In 2015, many hotels focused on introducing new technology, investing in new property layouts, and driving revenue through increasing direct bookings. Each of these will remain priorities in the upcoming year, as hotels leverage new technologies to personalize the guest experience and continue to adapt their properties to reflect evolving traveler preferences in the face of intensified competition. Additionally, in 2016 hoteliers will craft new strategies related to revenue management and rewards programs to remain competitive and increase guest loyalty. Here are a selection of top trends that will be evident in the new year:
Personalizing the guest experience before, during, and after a stay
Luxury hotels have traditionally been the primary players focused on ultra-customization of the guest experience. Yet, personalization is becoming table stakes across the industry as hotels strive to target a “segment of one” throughout the guest cycle. From tailored marketing and promotional offers to technologies that enable guests to input their pillow and newspaper preferences, hotels are aiming to provide an end-to-end experience that is unique to each guest. New technologies are making it cheaper and more feasible to achieve this goal. For instance, Omni Hotels recently launched a capability that empowers its Select Guest loyalty members to design each element of their stay, including sound machine and fitness choices, while Aloft Hotels is beginning to use robots to make room deliveries at select locations. Understanding these guest stay preferences also equips hotels to customize marketing and promotions down to the icons in emails or the version of the website displayed.
However, when striving for ultimate customization, hotels should be cautious, especially when offering promotions. For instance, offering a “third night free” promotion for a guest that usually books longer term stays or a discounted gym pass to a health-conscious guest may simply erode profits. Customer-level tests can help distinguish the programs that will drive truly incremental RevPAR from those that are likely to simply discount existing booking or purchasing behavior.
Leveraging loyalty programs for direct bookings
The hospitality industry has historically been ahead of the pack in terms of establishing loyalty programs and collecting customer data, but ensuring that rewards programs drive value for both members and hoteliers is an ongoing and evolving effort. A compelling rewards program can help drive true loyalty, and, importantly, direct bookings, especially in an environment where travelers have a growing number of lodging options. With so many different levers to pull such as various promotional offers, points structure, soft benefits, marketing messaging/channel, and more, hotel executives are trying new ideas to innovate within their loyalty programs. For instance, Starwood provides its Preferred Guest members with exclusive point redemption opportunities like World Series tickets, while Ritz Carlton and Marriott have offered accelerated loyalty status promotions.
However, as hotel companies seek to perfect their loyalty programs, they should find the middle ground between satisfying their members with benefits and offers that resonate, while also ensuring that these programs drive overall financial value. Top ranked loyalty programs may not truly be the best if they are grounded in offers and rewards that subsidize bookings that would have occurred anyway. Trialing specific promotions or benefits with a subset of the guest base can help hotels avoid these unprofitable offers. Such experimentation can not only inform which programs drive incremental revenue, but can also reveal which types of customers (e.g., those with high travel spending) respond favorably.