Shift in behaviours towards loyalty points

In my last post, I was raising the issue of the measures hoteliers take to draw customers and earn their loyalty, with the example of Le Méridien hotels. As explained, the chain created its own “arrival signature”, which provided the guest with a one-of-a-kind experience. The interrogation whether this would lift Le Méridien out of chain sameness was raised in the light of this post. My opinion is that it certainly endows the chain with some uniqueness, and this despite the fact that Le Méridien is an international chain part of an international group. Starwood guests still have the choice between many brands within the group, and Le Méridien now has a defined approach to its guests that may appeal to a more specific segment.

Talking about loyalty to hotel chains, I read a very interesting article from Kris Hudson dated December 16th 2009, which emphasizes a recent phenomena in this field. Whereas loyalty points used to be redeemed for free rooms or stays in hotel chains, lately, guests have been using them to buy gifts and other merchandise. With items as different as mixing bowls, vacuum cleaners, jewellry and Ipods, hotel chains have to face this new realty and their reserve of money intended for paying for free rooms and stays has significantly increased compared to the same period last year.

The dilemma now for hoteliers is that they do not want to see the number of their loyal members decrease, but they also aspire to minimize any loss in profit due to the money going to the product suppliers and not the hotels themselves.

The challenge for hoteliers is first of all to know if this trend is only due to the end of the year celebrations and tighter gift budgets. They also need to secure the number in loyal guests and encourage them to redeem their loyalty points for free rooms and stays in hotels rather than merchandise.