hotels, as it can lead to more profitable business models and improved guest experiences. The integration of technology, particularly AI, is expected to play a significant role in enabling this personalization at scale.

What's Next?

The future of loyalty programs in hospitality is likely to focus on three key areas: surprise and delight, behavioral incentives, and redemption value. Hotels will need to leverage data to create personalized, unexpected moments for guests, encouraging new behaviors such as leisure travel or dining. Additionally, offering rewards that feel genuinely worthwhile will be essential to maintaining guest loyalty. As technology continues to advance, hotels will have the opportunity to use AI to surface insights from data and recommend meaningful actions, allowing them to scale personalization without losing authenticity.

Beyond the Headlines

The shift towards personalization in loyalty programs also raises ethical and cultural considerations. As hotels collect and utilize guest data to enhance experiences, they must ensure privacy and data security. Moreover, the move from transactional to relational loyalty programs reflects a broader cultural shift towards valuing individual recognition and meaningful interactions over mere financial incentives. This change could influence other industries to reconsider their approach to customer loyalty, emphasizing the importance of genuine connections and personalized experiences.