Best Practice: Building a Loyal Database

The benfits of loyalty programs

Fairmont the Palm, Dubai is the latest Fairmont property in the UAE.
Fairmont the Palm, Dubai is the latest Fairmont property in the UAE.

As increasing numbers of hotel guests sign up to hotel loyalty programmes, hotel groups are coming up with more uses for their members’ personal data. Hotelier Middle East investigates the benefits those loyalty programmes can bring, both to the guest and the hotel:

With hotel groups increasingly seeking to understand traveller trends and their own guests demands, it’s time the potential of loyalty programmes as a data gathering source was maximised. However, how do hotels balance rewarding their guests, with rewarding themselves?

While they have long been used by the hospitality industry as an effective tool for rewarding customers, building brand loyalty and increasing repeat business, hotel companies are now using modern data gathering techniques to build accurate, up to date and valuable customer databases.

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Hotel groups can then utilise the information garnered to accurately tailor marketing campaigns towards specific market groups, develop new promotions and offers and personalise every aspect of a guest’s stay, from the newspaper they like to read in the morning to what their favourite item is on the room service menu.

Rewarding Loyalty
One such hotel loyalty scheme that tries to make the most of guest data is the Fairmont President’s Club, which offers members a selection of benefits based solely around their personal profiles such as personalised room-preferences and welcome amenities. Also on offer are specially created experiences that are tailored around each member’s likes and interests such as Fairmont Moments and Passion Packages.

As Fairmont Raffles Hotels’ executive director of loyalty marketing Sharon Cohen puts it: “Loyalty programmes give both the customer and the hotel an opportunity to start a relationship.”

“Through a loyalty programme members are given a channel to communicate what is important to them, and as hoteliers we can use that information as a way to personalise a guest’s stay. That way we can ensure that our guests receive exemplary service at any of our hotels, wherever they are in the world,” says Cohen.

Cohen goes on to explain how the Fairmont’s President’s Club loyalty programme is built around collecting and understanding each individual member’s needs and travel preferences, and then using that information to offer “guest experiences that are less transactional and are unique and engaging while revolving around what they are passionate about.”

One example Cohen uses is during New York fashion week, when Fairmont was able to offer certain President’s Club members front row seats and private meet and greets with designers behind the scenes.

“It is these kinds of rewards, rather than revolving around discounts or rewards points, that helps the President’s Club to stand out from any rival reward schemes,” says Cohen.

The Fairmont President’s Club is a tiered system that is split into three levels based purely on the number of guest stays within a calendar year. The entry tier is complimentary to all hotel guests and offers benefits such as a dedicated reservation line and express check-in and check-out.

Once a guest has five stays or 10 nights at any Fairmont hotel they move up to Premier level, and can then move up to Platinum after 10 stays or 30 nights within a calendar year.

However, Cohen admits that one of the challenges that comes with this kind of tiered service, and one that affects all loyalty programmes to some degree, is how to identify relevant customer data, and how to use that data to communicate with its members in a relevant way.

“One of our major challenges is making sure that we spend our money on the right people,” says Cohen. “That is something we solve through a detailed customer segmentation process, so that we can understand where we are spending our money and whether it's on the right people.

“A customer segmentation programme also lets you identify the guest’s behaviour that you are looking to encourage. For example, there might be a guest who stays with you often, but might not have any particular loyalty to the brand because of a company contract. So you have to understand where you can win, and what customers you have to focus on, beyond the typical tiered segmentation system of a loyalty programme,” says Cohen.

Running the numbers
Understanding its members then, is one of the main challenges for any hotel loyalty scheme. However, according to Rotana loyalty programme director Elie Saliba, there is still “the challenge of running a reward programme flexible enough to be able to satisfy all of your individual member’s needs”.

“Guest expectation, especially somewhere here like the Middle East, is very high, and with our Rotana Rewards programme, that expectation is even higher,” says Saliba.

The Rotana Rewards scheme is split into three separates systems, two for private guests and a ‘Classic’ card for corporate guests.

Of the two private loyalty cards, one is the entry level ‘Select’ card, that gives users benefits such as late checkout as well as earning the user points for every dirham spent at Rotana hotels. However, the second card, the ‘Exclusive’, is a paid for membership card that gives the member discounts on F&B as well as off best available room rates.

“At Rotana we have 17,000 Exclusive members,” explains Saliba, “with a further 25,000 Select members on file and 800,000 total profiles within the Rotana system.”

While Rotana guests are thus able to benefit from a long list of potential benefits, the main benefit for Rotana is the sheer amount of personalised data they are able to collect across all three systems.

“These kind of strong numbers within the database are a great benefit to us, and using this data we have been able to achieve a great response to our specially targeted promotional offers, delivering a 2% response rate to date that we are very happy with,” reveals Saliba.

In 2005, Rotana made the decision to move its loyalty scheme operations in-house, having originally outsourced the programme since its inception in 1999. It was a move that maximised the group’s ability to use guest information from the loyalty programme in more effective ways.

“The main reason for taking the loyalty programme in house was purely to improve customer service. When a third party runs a loyalty programme then their main focus will be to make money from selling the scheme, but our main objective was always to ensure we had a satisfied customer.

Being in direct contact with guests is also vital, with our members regularly receiving selected surveys, emails and letters to ensure there is regular communication and in order to listen to our member’s feedback,” adds Saliba.

“Now we are able to tell that, while our typical guests are spread across the leisure and business markets, 60% of our loyalty card members are business customers, while our Select and Exclusive loyalty card members generate 35% of all guest revenue across the whole company,” says Saliba.

A Personal Service
Another hotel loyalty programme that emphasises the personalised service it can offer through the information it collects is the Shangri-La Golden Circle programme, which was launched in 1997 and now has over 2.3 million members.

Shangri-La vice president of loyalty and partner marketing Wee Kee Ng describes the programme as a way for “Shangri-La to know guests’ preferences and to use their profile to tailor benefits on every stay, and at any Shangri-La hotel or resort.”

“Additionally, it enables our properties to anticipate and deliver truly personalised services to the guest. We can then utilise the relevant demographic and transactional data to send targeted communications to members with exclusive and personalised offers at new hotels, as well as to drive business to hotels during a promotion period,” adds Kee Ng.

The Golden Circle programme offers Shangri-La’s guests a variety of privileges that increase as each member progresses through the membership tiers of Gold, Jade and Diamond. These benefits can include free room nights, room upgrades and spa vouchers, with Diamond members invited to exclusive members’ only events such as golf tournaments, opera nights and musicals.

“What makes this programme different is our ability to recognise and reward our members every time they stay. Members value the exclusive recognition and benefits that come with the higher membership status and at the same time, they can earn points for a family vacation.

Through recognition and rewards, Golden Circle increases Shangri-La’s engagement with its guests and drives incremental business to the hotels,” adds Kee Ng.

However, Kee Ng is keen to stress that there are also considerable challenges and obstacles that must be overcome before a hotel starts running an effective loyalty scheme that can efficiently identify and utilise guest data.

“For an effective and efficient database system, there must be a seamless integration between the group’s membership, reservation, property management and customer relationship CRM systems. Only this way can the hotel’s marketing be effectively benefitted across multiple communication channels such as social media,” concludes Kee Ng.

CASE STUDY 1
Company: Carlson Rezidor Hotel Group

Loyalty programme: Club Carlson For Planners

Objective:
Club Carlson For Planners, the Carlson Rezidor Hotel Group rewards programme exclusively for meeting and event planners, aims to become the first loyalty programme in the hospitality industry to be completely carbon neutral by launching carbon neutral meetings for all members across the group’s six global hotel brands, totalling 1077 hotels in operation worldwide.

Strategy:
The carbon offsetting, a free service for meeting planners, will be managed through Carlson Rezidor’s new partner, Carbon Footprint Ltd. Each contribution will be used to invest in renewable energy in India and will be combined with the planting of one tree for every tonne of carbon offset in the Great Rift Valley in Kenya. As a result, any Club Carlson For Planners events held at a Carlson Rezidor hotel globally will have no net impact on the global environment.

Results:
The Carbon Neutral meetings programme launched at the end of 2012 across Radisson Blu hotels in Europe, the Middle East and Africa led to 433 tonnes being offset and 433 trees planted in Kenya. The programme is now part of Carlson Rezidor’s award winning Responsible Business Program focusing on a reduced negative impact on the environment, health and safety for employees and guests, as well as respect for social and ethical issues within the company and community.

CASE STUDY 2
Company: InterContinental Hotels Group

Loyalty program: IHG Rewards Club

Objective:
The re-launch and rebranding of the IHG Priority Club Rewards loyalty program into the IHG Rewards Club in July 2013, as well as the introduction of new benefits such as free internet access for all 71 million worldwide loyalty programme members.

Strategy:
IHG will start the rebranding by offering free internet globally to Gold Elite and Platinum Elite members in July 2013 this year, with all members receiving the benefit during 2014. Members of the programme will then be able to enjoy internet access for free at all IHG’s 4600 hotels, whether they’re staying the night or simply stopping by for a coffee.

Results:
IHG’s own research has indicated the increasing importance of internet access to hotel guests and how it becomes a key consideration when planning hotel stays by revealing that:
- 43% of adults surveyed said that they would choose not to stay in a hotel that charged
for internet.
- 23% of respondents said that free internet in rooms and throughout the hotel is the most important amenity when staying in a hotel for business, compared to 7% who chose room service.

CASE STUDY 3
Company: Marriott International

Loyalty program: Marriott’s Rewarding Welcome

Objective:
The Marriott Rewards loyalty programme allows employees to anticipate and deliver on Marriott Rewards members’ personal stay preferences after only one stay
across many of Marriott International’s hotel brands.

Strategy:
After entering their preferences online just once on arrival, member requests for extra towels, foam pillows, refrigerators or even specific newspapers will be honoured automatically at hotels globally, including Marriott Hotels & Resorts, JW Marriott Hotels & Resorts, Renaissance Hotels & Resorts, Marriott Vacation Club International, Courtyard, Residence Inn, SpringHill Suites, Fairfield Inn and TownePlace Suites brands

Results:
Since its inception in 1997, Marriott Rewards now has 42 million members worldwide earning point s across more than 3600 of the group’s hotel brands and partners.

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