October 18, 2022

How Hotel Loyalty Programs Can Increase Revenue

Posted By: Adelle Rodriguez


Loyal customers are essential in the hospitality industry, as they help improve the reputation of your hotel, increase your revenue, and become advocates for your brand.

One way to achieve and maintain customer devotion is by using updated software to create hotel loyalty programs.

If your goal is to retain customers and maximize both guest experience and profits, a hotel loyalty program is just what you need. Here’s how it works, how you can use it, and all the added benefits that can help your hotel grow.


How Do Hotel Loyalty Programs Work?

Hotel loyalty programs give both you and your guests a reward — while you retain and cultivate customers, they get rewards for returning to your property. On top of this, loyalty programs provide even more benefits:


1. Loyalty Programs Improve Guest Retention

Not only are returning customers good for strengthening your brand but they also have been shown to increase profits. In fact, a study from an article published in the Harvard Business Review showed that the cost of gaining a new customer is five times more expensive than what you would spend to retain one you already have.

The same study found that increasing customer retention rates by 5% increased profits from anywhere between 25 to 95 percent.


2. Loyalty Programs Increase a Customer’s Lifetime Value

Customer lifetime value is an important metric when managing a hotel, and maximizing that value should be a top priority when handling returning customers. Here’s an interesting statistic to highlight the importance of this metric: loyal customers spend on average 22.4% more than sporadic customers and have 28% longer stays.

Building trust and cultivating strong relationships with your guests are foundational strategies for maximizing customer lifetime value. With a hotel loyalty program, you can grow and maintain that trust by showing your guests how much you appreciate their business. This is key in generating devotees for your brand.


3. A Hotel Loyalty Program Increases Your Direct Bookings

Quality hotel loyalty programs enable staff to communicate directly with guests, thereby reinforcing relationships and increasing direct bookings. Communication with your guests is crucial to retaining them, encouraging them to write positive reviews, and increasing your reputation as a hotel. 

With a hotel loyalty program in place, this guest communication can also save you money on online travel agency (OTA) costs. For example, you can deter customers from booking through OTAs by communicating future booking openings directly before and after their stays at your hotel. This streamlines reservations while saving you time and money.


4. Hotels With Loyalty Programs Are More Likely To Get Referrals

As we’ve covered, creating brand advocates via retained customers can significantly improve revenue and reputation. And brand advocates are more likely to help increase brand awareness and volume within social channels and communities. In fact, a brand with a strong loyalty program is more likely to be recommended by 70% of consumers.

What separates a good hotel loyalty program from a great one is the emotional dedication, not just handing out random deals or items. Taking into consideration what your guests want and supplying them with a solution to those wants has shown to be a significant factor in guests choosing which hotel they stay at.


The Road To Operational Success

A loyalty program for hotels is a versatile and efficient tool that helps lead to more revenue and the best experience for your guests at your hotel.

But choosing the correct software to make this possible is just as important.

With the right hospitality management system, you can grow your hotel and build your brand for years to come.

Find out how our all-in-one management software can help you take your hotel to the top floor in hospitality.

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