iSeatz’s Andy Hermo discusses the findings of his company’s 2023 Hospitality Rewards Report
Exactly how important are loyalty programs as a vehicle for promoting, well, loyalty, and ultimately beefing up hoteliers’ bottom lines? That was the gist of what LODGING asked Andy Hermo, chief commercial officer at loyalty technology company iSeatz.
In response, Hermo, who leads the development and implementation of the iSeatz commercial strategy to drive enterprise growth, profitability, and improve customer satisfaction, said, “Loyalty programs play a significant role in the hospitality industry and have always been a key tool for guest engagement, and, when leveraged effectively, help drive real top-line revenue growth and profitability.”
Hermo’s support for this claim was based mainly on his company’s recently published State of Loyalty: 2023 Hospitality Rewards Report, which analyzed 27 rewards programs provided by major global hotel chains and well-known hospitality brands. Hermo also spoke about what he and others in the industry foresee in the years ahead, including the impact of AI and trends across the hospitality industry. These include the unbundling and upselling of ancillary services and on-property earning and redemption options, such as car rental, dining, live events, and food delivery.
The analysis for the report, said Hermo, focused on 13 types of reward options encompassing both earning and redemption aspects among brands that operate a points-based rewards system. The resulting report was created using publicly available information on hotel loyalty program websites and mobile applications, and the details were verified when possible.
This report and Hermo’s comments reflected a belief in the continuing importance of loyalty programs and opportunities to further strengthen them. “Loyalty programs are notably important for various reasons. They contribute to customer retention, ensuring that guests return to the same brand due to the rewards and benefits they receive,” he explained. “These programs also boost spending as customers strive to earn more rewards. They facilitate cross-selling and up-selling opportunities, encouraging guests to explore diverse offerings such as restaurants, spas, golf, tours, and activities available on the property. Additionally, loyalty programs gather valuable customer data to shape tailored marketing strategies. This data-driven personalization further enhances guest satisfaction.”
Hermo supported these claims with iSeatz loyalty booking data: “Reward members consistently and increasingly have a higher average booking value (ABV) than non-members. Over the last five years, members have spent 2.8 percent more in ABV when ancillary products are included. In the last two years, ABV is up by 6.8 percent and even more compelling, YTD 2023 ABV is up 15 percent.”
Calling the IHG One Rewards program, which added 12.2 million loyalty members in 2022, “a great example of the impact of loyalty strategies done right,” Hermo said, “Loyalty members are responsible for more than half of all room nights globally and typically spend 20 percent more in hotels than non-members.”
AI and Hyper-personalization
Hermo described recommendations based on report findings, including expanding the earning and redemption opportunities, offering consumers more control, unbundling, and providing “real personalization” based on AI-powered analytics. “Our platform data proves that expanding the earning and redemption opportunities to include ancillaries in loyalty programs is a big opportunity,” he said. “We found, too, that consumers are increasingly more comfortable with unbundling and are willing to pay more to be able to choose their room, its specific view, and its floor.”
As for the use of AI, he said, “The rise of artificial intelligence via ChatGPT is meteoric and has many potential applications impacting many aspects of our industry—from how providers design and support solutions, to how consumers dream, plan, search, develop itineraries, book, and enrich their experiences while traveling.” However, to provide that “real personalization,” he said, “providers need to embrace the investment in developing winning strategies, building skilled teams, and enhancing their data science and tech stack that will scale and evolve with their customer’s needs.” Ultimately, he maintained, “The broader impacts of AI and machine learning will be seen as more and more companies embrace hyper-personalization, which combines AI and real-time data to help better understand the true intent behind the behavior of individuals to enable even more meaningful and intimate offers.”
Ancillary Services: More Hoteliers Are Integrating Them Into Loyalty Programs
Hermo cited trends reflected in his company’s State of Loyalty: 2023 Hospitality Rewards Report showing “the hotel loyalty program is as relevant as ever,” and ancillary services are especially popular. “The more ancillary services a property can offer,” he explained, “the more opportunities it has to integrate them into the loyalty framework.” Hermo said that on-premises dining and wellness services are currently the main avenues for this trend, noting that “earning and redemption opportunities available to guests while they’re on property helps increase the utility and perceived value of the loyalty program while keeping the rewards currency within the hotel ecosystem.” However, he also said other local market offerings such as tours, activities, and live events represent “big opportunities.” Examples include the following:
- Marriott has enabled its loyalty program members to use points on ground transport and food delivery.
- Choice Hotels lets its members earn points on off-premises dining.
- Meliá Hotels has added the ability to earn points on offsite tours and activities, as well as onsite dining.