Research Paper - Evaluation of Loyalty Programs in Hotel Industry - Final

Running head: EVALUATION OF LOYALTY PROGRAMS IN HOSPITALITY 1

Evaluation of Loyalty Programs in the Hospitality Industry

Submitted to Dr. Scott Freehafer by Yahya Abdulqader

In fulfillment of course requirement for MBA 690

The University of Findlay

August, 2015

EVALUATION OF LOYALTY PROGRAMS IN THE HOSPITALITY INDUSTRY

Table of Contents

Abstract......................................................................................................................................3

Introduction................................................................................................................................4

Overview on Hotel Loyalty Programs.......................................................................................4

Loyalty Definition...........................................................................................................4

Loyalty Programs History...............................................................................................5

Hotel Loyalty Programs Development and Future.........................................................7

Hotel Loyalty Programs Types.......................................................................................9

Hotel Loyalty Programs Tiers.......................................................................................13

The Importance of Hotel Loyalty Programs............................................................................15

Recommended Strategies for Hotel Loyalty Programs............................................................20

The Impact of Hotel Loyalty Programs on Guest’s Booking Decision...................................27

Online Travel Agencies (OTAs) and its Loyalty Programs.....................................................30

Brief History of Traditional Travel Agencies...............................................................30

The History of Online Travel Agencies (OTAs)...........................................................31

The Relationship between Online Travel Agencies (OTAs) and Hotels......................32

The Loyalty Programs of Online Travel Agencies (OTAs)..........................................34

Do OTAs Loyalty Programs Compete Traditional Programs?.....................................35

Hotels Loyalty Programs vs OTAs Loyalty Programs.................................................36

Top Hotel and OTAs Loyalty Programs for 2015...................................................................37

I. Top Hotel Loyalty Programs.........................................................................................40

A. Top Ten.....................................................................................................................40

B. Comparing Bottom, Middle, Top Tier Elite Status...................................................51

II. Best Five OTAs Loyalty Programs...............................................................................54

Conclusion................................................................................................................................59

Data Collection.........................................................................................................................60

References................................................................................................................................61


Abstract

This paper discusses several topics related to loyalty programs in the hospitality

industry. Firstly, the loyalty programs’ history, evolution, and structure. Secondly, a

discussion of the effectiveness of these programs with providing different views in this

subject. The paper emphasizes the importance of these programs and proves how they have a

significant impact in increasing the repeat business which eventually leads to maximizing

hotels’ revenues. Thirdly, the paper recommends a number of strategies that would increase

the effectiveness and efficiency of these programs. Fourthly, a discussion about the impact of

online travel agencies (OTAs) in guests’ booking decision. As well as, the paper illuminates

the relationship between OTAs and hotels and how this relationship will remain robust over

the future. Finally, the paper evaluates the top ten hotel loyalty programs and the best five

loyalty programs of OTAs.

Keywords: loyalty programs; hospitality industry; tiers; guests; points; redeem; rewards

hotels’ revenues; online travel agencies; OTAs.


Introduction

Loyalty programs are one of the most common marketing methods adopted by many

industries at the present time. For example, these programs are existing one way or another in

the airlines companies, large retailers, fashion and perfume houses, and of course hotels are

not an exception. Although these programs vary widely in diversity, credibility, and the

advantages offered to customers, they all share one goal: to create a close and strong

relationship with clients in order to retain a constant loyalty to the organization as long as

possible. In the end, this relationship is mutually beneficial, for the organization as it

effectively contributes in increasing organizations’ sales volume; and for the clients where

they get many advantages and benefits.

The following paragraphs will provide an overview on loyalty programs in general

and on hotel loyalty programs in particular. This overview will start that by defining loyalty,

what does to be loyal to an entity or organization mean? Followed by a brief summary of the

emergence of loyalty programs. Then, how loyalty programs have developed over the years

with some examples from industries. In addition to an objective discussion and outlook of the

future of loyalty program, especially in the area of the procedural steps that hotels should take

into consideration. The final two sections of this overview will provide a detailed explanation

for loyalty programs’ types and tiers.

Overview on Hotel Loyalty Programs

Loyalty Definition

In general, loyalty program is a rewards program provided by a company to

customers who frequently make purchases. Typically, loyalty programs pursue a variety of

methods to attract new customers and retain loyalty of old ones. That’s include giving the

customers an advanced access to new products, special sales coupons or free merchandise

(“Loyalty Program,” 2015). According to Mark Haley (2006) in a special report titled


Hospitality Loyalty Programs; Strategies for Points-Based, Recognition-Based Programs,

“the intent of hotel loyalty programs is to drive customer loyalty and to make the guest want

to continue to choose to stay at a brand’s hotel again and again” (Haley, 2006).

Accordingly, the ultimate goal of hotel loyalty programs is to confine the customer

options, when he or she wants to book a hotel room, by making the hotel or the chain his or

her first choice or perhaps the only one. On the other hand, hotel loyalty programs usually fall

into two main categories, points-based frequency programs and recognition programs. “Both

varieties of programs have their place, including points-based. Different organizations

establish different programs according to their size, competitive posture and other attributes”

(Haley, 2006). However, more details about these categories will be provided in hotel loyalty

programs types section.

Loyalty Programs History

In general, the loyalty programs have emerged since about 120 years ago. According

to Loyalty and Rewards Guide.com in a report released in 2014, “one of the earliest efforts to

win the hearts, minds and wallets of customers was the S&H Green Stamp program,

originating in 1896” (“The History,” 2014). The idea of that program was based on

redemption and here how was it worked. “Consumers received tiny stamps when they made

purchases from participating merchants, glued them onto pages of booklets (known as

“alternative currency”) and redeemed them for products when the accumulated stamps had

attained a certain value” (“The History,” 2014).

According to the same resource, “another well-known early loyalty program was

General Mills longstanding Betty Crocker Points Program in which customers collected

points which were redeemable for kitchenware from a catalog” (“The History,” 2014). As we

can see the idea in those two examples was similar, which is encouraging repeat business by

rewarding customers for their loyalty to the company. Those primitive models were the basic


building block that paved the way to the contemporary model of loyalty programs. However,

there were two factors have contributed effectively in the development of loyalty programs,

“airlines deregulation (1978) created the marketing environment and computerization created

the necessary systems infrastructure” (“History of Loyalty,” 2014).

Hence, we can state that the real birth of hotel loyalty programs began shortly after

the launch of the airlines loyalty programs that followed the airlines deregulation in the

United States in 1978. Ed Watkins (2013) in his article, The History and Evolution of Hotel

Loyalty, has stated that the first frequent flyer program from a major air carrier has been

provided by American Airlines, which launched AAdvantage in 1981. Whereas the first hotel

loyalty program has been provided by Holiday Inn when it launched its program in February

1983. In addition to this convergent evolution in time, there was a close relationship and

mutual benefits between the two industries in early stages of their loyalty programs.

Watkins (2013) added more details about this relationship. “The first generation of

hotel loyalty schemes were simply conduits to airline programs: Currency earned in hotel

programs could be used toward free flights on participating airlines.” However, this situation

of limited rewards options did not last long as hotels began to redesign their loyalty programs

rewards to include a redemption of free room nights, room upgrades, and other rewards such

as free Internet and access to VIP lounges. It’s worth mentioning that still there is a strong

relationship between the two industries where the major airlines and hotel chains have linked

the enrollment, rewards, and redemption of their loyalty programs in a way or another.

The following is a further clarification about loyalty programs in the hotel industry.

As mentioned earlier, the first scheme of hotel loyalty programs has been designed more than

32 years ago. “Two brands lay claim to firsts involving frequency programs in the hotel

industry. Holiday Inn launched its program in February 1983, followed by Marriott in

November of the same year” (Watkins, 2013). Watkins has mentioned that Holiday Inn


discontinued its program three years after its launch, then restarted it a year later in 1987.

This fact gives Marriott hotel chain the claim as the oldest continuously operating program in

the hotel industry (Watkins, 2013).

Hotel Loyalty Programs Development and Future

During the last three decades all hotel chains have created their own loyalty programs;

others continued to modify or refine their loyalty schemes and rewards. Recently, “four large

hotel companies—IHG, Marriott, Hilton Worldwide and Starwood Hotels & Resorts

Worldwide—made significant changes to their points programs, raising the thresholds for

members to receive free-night benefits” (Watkins, 2013). Here are additional examples of

these modifications. IHG renamed the existed tiers of its loyalty program and added a forth

one; Marriott re-categorized a number of its properties; Hilton added a new category to

include some of its properties; and Starwood Hotels & Resorts Worldwide added additional

benefits to its loyalty program.

On the other hand, hotel loyalty programs are no longer limited to large hotel chains

companies. Some resorts, inns, and independent properties have entered on-line. For

example, “Voila Hotel Rewards and Stash Hotel Rewards, provide loyalty options for

independent and boutique properties” (Watkins, 2013). By the same token, a number of brand

companies have partnered with resort companies in order to add a variety of choices to their

customers. Here are some examples, “IHG with Las Vegas Sands and Hyatt Hotels

Corporation with MGM Resorts International to provide reciprocal benefits for its loyal

customers” (Watkins, 2013).

Moreover, according to Watkins (2013), traditional hotel chains has started to give its

loyalty club members an increased flexibility in how they can use and redeem their gained

points. For instance, “IHG has a concierge service, in which IHG Rewards Club members can

use a merchandise catalog to exchange points for products, services and travel offers.


Marriott recently struck a deal with United Airlines that provides special benefits to members

in both companies’ loyalty programs” (Watkins, 2013). Thus, hotel loyalty programs are

developing steadily from time to time in the light of the frenzied race to win the lion's share

of the hospitality market.

Nevertheless, how the future of hotel loyalty programs seems? Is there a major change

coming in the near future? Should hotels add more value to their loyalty programs? What do

they have to avoid? Watkins (2013) has answered these questions by saying that “the industry

won’t get away entirely from the points-for-stay model, but the evolution of loyalty will

move toward recognition: who is the guest? What do they like? And what are their

preferences?” In Watkins’ opinion, “the industry can, will and should get away from the

gamification aspects that have plagued not just hotel loyalty programs, but the airlines as

well.” “You’ll see hotels focus more on guest spending and the financial value the guests

bring, as opposed to strictly frequency,” Watkins emphasized (Watkins, 2013).

In my opinion, there are some issues and observations limit the expansion and the

impact of hotel loyalty programs, or in other words devalue its appeal in customers’ eyes.

Among these observations, and this is from a personal experience, nearly all hotels refrain

from granting any points to guests who have made their bookings through a third party such

as travel agencies or booking websites. Besides, many guests find that the required number of

qualified nights spent in each tier to achieve the next one is more likely unreachable. For

instance, the required nights to qualify a guest to move up to a higher tier is ranged between

15 to 50 nights and must be spent in one calendar year. Guests believe that this formula is

inaccessible to lower and middle class travellers; only beneficiaries are businessmen.

Also, many guests find that the worthwhile advantages of hotel loyalty programs are

only offered to the top tiers members such as the platinum ones. That means there is no real

advantages for early stages members, and as mentioned, the way to the top tiers is too long;


could take years. By the same token, some of benefits and advantages provided to members

of hotel loyalty programs has become among basic requirements in hotel industry such as the

free Internet or newspapers; in other words, they should not be considered as advantages.

Accordingly, hotels should take these observations into consideration and try to add real

value to their loyalty programs in order to be more attractive to guests.

Hotel Loyalty Programs Types

As mentioned earlier, hotel loyalty programs have been categorized under two major

schemes/categories, points-based frequency programs and recognition programs. Let us take

a closer look at each scheme/category. First, points-based frequency programs allow guests to

earn points when staying at a hotel or using its services. These points can be exchanged or

redeemed for free room nights, upgrade bookings, or other benefits. Also, many hotels allow

guests to exchange their points for other services provided by allied partners such as airlines

and car rentals companies. Second, the concept of recognition programs is based on capturing

guests’ preferences then use them to enhance guests’ future visits.

So, as we can see, each category has its unique philosophy in treating guests and

dealing with their preferences. Now, a number of questions arise: are there any specific

requirements in order to enroll in one of the two programs? What are the characteristics that

distinguish each category? Why a certain hotel or chain adopts a certain way to reward its

guests? What type of hotels or chains that adopt points-based frequency programs and what

type adopt recognition programs? Is there any hotel or chain combines the two approaches?

Does any one of the two categories support elements in the other? And finally are there any

disadvantages for loyalty programs? The following paragraphs provide answers for these

questions.

Basically, all hotel loyalty programs are free to join. The enrolment in such programs

usually follows one of two paths, an initiative from the guest; or via an invitation by the


hotel. There are no specific requirements to join those programs with the exception of filling

in the membership form, which can be completed in the hotel reception, by mail, or via the

hotel official website. However, the enrolment in recognition programs might be based on

“staff observations, where line personnel are incented to record relevant guest behaviors, so

that the request can be anticipated on the next visit” (Haley, 2006). A clear example

represents this class of program is Denihan Hospitality’s MAGIC (Marketing and Guest

Information Center), as it “using sophisticated database tools to match up guest reservations

with existing profiles, and no enrollment or member number is called for” (Haley, 2006).

On the other hand, each category has its attributes and advantages that distinguish

each one from the other. Some attributes of points-based programs including:

They are easy to enroll: just filling one form.

They are voluntary: it’s all about guests’ acceptance to join the program and

willingness to share their personal information.

They are quite understandable: stay, spend, get points, and then exchange them for

free nights and many other rewards.

The majority of hotel loyalty programs grants its guests to keep and redeem their

points lifetime.

The redemption’s options became wider with the alliances between hotels, airlines,

rental car companies, and with many other entities such as banks, credit card

organizations, fashion houses, and luxury shops.

“They are straightforward to administer, with the right investments in technology and

business process integration” (Haley, 2006).

They are really effective: “Market Metrix1 reports that 34 percent of hotel guests say

that a loyalty program was a key factor in hotel choice, from a sample dominated by

points-based programs” (Haley, 2006).


In contrast, recognition programs do not have all these attributes; fundamentally they

are limited to hotel staff observations and there are no points to earn. With that said, why a

particular hotel choose to limit its options to this approach? The answer is, many hotels that

adopt this approach have no choice but to do so, due to its size or location. Haley (2006) adds

more explanation, “In order to accumulate enough points to fund a meaningful stay or partner

award, one needs quite a few stays. But for a single hotel or small chain, it is difficult to

assign enough value to a given stay to accumulate enough points to give anything away”

(Haley, 2006). That leads to provide an answer to the following question, what type of hotels

adopt each category? Obviously, large hotels and major brands adopt point-based programs

and small hotels and independent ones adopt recognition-based programs.

However, a number of hotels combine the two approaches. For instance, “(Kimpton

Hotel & Restaurant Group) offer not just rewards but also on-site guest recognition, such as

free Wi-Fi or member-only events at their hotels” (Watkins, 2013). By the same token, the

points-based programs support elements of guest recognition. “Examples include flagging

elite members as such to associates or populating reservations with key preferences such as

nonsmoking or smoking” (Haley, 2006). That distinguishes the two programs in one way

where points in points-based programs are “the currency valued by the guest,” whereas in

recognition programs “the experience becomes the currency and thus a tangible extension of

the brand” (Haley, 2006).

Finally, let us take a look upon the opposite side of these programs. Some

disadvantages of points-based programs including:

In order to earn points, the guests must make their bookings only through the hotel;

making the booking through a third party will result in zero points to earn.

Unreasonable number of nights that required to be spent in each tier in one calendar

year to qualify guest for the advanced levels.


Hotel loyalty programs members who achieved a higher tier are required to continue

spend the same nights required for the new tier in every following year in order to

maintain their qualification for that tier, failure to spend the required nights in one

calendar year will result in downgrading them to the previous tier again. For example,

if a guest has successfully moved up from the silver tier to the gold one, then he or

she needs to spend the number of nights required for the gold tier in one calendar

year, let us say the number of nights required for gold tier is 35 nights, so if the guest

spent only 34 nights he or she will automatically be downgraded to the silver tier

again.

Some hotel loyalty programs do not allow members to redeem their points during top

events and high-demand seasons.

Some hotel chains limit redemption to its low category properties; or significantly

raise the figure of points required to redeem in its top category properties

Some rewards became among basic hotel industry amenities such the free Internet,

“Internet access is increasingly viewed by guests as utility similar to lights and water”

(Dhir, 2013). Also, among these basic amenities are newspapers, mineral water, and

coffee trays.

Some of worthwhile rewards of hotel loyalty programs are exclusively designed and

offered to members of top tiers.

By the same token, some disadvantages of recognition-based programs are:

Lack of rewards options, guest almost has no option due to the nature of these

programs.

These programs is difficult to be independently applied in large hotels or chains due to

the high number of staff required to observe and record guests’ preferences.

These programs seem to be fitted to elite guests not to low and middle class ones.


Lack of motivation factor that available in points-based programs, which is collecting

points.

Hotel Loyalty Programs Tiers

Basically, all loyalty programs have been structured on the basis of tiers. The idea of

tiers is based on that most of people are naturally fond of accomplishment. Thence, this idea

gives people the motivation to accomplish more and more levels which requires more and

more spending on a company’s products. That leads to win-win scenario; customers improve

their loyalty and companies increase their revenues. In general, most of loyalty program’s

tiers consisting of 3 tiers, some consisting of 4 or even 2 tiers. Usually, the first tier or the

basic one’s called basic, entry level, or bronze; the next tier called silver, the third called

gold, the forth tier or the top one’s called platinum, diamond or elite. However, there are

other titles of those tiers, but those mentioned are the most common titles.

The previous structure did not change or revamp since decades; it worked well as

marketers who built it planned and generated the intended results, at least until ten years ago.

Nevertheless, does this structure still work or is there any need to remodel it? The findings of

a recent study on attitudes toward membership status in loyalty programs titled Fears for

Tiers, published by Jeff Berry and summarized by Fabio David Capasso (2014), have found

that the efficacy of tiers model has faded and its attractiveness in customers’ eyes has

dimmed. “Data seemed to indicate that tiering is no longer motivating customers,” Capasso

said. This means that marketers in general and hoteliers in particular must find new ways and

innovative methods to maintain the effectiveness of loyalty programs.

The mentioned study has proposed a new formula that will enhance the standing of

the hotel loyalty programs and restore its luster. The key ingredients of this formula are

mixture of “simple customer-facing tiers combined with complex internal micro

segmentation, increasingly focused on the high-potential middle tier. This is the future of


tiering” (Capasso, 2014). Moreover, this study showed that one of the most important reasons

for the failure of tiers system is there is a kind of blurred vision with customers toward this

system. Knowledge is the most important factor that would clear that vision. Thence, “savvy

loyalty program operators will put constant and consistent communication programs in place

to keep consumers updated on status and eliminate potential confusion” (Capasso, 2014).

As mentioned earlier, tiers system designers should pay more attention to the middle

tier, as study findings recommended, but why? Several factors could be combined to provide

an answer to this question. Some of these factors are:

Research found that the “today’s tiered loyalty programs are overweight on the top

and bottom.” As a result, “marketers can find the best potential for program payoff at

middle tier.”

“Middle-tier members are the most optimistic about achieving a higher status.”

Middle-tier members have a “better understand the benefits available to them in their

tiers, as well as in the tiers above them, compared to people in the lower tiers.”

“Middle tier members are more motivated by soft benefits, such as the ability to share

perks with friends or family, better service and access to events” (Capasso, 2014).

Finally, this study has suggested some strategies that would increase customers’

spending and hotels revenues alike. Here is a summary of these strategies:

1. Clear the clutter: keep it simple, successful loyalty programs focus on a few valuable

benefits at each tier rather than many invaluable benefits.

2. Stop changing lanes: hoteliers should avoid linking tier qualification to only dollars

spent; always there is another way to assess the guest.

3. Continued education: always communication is the best way to deliver your message,

“it should be continued throughout the consumer lifecycle, and not just during the

onboarding process.”


4. Recognize motivations within tiers: hostelries and loyalty programs designers should

consider tiers as one component in a multi-component strategy that aims to engage the

guest. Accordingly, other motivators should be embedded with an organization’s tier

structure “by way of an internal segmentation strategy.”

5. Segment out the middle: as mentioned earlier, middle tier members are the best

translation to how the engagement to hotel loyalty programs should be. So, it’s really

a wise decision to give the priority to those members (Capasso, 2014).

The Importance of Hotel Loyalty Programs

The fierce competition in the aviation market that began in the late seventies has

pushed the airlines companies to innovate new marketing tools in order to get a bigger slice

of the market cake. One of these marketing tools was frequency loyalty programs. Soon, the

hospitality industry realized that there is a need to adopt the same idea, the loyalty programs.

As mentioned earlier in the definition section, these programs are marketing tools aimed to

reward guests and thus encourage loyal behavior. However, a question arises here, did these

programs perform its role in increasing hotels revenues and developing the relationship

between guests and hotels? If yes, do these programs still perform their role or they fall

behind? The following paragraphs provide answers to these questions.

Undoubtedly, hotel loyalty programs has effectively contributed in increasing hotels’

revenues since its inception and during the past three decades. They also been able to

consolidate the bonds between the guests and the hotels. Hence, it can be said that the

fundamental importance of these programs is to build a solid relationship with guests that

leads to increase the repeat business, which in turn maximizes hotels revenues. The success in

building such a relationship is essentially depend on to what extent these programs are

efficient and flexible and whether or not they still have the ability to attract more guests and


retain the existing members. The more they being realistic and convenient to the guests’

requirements the more they generate the intended results, and vice versa.

However, after about 32 years of the first launch of these programs, the opinions are

divided about the effectiveness of these programs at the present time. Mainly, there are two

teams here: one team says that these programs still perform its desired role and there is no

urgent need to make any adjustments on these programs. Yet, a few members of this team see

that it is essential to rebuild those programs or make some necessary adjustments in order to

be compatible with the latest developments in the hospitality market. The other team says that

hotel loyalty programs do not play any vital role; even this team confirms that hotel loyalty

programs have become obsolete. Each team has a number of reasonable proofs, let us take a

closer look at them.

First, let us take a look upon the opinion of the first team who believes that the hotel

loyalty programs still play a pivotal role in hotel industry. A recent study titled Assessing the

Benefits of Reward Programs: A Recommended Approach and Case Study from the Lodging

Industry, has found that a “well designed hotel loyalty programs encourage frequent guests to

become even more frequent.” That resulted in creating repeat business which leads in turn to

increase hotels revenues. Also, the findings of this study, which conducted by the Center for

Hospitality Research (CHR) at the Cornell School of Hotel Administration and released in

2014, has revealed that there was “a 50-percent increase in revenue compared to those who

did not join the program” (Voorhees, McCall, & Carroll, 2014).

Another study conducted by the same center on 50,000 hotels in North America over

two years, has found that “once a guest signed up to a hotel’s loyalty program the frequency

of stays booked by a guest at that hotel rose on average by 49%.” Also, the study has found

that “loyalty programs accounted for a 57% rise in bedroom revenue.” At the first place, the

researchers of this study have aimed to find an accurate answer to the question, were hotel


loyalty programs worth the time and money hotels spend on them? So, they have concluded

to the following important points:

“Hotels in the study are seeing a substantial revenue increase when their guests enroll

in a properly conceived and executed program.”

“Loyalty programs can and do deliver positive results in terms of revenue, stay

frequency, and guests spending.”

“Loyalty programs also provide hotels with a wealth of information on their guests.”

(John, 2015).

For instance, some of these important information including guests’ backgrounds,

guests’ preferences, and guests’ personal details. Such information are very valuable to the

hotel marketing departments and staff as they can be used in creating successful marketing

campaigns, sort guests, and give priority to certain members. In the same context, Alex

Gaggioli (2015) in his article The Argument for Hotel Loyalty Programs, has illustrated an

additional feature of hotel loyalty programs, which is they “drive direct bookings, helping

hoteliers reduce online travel agencies (OTAs) commission fees. Targeting loyalty members

with special rates and packages deters those same guests from researching other options”

(Gaggioli, 2015).

Second, in the opposite side, there is a team who believes that hotel loyalty programs

really became a part of the past. For instance, Xtoles, a website deals with hotel distribution,

marketing and revenue management, has published an article that represents this team

entitled Throw your Hotel Loyalty Program out the Window. In this article, Remko West

(2014), the author, believes that hotel loyalty programs have become obsolete, and he has

supported his theory with some reasons. Here is a brief of these reasons:

“The return of being a loyal customer is not immediate.”

“The return of loyalty is not rewarding to the customer.”


“Alternatives are too easy to find and access.”

“There are plenty of pitfalls related to the effort of having someone become part of

your loyalty program and getting them to stick around to reap the benefits” (West,

2014).

Here is more explanation to Remko West points. West believes that customers should

be rewarded immediately and there is no reason to let the guest waiting for rewards as he or

she should first achieve a certain level to be rewarded. He also has emphasized that loyalty

programs do not provide a true value to its members. And I have mentioned earlier something

similar to this fact when I said that worthwhile rewards are only provided to top tiers

members and the rewards for early tiers members are invaluable. West has given a real

example for that when he said “a free stay every 50 nights? Just imagine how much I would

desire the 51st night per year,” and I totally agree with him.

On the other hand, as a result of the spread of the Internet, alternatives are endless;

everything become under the guest fingertip. “The big enemy of loyalty is choice,” West

said. Finally, West has illustrated some obstacles created by hoteliers when they lengthen

achievement process, as an example. As well as, dumping the guests in a flood of

promotional emails may leads to an opposite result. However, in my opinion, hotel loyalty

programs still play a significant role in hospitality industry. Regardless of West’s points,

which most of them are true, that is not necessarily means that we have to throw out these

programs from the window, as West said. What marketers have to do is making some

substantial modifications to these programs by providing true benefits and simplifying the

tiers system.

Finally, let us analyze one more article supports this team. Amadeus is a company

produces a cutting-edge products and provides the latest technology solutions in travel sector.

In 2011, the company has posted an article titled Thirty Years In: A Mid-Life Crisis for Guest


Loyalty Programs? The article has raised an important question, which is “is the notion of

guest loyalty having a mid-life crisis?” To answer this, the article has introduced some facts

and figures showing a decline in the popularity of hotel loyalty programs. For instance, “in

2009, Forrester Research said that only 36% of business travelers said they were brand loyal,

compared to 42% in 2007.” “Hilton’s CEO said that guests were moving away from

‘conspicuous consumption’ towards a more ‘authentic’ experience” (“Thirty years,” 2011).

Another important question has been raised by this article, which is “does the

traditional concept of loyalty exist anymore?” The article stated that “the rise of online

comparison shopping, plus fierce competition among hoteliers to offer low rates, has watered

down consumers’ loyalty to a brand” (“Thirty years,” 2011). Also, the article has discussed

some defects in the points system. One of these defects is that points system makes the guests

in a comparison state. This assumption has been argued by Cornell Hospitality in a report

released in 2010 as it stated that “loyalty programs focusing on price-orientated rewards (for

example, ten thousand points pays for a weekend stay) encourages more comparison

shopping” (“Thirty years,” 2011). That means the guests split their choices between different

hotel brands to gain the most profitable benefit possible.

One more defect of points system is regarding to the cost of high-value rewards. The

same article has argued that the points system, sometimes, pushes the hotels to offer high-

value rewards in order to strengthen the bonds with their guests. These high-value rewards in

turn reducing the overall benefit for hotels. By the same token, hotels loyalty programs that

offer only one choice “‘points-for-cash’ encourage ‘games players’,” the article stated. That

means that such a sole choice creates what we can call them opportunities-catchers whose

relationship with the hotel ends-up with a short-term period. In other words, sign up, get the

reward, and you will never see me again. Such a behavior can exhaust the devoted budget of

loyalty programs.


To conclude this section, as we have seen there are two views about the importance of

hotel loyalty programs: one view sees that hotel loyalty programs still lie in the attention of

guests and play a crucial role in their booking decision; the other view sees that these

programs became a part form the past and their popularity has dramatically retreated.

However, we can draw here a third point of view, which is not to keep those programs as they

are and not to fully dispense them. This vision is centered on creating a new generation of

loyalty programs wearing a modern suit that live up to the aspirations of the guests. This only

can be achieved by adopting new strategies, which the next section will provide some of

them.

Recommended Strategies for Hotel Loyalty Programs

As I concluded that hotel loyalty programs still consider an impressive marketing tool

and play a role that cannot be ignored, yet, they must be subject to further developments and

modifications. In this context, there are a number of strategies that can be applied in order to

increase the efficiency of hotel loyalty programs. The provided strategies have been derived

from several sources as following, Hanover Research, the Center for Hospitality Research at

the Cornell School of Hotel Administration, Ipag Business School, Hotel Executive.com,

Amadeus.com, Xtoles.com, and Go Group Booking.com. The following paragraphs will

provide the strategies of each source separately.

1. Hanover Research

Hanover Research has conducted a study in 2011 entitled Consumer Loyalty

Programs to identify successful loyalty program models. Although this study aimed to

analyze consumer loyalty programs in general, many of its findings and recommended

strategies can be applied to the hotel sector. Here is a summary of its findings:

Research suggests that the “optimal program structure has three tiers (top elite,

bottom elite, and no status) with a controlled proportion of consumer population in


high tier” (p. 3). So, that means restructuring the tiers system to be consisted of only

three tiers instead of two or four tiers that in place in many hotels. That would

“maximize feelings of superiority” among all members, as the study stated.

“Rewards should provide a personalized incentive, i.e., something that the specific

customer will want” (p. 3). To do so, the study has suggested some strategies such as

providing rewards from a third party, providing multi-optional choices that allow

guests to choose from, or track guests’ purchasing habits to provide customized

rewards.

“Programs should provide targeted long-term goals and awards, rather than just

immediate gratification. However, instant prizes can be an incentive to join” (p. 3).

“Partnerships with other businesses or organizations can increase point collection

opportunities for customers and improve their loyalty to the program” (p. 3). In my

opinion, this is one of the most important strategies where it gives the guests a wider

space to collect or to redeem their points alike.

Successful rewards system should connect with the lifestyle of the typical guest

(“Consumer Loyalty,” 2011).

2. Center for Hospitality Research

The Center for Hospitality Research at the Cornell School of Hotel Administration

has conducted a study in 2014 entitled Assessing the Benefits of Reward Programs: A

Recommended Approach and Case Study from the Lodging Industry. The study has

concluded to an important strategy to improve loyalty programs, which is making a frequent

comprehensive assessment. That can be successfully done by building a solid communication

channels with the guests. Communication should include knowing guests’ attitudes toward a

program, measuring guests’ attitude change, measuring guests’ behavior change, and

conducting a complete ROI analysis (Voorhees, McCall, & Carroll, 2014).


3. Ipag Business School

Ipag Business School of France has devoted one of its Working Paper Series (2014-

194) to analyze hotel loyalty programs. The paper is titled Loyalty Programs: A Study Case

in the Hospitality Industry and written by Lubica Hikkerova. The study defines the loyalty as

a commitment relationship between the guest and hotel; and this commitment is based in one

word trust, “trust and mutual commitment are determining factors for an enduring

relationship and building customer loyalty” (p. 3). Therefore, the best strategy to maintain

customer confidence is that the hotel should be keen to deal carefully with the factors of

“honesty, reliability, the reduction of uncertainty, credibility and goodwill” (p. 3).

The study added that when a loyalty program has been designed to, at the first place,

satisfy the guests’ interests “(both cognitive and emotional),” the intended results are

guaranteed. That includes creating an enduring and solid relationship with the guest (p. 3).

On the other hand, this study has recommended a similar strategy to what Hanover Research

recommended, which is not to limit rewards to something produced by the hotel; guests

adhere to loyalty programs that offer “additional benefits (monetary or in kind)” (p.4). Also,

another important strategy that would retain guest’s loyalty is to “create a value offer which

would make it difficult for the customer to find a substitute among competitors” (p. 5).

4. Hotel Executive.com

Hotel Executive.com, a hotel business review website, has posted an article entitled

The Importance of Hotel Loyalty Programs written by Jennifer Nagy (2011). In this article

Nagy has revealed a fact that many hotel loyalty programs are ineffective, “on average, only

20 to 40% of hotel loyalty programs members actively accrue points and work towards

redeeming them.” According to Nagy “hotels are losing on the opportunity to earn income

from approximately 60% of their loyalty program members.” Accordingly, in order to

increase the effectiveness of hotel loyalty programs, Nagy has advised the hoteliers to take


two factors into consideration, applying the ladder system format and taking care of mediums

in which customers can interact with the program (Nagy, 2011).

To add more clarification on those two factors, the ladder system is a system that

improves rewards at each stage and ensures that there are rewards available to all members,

“no matter how frequent their stay or their point level.” So, the more members are able to

earn points, the more they will be able to redeem them for a higher-value rewards, “making

the ladder system an effective one at incentivizing loyalty.” Nagy suggested to refer members

of the highest points as the ‘elite members’. So, as these members are being highly satisfied

with the loyalty program, they no doubt will recommend the hotel to their friends, as well as

they will be “willing to pay up to 17% more at a hotel where they receive membership points

and benefits” (Nagy, 2011).

The other factor, which is the medium, is an important determinant of the success of

any hotel loyalty program. According to Nagy, “statistic shows that the most effective loyalty

programs will be available on- and offline.” She added that according to “a 2010 survey by

Loylogic, 58% of travelers prefer the Internet, followed by mobile (20%), in-store (11%),

SMS (4%) and Facebook (3%)” (Nagy, 2011). Therefore, any successful hotel loyalty

program should offer all mediums possible to give a wider ability to members to check their

status and redeem their points. These mediums should include hotel websites, mobile

platforms, and SMS. It’s worth mentioning that mobile platforms became a popular

interactive mediums for many people, so it is a wise marketing decision to develop hotel

applications based on these mediums.

Moreover, Nagy provided two more strategies that hoteliers should apply in their

loyalty programs: allowing guests to redeem their points as possible as earlier and offering

‘points + pay option’. “A study by Mintel showed that 47% of consumers were more

motivated to join a loyalty program if the program provided instant gratification rather than


offering travel units that could only be earned over time with repeated stays.” In other words,

prompt redemption option induces guests to earn more points. “After the first redemption,

customers’ earn rates can increase by 8 times,” Nagy stated. In the same context, ‘points +

pay’ option can significantly increase the attractiveness of loyalty programs as it gives

members more flexibility to redeem their points. That is in turn “will ensure the long-term

success of your property’s loyalty program” (Nagy, 2011).

5. Amadeus.com

Amadeus.com in its article Thirty Years In: A Mid-Life Crisis for Guest Loyalty

Programs? posted in 2011, has emphasized that hoteliers should diversify the rewards of their

loyalty programs as “one size doesn’t fit all.” The essence of this assumption is that each

individual/traveler is appreciating a different type of rewards. For instance, a businessman

would prefer a priority treatments or an upgrade to his room, a family would appreciate a free

access to the hotel’s kids’ club or free tickets to local theme parks. Hence, hoteliers must be

able to identify each guest’s behavior and preference in order to make the rewards fitting to

all members as much as possible.

Also, this article has emphasized the importance of redesigning the tiers system where

it indicated that many guests feeling that tiers system is infeasible. For instance, many guests

see themselves incapable to earn the number of points needed to move up from tier to

another. This feeling makes guests frustrated and as a result decreases their loyalty. So, “tiers

need to be flexible, not static, to ensure that valuable customers are not slipping through the

net” (“Thirty Years,” 2011). The article has given one example of how the tiers system could

be flexible, “Hilton used its sponsorship of the Grand Prix to offer race-mad customers the

chance to book a room at a Hilton hotel near the track.” Thus, there is no reason to limit

rewards to the traditional partners such as airlines or banks.


Finally, the article has suggested a new approach to reward guests called it the

‘hidden or unexpected rewards’. Some examples of these rewards provided by the article

including “remembering guests’ wedding anniversary with a complimentary bottle of

champagne or a surprise upgrade to a master suite when they check in.” In my opinion, this

approach is innovative and there are no obstacles to apply it where guests’ birthdays,

anniversaries, and other personal information can be easily tracked nowadays. An additional

advantage of this approach is preventing guests from comparing the rewards of a given

loyalty program to the competitors’ ones.

6. Xtoles.com

Xtoles.com in its article Throw Your Hotel Loyalty Program out the Window by

Remko West (2014), has emphasized on some strategies that already have been presented in

the previous paragraphs, which is, mainly, the availability of providing an immediate and

remarkable rewards. Some examples of these rewards provided by the article including “a

lower rate in the form of a discount bookable for members only, a guaranteed room upgrade,

complimentary access to specific onsite amenities, or a truly funny gift.” Also, the article

advised hoteliers not to complicate the process to getting access to any advantages. Finally,

the article has emphasized on the priority to communicate with the guests, especially through

social media channels.

7. Go Group Booking

Go Group Booking of Ireland, a website specialized in group business growth, has

posted an article in 2015 entitled Why Hotel Loyalty Programs are Good for Hotels? This

article aimed to emphasize the importance of hotel loyalty programs and how they consider

as important determinants in guest’s booking decision. The article has revealed that there is a

recent trend among hotels to offer valuable deals to new customers, whereas, at the same

time, raising the prices for existing customers. However, the article has advised the hoteliers


to “concentrate on guest retention and less on attracting new guests. It makes far more sense

for hotels to generate more repeat business than constantly trying to drum up new business”

(John, 2015).

Lastly, to conclude this section, here is a summary of the recommendations and

strategies of all sources that aimed to increase the efficiency of hotel loyalty programs:

I. Programs’ structure, outlines, and general strategies:

Structuring the loyalty program on three tiers (basic, middle & top).

Partnering with other businesses or organizations (e.g. airlines, banks, credit cards

companies) in order to give members more options to redeem their points.

Making a frequent comprehensive evaluation to the loyalty programs is a smart

strategy to improve its quality.

Applying the ladder system that guarantees rewards to all members regardless of their

tiers or number of points earned.

Offering all mediums possible to maximize guests’ interaction became an essential

requirement.

II. Programs’ tiers:

Simplifying tiers system, either by expanding the period needed to achieve a higher

tier (e.g. two calendar years instead of one), or by decreasing points or nights needed

to achieve a higher tier.

III. Programs’ points and redemption:

Giving more flexibility to members in respect of earning points from allied partners;

not to limit earning points to hotel products (some programs allow members to

redeem their points form a third party but not to earn).

Allowing guests to redeem their points as possible as earlier and offering ‘points +

pay option’ is a must.


IV. Programs’ rewards:

Providing a personalized incentive; something that would fit to and appreciate by

most of members.

Providing targeted long-term goals and awards, rather than just immediate

gratification.

Connecting rewards system with the lifestyle of the typical guest.

Providing untraditional rewards (e.g. monetary) or remarkable rewards (e.g. a

discount bookable for members only) is an innovative idea.

Surprising hotel loyalty members by providing them unlisted rewards (e.g. wedding

anniversary gift) may create lifetime relationship between the guests and hotel.

V. Guests relationship:

Building a solid relationship with the guest that based on trust and mutual

commitment should be the fundamental goal of any hotel loyalty program.

Focusing on providing valuable deals to existing guests rather than focusing on

gaining loyalty of new ones; retaining an existing guest is better and less expensive of

acquiring new one.

The Impact of Hotel Loyalty Programs on Guest’s Booking Decision

It is well known that the two fundamental factors that determine most of the hotel

booking decisions are price and location. However, some guests take other factors into

consideration such as hotel amenities or brand. Other guests may be influenced by other

guests’ reviews. In 2014, I conducted a small survey on 110 respondents entitled How Much

Do Online Hotel Reviews Influence the Travelers’ Booking Decision? The respondents were

asked to pick one out of four choices to provide an answer to this question, what is the main

factor influences your booking decision? Their answer was: hotel location (32.7%), room rate

(19.1%), costumers’ reviews (15.5%), and service provided (14.5%).


But what about the impact of hotel loyalty programs in guests’ booking decision? The

following paragraphs will provide different views as an answer to this question. Market

Metrix has conducted a study in 2009 in order to figure out the ranking of each factor that

impacts guest’s booking decision. One measure Market Metrix used to appraise the success

of a given loyalty program is called “Loyalty Program Effectiveness”. “This measure

identifies the percentage of guests who say that their loyalty program membership was a

primary reason for choosing that hotel.” The following tables provide statistics about the

loyalty programs effectiveness (2009-2011), and segment winners (2010-2011), (Barsky,

2015).


Back to the findings of this study which have proven that hotel loyalty programs rank

fourth in the top deciding factors when booking a hotel, “(the top three reasons are location,

price, and past experience)” (Barsky, 2015). As we can see in the previous tables, 32.7% of

the respondents said that hotel loyalty programs have influenced their booking decision on

where to stay. Moreover, the study has declared that this number has increased by almost 2%

in the past two years (Nagy, 2011). By the same token, a more recent study conducted by

Deloitte (2014) showed that “two-thirds of high-frequency travelers stay at the same hotel

brand for more than half their travel days, regardless of location” (Jennings, Giorgio, Murali,

& Goggin, 2014).

Another recent study conducted by Epsilon Strategic & Analytic Consulting Group in

2010 on 400 travelers asking them about the most important factor that impacted their recent

hotel bookings. The findings of this study have found that, in addition to the factors of price,

location, guests’ reviews and recommendations from others, hotel loyalty programs were

definitely a motivating factor in their booking decision. In fact, the study’ findings has

showed that more than eight in ten program loyalty members consider the hotel’s loyalty

program and rewards before booking their hotel (Nagy, 2011).

In the same context, Dr. Jonathan Barsky (2015) in his article Hotel Loyalty

Programs Offered by Chains and Independents are Growing in Popularity, has confirmed the

same fact. Dr. Barsky said that “with improved benefits and guest-friendly rules, hotel loyalty

programs are increasingly becoming one of the primary reasons for selecting a particular

hotel.” Also, he declared that the ‘Elite’ membership percentage “rose sharply in 2011 (up

5%).” This is good news to hotels, as Dr. Barsky said, but why? That is because the members

of this tier more likely to recommend their accommodation experience to their friends, spend

more dollar, and are less sensitive to price increases compared to other members (Barsky,

2015).


Although, the previous studies and articles illustrated a significant impact of hotel

loyalty programs in guests’ booking decision, there is a different view here. Deloitte, a firm

providing audit, consulting, financial advisory, risk management, and other services, has

conducted a survey in 2012 to get in-depth look at travelers’ behaviors with a focus on the

area of loyalty programs. The respondents were about 4,000 travelers with different travel

purposes. The findings of this survey have found that only “8% of travelers said they’re loyal

to the same brand.” (Nayer, 2013). The survey has concluded to two important points:

1. “Hotel loyalty programs have either little or no impact on travelers’ purchase

decisions, and

2. Roughly 30 percent, on average, of hotel loyalty members are “at risk” of switching

their preferred brand” (Nayer, 2013).

Online Travel Agencies (OTAs) and its Loyalty Programs

Brief History of Traditional Travel Agencies

First of all, let us take a general look at the history of travel agencies. The history of

travel agencies has passed by several stages starting from the nineteenth century to the

present. The story began by transportation sector, especially in the area of making

arrangements to transport travellers by using railways. Later, automobile sector started to

adopt the same idea when the first car rental company has been launched. Soon, as air

transportation experienced rapid growth, airlines companies started to create their own travel

offices that dealt with passengers’ bookings and ticketing. A parallel growth has been

witnessed in the sector of the independent travel and tourism agencies. The primary goal of

these agencies was to serve as sales and booking channels for the airlines. Later they

provided hotel bookings and full packages for travellers (Joyce, 2013).


The History of Online Travel Agencies (OTAs)

The emergence of online travel websites is closely linked to the emergence of the

Internet. Following the advent of the Internet in less than 3 years, and specifically in 1992,

“Travicom created what became known as the first travel Website. This website, now under

the name Galileo, has combined with Apollo system to provide booking services that

included airlines, hotels, cruise bookings as well as car rental reservations” (Hockenson,

2012). Soon, several entrepreneurial projects tacked the footsteps of Travicom. At present,

there are hundreds of online travel websites. Also, a great shift in hotel websites sector has

started by the emergence of websites that specialized in combining multiple rates for a given

hotel in one place, such as HotelsCombined, Kayak, and Trivago.

Kevin May (2014), in his article How 25 Years of The Web Inspired the Travel

Revolution, has summarized the history of online travel websites starting from 1994 until the

present time. Based on this article, here is a summary of the most remarkable years in the

history of online travel websites.

1994, “Travelweb.com emerged as the first comprehensive catalogue of hotel

properties around the world.”

1995, “Viator Systems launched a travel technology business to help provide

bookings for destination tours and excursions via the web.”

1996, “Microsoft unveiled its attempt at an online travel agency, known as Expedia.”

1998, Brent Hoberman and Martha Lane Fox created Lastminute.com.

1999, US site FareChase appeared on the scene with a different view on the online

travel shopping experience that paved the way to some of the most famous websites

such as Sidestep, Kayak, TravelSupermarket, Skyscanner.

2000, TripAdvisor has been founded.


2004, two of the most popular booking websites have been created in this year,

Priceline and Booking.com.

2008, the second wave of booking websites has started with AirBedAndBreakfast,

now known as Airbnb.

2011, HotelTonight, a “mobile app that allowed users to find a vacant room in a city

for the same day.” (May, 2014).

The Relationship between Online Travel Agencies (OTAs) and Hotels

As mentioned earlier, the primary goal of online travel websites is to serve as sales

and booking channels for airlines, hotels, and many other travel entities, so, it is basically a

partnership relation. This relationship is based on a mutual benefit where those travel

websites gain a specific commission from hotels, and at the same time, hotels gain a lucrative

increase in their revenues. However, the relationship between online travel agencies and

hotels varies from hotel or chain to another. For instance, it is logical that this relationship

would not be a robust relationship with hotel chains as these chains possess effective

marketing tools that making them not in need for intermediaries services. While these

agencies have a close relationship with independents hotels. “The average OTA share at

chain hotels is less than half that of independent hotels” (Trotter, 2015).

On the other hand, as these websites have eased the booking process and diversified

travelers’ options, they became highly demanded by travelers. That led to dramatically

increase the percentage of bookings made through a third party comparing by the direct

bookings made with hotels. Hotel Scores in a report released in 2013 entitled, Online Travel

Agencies (OTA): Friend or Foe? has claimed that in the past five years, “online travel sales

have grown from $93-Billion to over $160-Billion, with hotel reservations accounting for

almost 40% of this total volume.” The report added, “Online travel agency (OTA) websites


are responsible for one-third of the online hotel bookings.” That indicate the importance of

these websites as distribution and reservation channels (“Hotel Scores,” 2013).

Unfortunately, the steady relationship between hotels and online travel agencies has

eventually turned into a chronic headache for hotels as the commission’s percentage they

have to pay to intermediaries is significantly increased. In order to decrease, or even avoid,

paying commissions to online travel websites, hotels is applying some strategies that would

convey guests to book their accommodation directly with hotels, especially in the area of

loyalty programs. Among these strategies:

Attaching guests to hotel loyalty programs by making rewards more attractive to

members.

Putting more effort to update official hotel websites.

Advertising special promotion that to be exclusively obtained though hotel websites.

Disqualifying guests to earn any points of their loyalty programs if their bookings

have been made through a third party.

However, it seems that applying such strategies did not solve the problem as the

primary desire of most of travelers is to get the best deal possible, regardless of loyalty

programs and points. To add salt to injury, many online travel websites have recently

launched their own loyalty programs. That put hoteliers in an unenviable situation as their

uneasiness seems endless. In fact, loyalty programs of online booking website seem more

flexible than hotel loyalty programs and, in my opinion, will certainly attract more travelers.

Wiz Weiss (2014) in her article, The Booking Battle: OTAs Break Into the Loyalty Market,

has confirmed this fact when she said, “programs like Expedia Rewards and Orbitz Rewards

will continue to encourage travelers to make third-party bookings” (Weiss, 2014).

However, a question arises here, will hotels cut their relations with online booking

websites? The answer, in my opinion, of course not. That is because these websites remain an


important tributary to increase hotels’ profits. These websites “fill beds that could otherwise

be left empty” (Weiss, 2014). In the same context, Dorothy Dowling, senior vice president of

marketing and sales for Best Western International, confirmed that these websites are very

important to hotel business. “Although OTAs do claim a cut of the profit of each sold room,

in the end, the hotels are still making money,” Dowling added (Weiss, 2014). Now, let us

take a closer look at loyalty programs of online booking websites, and the views of experts

and specialists about them. Then, a short comparison between loyalty programs of online

booking websites and traditional loyalty programs will be provided.

The Loyalty Programs of Online Travel Agencies (OTAs)

As mentioned earlier, many online travel agencies (OTAs), have launched their own

loyalty programs. For instance, “Expedia + Rewards, a new credit card from Orbitz, and the

end of Chase Ultimate Rewards’ online shopping portal bonuses at a number of sites like

Travelocity and Priceline” (Kelly, 2014). The tactic of these loyalty programs is similar to

what hotels have employed in their loyalty programs, the ultimate goal of both programs is to

promote repeat bookings and attract more travelers. A as result, bookers “have plenty of

loyalty programs to choose from. And now, travelers are facing a challenge when it comes to

selecting a booking method to which to pledge their allegiance” (Weiss, 2014).

On the other hand, online travel agencies have innovated new methods to reward

guests when they join their loyalty programs. For instance, Orbitz announced a partnership

with Visa in which members are able to receive “an 8 percent return per dollar spent on hotel

bookings and a 6 percent return on airfare bookings” when they using any Visa card to

purchase through Orbitz.com (Weiss, 2014). In my opinion, this is a very reliable way to

reward members, especially when we know that the members still eligible to collect “a 3

percent return per dollar paid for each hotel booking made on Orbitz.com” even they decided

not join the Orbitz Visa card. One more example, “Hotels.com Welcome Rewards hooks


members with the promise of a free hotel stay for every 10 hotel nights booked” (Weiss,

2014).

Do OTAs Loyalty Programs Compete Traditional Programs?

Now, let us consider some views of hoteliers and observers about these programs. Jeff

Low, chief executive of Stash Hotel Rewards, has a strong doubt about the effectiveness of

these programs. His doubt stems from that OTA programs are unable to provide “sought-

after benefits like complimentary amenities, which draw frequent travelers to traditional hotel

programs” (Weiss, 2014). As well as, he believes that “traditional programs are making

moves to stay competitive in the loyalty space,” (Weiss, 2014). By the same token, Scott

Mackenzie, creator of travel site Hack My Trip, said that “the status benefits of OTAs are

generally quite poor due to travel sites maintaining relationships with so many disparate

properties” (Weiss, 2014).

Also, Brian Kelly, founder of ThePointsGuy.com, said that “OTA loyalty programs

aren't challenging the traditional rewards system because they're not targeting business

travelers” (Weiss, 2014). Kelly added that one of the biggest disadvantages of the OTA

loyalty programs that the guest will not get “the same perks” as those obtained from hotel

loyalty programs. In the same context, Clem Bason, CEO of DealBase.com, looked at the

subject from another view as he sees that the precious offers provided by OTA loyalty

programs is “an unusual way to gain loyalty from customers who aren't already using their

channels.” In his opinion, these generous deals will eventually lead to make OTAs less

profitable (Weiss, 2014).

In contrast, Tim Winship, editor and publisher of FrequentFlier.com, stated that there

is a big advantage of OTAs loyalty programs, which is simplicity. He added that the

simplicity of OTAs loyalty programs “may be the primary selling point: Traditional hotel

program policies are constantly changing, making it difficult for members to keep track of


how they can use their rewards” (Weiss, 2014). Also, David Doctorow, Expedia CMO and

Senior Vice President of Global Marketing, added one more advantage of OTAs loyalty

programs, which is the availability to redeem points faster than traditional hotel program.

“OTA program members can earn rewards by booking stays at eligible hotels, regardless of

the brand they choose — allowing for increased earning potential,” Doctorow added (Weiss,

2014).

Hotels Loyalty Programs vs OTAs Loyalty Programs

As mentioned earlier, both loyalty programs, traditional and online, are employing the

same technique and sharing the same goal, which is attracting more travelers and hotel

bookers by providing them a variety of rewards, which in turn leads into increasing profits for

hotels and online travel agencies alike. However, there are some differences between both

programs, especially in the area of rewards, redemption, and the percentage of members

enrolled in each program. The following table will provide a comparison between the loyalty

programs of hotels and loyalty programs of online travel agencies. Only the most important

differences is considered.

Hotel Loyalty Programs Online Travel Agencies Loyalty Programs

Generally targeting business travelers who

book in a frequent basis.

Generally targeting travellers who book one,

two or three trips a year.

Based and aimed to build a long relationship

with the guest.

Usually, based on a short relationship with

the guest.


More valuable rewards. Less valuable rewards.

Usually, there is a long procedure to redeem

points.Redeem points faster.

Points are only redeemable in the same

hotel, or within the chain properties.

Points are redeemable in any booking at any

qualified hotel, regardless the hotel brand.

Usually, do not allow guests to earn points

from a third party.

Usually, allow guests to earn points from a

third party.

Complicated tiered system. Simple tiered system.

Members can directly amend or cancel their

reservations.

Usually, members are referred to hotels to

amend or cancel their reservations.

Have more members enrolled than OTAs.

Have less members enrolled than hotels.

“Among hotel loyalty program members,

(29 percent) claim membership in an OTA

loyalty program” (“Study: OTA Loyalty,”

2013).

Look more reliable in travelers’ eyes. Look less reliable in travelers’ eyes.

Top Hotel and OTAs Loyalty Programs for 2015

Frist of all, there is no agreement among travelers nor experts and analysts, on what

hotel, chain or online travel agency provides the best loyalty program. That is because each

traveler has his or her unique requirements, and a given hotel that fits to a given traveler

could not fit to the other one. For instance, each one has a specific budget, prefers a different

style of accommodation, or considers hotel amenities the first factor in his or her booking

decision. Accordingly, arriving to full agreement among experts and analysts who evaluate

these programs cannot be achieved as their evaluation is based on different views of travelers

and customers.

In the same context, each loyalty program distinguishes itself from another, either by

providing exclusive rewards and treatments, or even by targeting a particular group of guests.


For this, there is no single loyalty program would meet all guests’ requirements or fulfill their

needs. However, after reviewing multiple articles that evaluated loyalty programs, we can

rely on a report posted by U.S. News and released in 2015. In addition to the newspaper’s

credibility, it conducted this report based on a wide collection of independent opinions of

experts and users. “We believe that our unbiased approach makes our rankings more useful

than simply providing our editors' personal opinions,” the newspaper stated.

More importantly, “U.S. News identified 18 of the most prominent hotel loyalty

programs and evaluated them using a signature methodology that weighs factors such as

added benefits, the average number of paid nights required to earn a free stay and the ease of

earning and using rewards” (“Best Hotel,” 2015). Additionally, John Ollila (2015) in his

article, U.S. News & World Report Best Travel Rewards Programs 2015 – 2016, has given

comprehensive details on the methodology used by U.S. News in conducting this report.

Finally, it is worth mentioning that World Report and Fortune Magazine have adopted the

same report that conducted by U.S. News (Elliot, 2015). Here is the ranking of the top ten

hotel loyalty programs for 2015:

1. Marriott Rewards.

2. Wyndham Rewards.

3. Best Western Rewards.

4. Club Carlson.

5. IHG Rewards Club.

6. Leaders Club.

7. La Quinta Returns.

8. Starwood Preferred Guest.

9. Hilton HHonors.

10. Hyatt Gold Passport.


On the other hand, in respect of loyalty programs of online travel agencies (OTAs),

there is no available ranking for these programs, which we can rely on. After reviewing many

articles in this regard, we can conclude that the best five OTAs loyalty programs are:

1. Expedia.

2. Hotels.com.

3. Orbitz.

4. Priceline.

5. Travelocity.

The following tables will provide more details about each hotel loyalty program of the

top ten. Following that, three tables comparing bottom, middle, and top tier elite status of six

out of the top ten hotel loyalty programs. Finally, five tables will provide more details about

each OTA loyalty program of the best five. To be noticed, all information of hotel loyalty

programs are derived from the hotel official websites. The comparison tables are derived

from an article titled The Best Hotel Loyalty Programs written by Scott Mackenzie, posted in

2015 by Travel Codex.com (Mackenzie, 2015a). Whereas, all information of OTAs loyalty

programs are mainly derived from OTAs official websites in addition to the following three

articles:

1. Online Travel Agency Loyalty Programs – the Basics, written by Brain Kelly and

posted in 2013 by The Points Guy.com (Kelly, 2013).

2. Comparing Online Travel Agency Rewards Programs, written by Scott

Mackenzie and posted in 2013 by Travel Codex.com (Mackenzie, 2013).

3. Which Online Travel Agency Has the Best Rewards Program? written by Scott

Mackenzie and posted in 2015 by Travel Codex.com (Mackenzie, 2015b).


I. Top Hotel Loyalty Programs

A. Top Ten


1. Marriott Rewards

Provider: Marriott International Inc.Official Website www.MarriottRewards.com Launch Year 1983Program Based PointsBrands Number 16Brands Name The Ritz Carlton, Edition, JW Marriott, Autograph Collection

Hotels, Renaissance Hotels, Marriott Hotels, Marriott Vacation Club, Gaylord Hotels, AC Hotels, Courtyard, Residence Inn, Spring Hill Suites, Fairfield Inn & Suites, Towne Place Suites, Moxy Hotels, & Protea Hotels.

Number of Participating Hotels

More than 3,800 Marriott hotels in 71 countries worldwide.

Membership More than 49 million members worldwide.Tiers Number 3Tiers Name Silver Elite, Gold Elite, & Platinum Elite.Qualified Nights for Each Tier

• 10 nights or more for Silver Elite;• 50 nights or more for Gold Elite;• 75 nights or more for Platinum Elite.

Most Notable Rewards for Each Tier’s Members(Membership Benefits)

Silver Elite:• Free Wi-Fi.• Mobile check-in.• 5th redemption night free.Gold Elite:• Priority Late Checkout.• Weekend discount.• 20% bonus on points for stays.Platinum Elite:• 48-Hour Guaranteed Availability.• Platinum Arrival Gift.• 50% bonus on points for stays.

Partnership to Earn or Redeem Points

• Available with 30 airlines with Airline Miles Program.• Available with many other partners, such as Hertz, Cruises Only, Shop My Way, Diners Club, & Energy Plus.

Credit Card Availability Marriott Rewards Premier Credit Card; Marriott Rewards Business Card; Canadian Marriott Rewards Premier Visa Card; World Master Card by Marriott Rewards (UK).

Points Options • Available to buy, gift, & transfer.• Available to donate to International Federation of Red Cross

and Red Crescent Societies (IFRC) & Hotels for Heroes.Using Cash + Points AvailableImmediate Redemption AvailableMediums Available Hotel website, mobile platforms, multiple social media means

including Twitter, Facebook, & Instagram.


2. Wyndham Rewards

Provider: Wyndham Worldwide CorporationOfficial Website www.WyndhamRewards.com Launch Year 2008 after four years as the TripRewards.Program Based PointsBrands Number 15Brands Name Dolce Hotels and Resorts, Wyndham Grand Hotels and Resorts,

Wyndham Hotels and Resorts, Wyndham Garden, TRYP by Wyndham, Wingate by Wyndham, Hawthorn Suites by Wyndham, Microtel Inn & Suites by Wyndham, Ramada, Days Inn, Super 8, Baymont Inn & Suites, Howard Johnson, Travelodge, & Knights Inn.


Approximately 7,700 properties and over 668,500 rooms in 71 countries.

Membership More than 40 million members worldwide.Tiers Number 2Tiers Name Basic Membership, & Gold Status Membership.Qualified Nights for Each Tier

A minimum of 20 qualifying nights in one calendar year to achieve Gold Status.


Basic Membership:• Ability to earn and use points.• Member discounts.• Guaranteed best room rate.Gold Status Membership:• Ability to earn and use points. • Member discounts.• Guaranteed best room rate.• Collecting bonus points known as Gold Status points.


• Available with many North American airlines partners, as well as international airline partners.• Available with many other partners, such as Amtrak Guest Rewards points, car rentals, gift cards, and other merchandise.

Credit Card Availability Wyndham Rewards Visa credit card.Points Options Available to purchase.Using Cash + Points Available with Go Fast.Immediate Redemption Available with Go Free.Mediums Available Hotel website, mobile platforms, multiple social media means



3. Best Western Rewards

Provider: Best Western InternationalOfficial Website www.BestWestern.com/rewardsLaunch Year 1988Program Based PointsBrands Number 6Brands Name Best Western, Best Western Plus, Best Western Premier, Best

Western Plus Executive Residency, Vīb, & Bw Premier Collection.


More than 4,000 hotels in over 100 countries and territories worldwide.

Membership More than 25 million membersTiers Number 4Tiers Name Best Western Rewards, Gold Elite, Platinum Elite, & Diamond

Elite.Qualified Nights for Each Tier

• After 10 qualifying nights or 10,000 points for Gold;• After 15 qualifying nights or 15,000 points for Platinum;• After 30 qualifying nights or 30,000 points for Diamond.


Best Western Rewards:• Points never expire.• Hotel stay rewards with no blackout dates.• Exclusive guest service phone number.• Point purchasing for award redemption ($10 per 1000 points).• Best Western Rewards branded key packet upon arrival.Gold Elite:• Exclusive elite only offers.Platinum Elite:• Best available room.• Welcome snack and beverage OR 250 bonus points.Diamond Elite:• Best available room.• Welcome snack and beverage OR 250 bonus points.


• Available with AAA Program; AARP Program; CAA Program; Ride Rewards; Service Rewards.• Available with many airlines partners.

Credit Card Availability • Best Western Rewards MasterCard;• Members can also converting American Express Membership Rewards points or Diner's Club Rewards to Best Western Rewards points.

Points Options Available to purchase.Using Cash + Points AvailableImmediate Redemption AvailableMediums Available Hotel website, mobile platforms, multiple social media means



4. Club Carlson Rewards

Provider: Carlson Rezidor Hotel GroupOfficial Website www.ClubCarlson.com Launch Year 1992 under the name Look To Book, redesigned and renamed

under Club Carlson in 2011.Program Based PointsBrands Number 7Brands Name Quorvus Collection, Radisson Blu, Radisson, Park Plaza, Park

Inn by Radisson, and Country Inns & Suites By Carlson.Number of Participating Hotels

More than 1,370 hotels in operation and under development with 180,000 rooms and a footprint spanning 110 countries and territories.

Membership 5.5 million members (announced, 2010), (Garrido, 2010).Tiers Number 4Tiers Name Red, Silver, Gold, & Concierge.Qualified Nights for Each Tier

• 15 nights or 10 stays for Silver Tier;• 35 nights or 20 stays for Gold Tier;• 75 nights or 30 stays for Concierge Tier.


Red Tier:• 5% discounts on food & beverages.Silver Tier:• 10% discounts on food & beverages.• 15% point bonus• Early check-in and late checkout.• Elite member services line.Gold Tier:• 15% discounts on food & beverages.• 35% point bonus.• In-Room welcome gift.Concierge Tier:• 20% discounts on food & beverages.• 75% point bonus.• Free continental breakfast.


• Available with more than 20 airline partners and purchases through Club Carlson retail partners.• Available with Carlson Rezidor partners with several car rental agencies, including Alamo, Avis, Budget, & Enterprise.

Credit Card Availability Club Carlson Business Rewards Visa Card & Club Carlson Rewards Visa Signature Card (both with US Bank).

Points Options Available to purchase.Using Cash + Points AvailableImmediate Redemption AvailableMediums Available Hotel website, mobile platforms, multiple social media means



5. IHG Rewards Club

Provider: InterContinental Hotels Group (IHG)Official Website www.ihg.com/rewardsclubLaunch Year 1981Program Based PointsBrands Number 10Brands Name InterContinental, HUALUXE Hotels and Resorts, Kimpton,

Hotels and Restaurants, Crowne Plaza, Hotel Indigo, EVEN Hotels, Holiday Inn, Holiday Inn Club Vacations, Holiday Inn Resort, Holiday Inn Express, Staybridge Suites, and Candlewood Suites.


Over 4,900 hotels and nearly 724,018 rooms in nearly 100 countries around the world.

Membership More than 88 million members.Tiers Number 4Tiers Name • Club, Gold Elite, Platinum Elite and Spire Elite.

• Members can also become an InterContinental Ambassador for an extra fee or a Royal Ambassador by exclusive invitation.

Qualified Nights for Each Tier

• 15 nights or 20,000 elite qualifying points for Gold Elite;• 50 nights or 60,000 elite qualifying points for Platinum Elite;• 75 nights or 75,000 elite qualifying points for Spire Elite.


Gold Elite:• Priority Check-in on guaranteed reservations.• 10% bonus on base points.• Exclusive Gold Customer Service Phone Number.Platinum Elite:• Complimentary room upgrades (Subject to availability)• Guaranteed room availability (72 hours in advance)• 50% bonus on base points.Spire Elite:• Exclusive Choice Benefit (receiving 25,000 points, or upgrading a friend or family member to Platinum Elite).• 100% bonus on base points.


• Available with IHG's partners with more than 400 air carriers, including American Airlines, Delta Air Lines and Alaska.• Points can also be redeemed for gift cards, golf lessons, wine tours and other offers.

Credit Card Availability IHG Rewards Club MasterCard.Points Options • Available to buy, gift, & transfer.

• Available to donate to charity.Using Cash + Points AvailableImmediate Redemption AvailableMediums Available Hotel website, mobile platforms, multiple social media means



6. Leaders Club

Provider: The Leading Hotels of the World Ltd. (LHW)Official Website www.lhw.com/leaders-clubLaunch Year The company has founded in 1928.Program Based For annual feeBrands Number N/ABrands Name LHW deals with a number of luxury properties across the globe,

with numerous locations in the United States, the Caribbean, Europe, Central and South America, Africa and the Middle East and Asia.


430 hotels in 80 countries.

Membership UnknownTiers Number 2Tiers Name Leaders Club & Unlimited.Qualified Nights for Each Tier

Only though an annual membership fee: $150 to join Leaders Club & $1200 to join Unlimited.


Leaders Club:• Special rate privileges available.• Early check-in, late check-out considerations.• Unique welcome gift for you at each Leading Hotel.• Invitations to Leaders Club Events held near guest hometown• Invitations to Leaders Club Events held at properties.Unlimited:• Complimentary gift memberships for your family – up to three complimentary Leaders Club memberships to share with your family.• A Priority Pass card which provides access to over 600 VIP airport lounges in over 100 countries.• Access to one-of-a-kind specially-created experiences• Guaranteed 4:00 PM late check-out.


• Available with LHW partners such as airlines including Delta, Lufthansa, Singapore Airlines, JAL and Jet Airways – giving additional point and reward opportunities for members.• Member can also take advantage of discounts and services with travel partners, including Sixt car rental, Luggage Free (a door-to-door baggage service) and Italo trains in Italy

Credit Card Availability Not available.Points Options N/AUsing Cash + Points N/AImmediate Redemption AvailableMediums Available Hotel website, mobile platforms, multiple social media means



7. La Quinta Returns

Provider: La Quinta Holdings.Official Website www.lq.com/retunrsLaunch Year UnavailableProgram Based PointsBrands Number 1+

Brands Name • The La Quinta Inns & Suites.• Partnership with 26 luxury hotels and resorts, including the Stowe Mountain Lodge in Stowe, Vermont, and the Resort at Squaw Creek in Lake Tahoe, California.


More than 870 hotels in the U.S., Canada and Mexico with approximately 84,000 rooms.

Membership Unknown.Tiers Number 3Tiers Name Silver, Gold, & Elite.Qualified Nights for Each Tier

• 10 paid nights for Gold;• 25 paid nights for Elite.


Silver:• Express check-in, late check-out.Gold:• 20% bonus points per dollar spent.• Two free room upgrade certificates per year.• Free faxes (up to 15 pages per fax).Elite:• 30% bonus points per dollar spent.• Guaranteed availability when reserve 48 hours prior to arrival. • No blackout dates for free night certificates.• Automatic free room upgrade based upon availability.• Welcome gift in-room.


• Available with Airline miles including Southwest Airlines, American Airlines and Alaska Airlines.• Members can also apply points to magazine subscriptions or gift certificates for retailers and travel partners, including Amazon and Celebrity Cruises and many other local merchants.

Credit Card Availability La Quinta Returns credit card from Visa.Points Options Available to purchase and transfer.Using Cash + Points AvailableImmediate Redemption AvailableMediums Available Hotel website, mobile platforms, multiple social media means


8. Starwood Preferred Guest


Provider: Starwood HotelsOfficial Website www.StarwoodHotels.com/preferredguestLaunch Year 1999Program Based PointsBrands Number 10Brands Name Sheraton, Four Points by Sheraton, W Hotels, aloft hotels, The

Luxury Collection, Le Méridien, Tribute Portfolio, Element Hotels, Westin Hotels & Resorts and St. Regis Hotels & Resorts.


More than 1,200 hotels in 100 countries.

Membership Over 11 million members (announced, 2010), (Garrido, 2010).Tiers Number 3Tiers Name Preferred, Gold, & Platinum.Qualified Nights for Each Tier

• 25 nights or 10 eligible stays for Gold;• 50 nights or 25 eligible stays for Platinum.


Preferred:• Credit earned toward elite status on paid and Award stays.• Free Night Awards and Award Flights without blackout dates.Gold:• 4 p.m. late checkout.• Welcome gift at check-in.• Enhanced room at check-in, when available.Platinum:• Room upgrade at check-in, including Select Standard Suites.• Complimentary in-room high-speed Internet access.• Complimentary Sheraton Club and Executive-level privileges.


• Available with Delta SkyMiles program.• Available with many other partners that allowing members to buy tickets to concerts and sporting events, and merchandise from Amazon, Starbucks and iTunes, among other retailers.

Credit Card Availability Starwood Preferred Guest credit card from American Express.Points Options • Available to buy, gift, & transfer.

• Available to donate to charity.Using Cash + Points AvailableImmediate Redemption AvailableMediums Available Hotel website, mobile platforms, multiple social media means


9. Hilton HHonors


Provider: Hilton WorldwideOfficial Website www.hhonors3.hilton.comLaunch Year 1987Program Based PointsBrands Number 12Brands Name Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts,

Conrad Hotels & Resorts, Canopy, Curio, Doubletree, Embassy Suites, Hilton Garden Inn, Hampton Inn, Homewood Suites, Home2 Suites, & Hilton Grand Vacations.


Over 4,300 locations in 94 countries.

Membership 26 million members, (estimated, 2010), (Garrido, 2010).Tiers Number 4Tiers Name Blue Status, Silver Status, Gold Status, & Diamond Status.Qualified Nights for Each Tier

• 4 stays or 10 nights for Silver Status;• 20 stays, 40 nights or 75,000 points for Gold Status;• 30 stays, 60 nights or 120,000 points for Diamond Status.


Blue Status:• Digital Check-In: choose room and customize stay from mobile device up to 24 hours in advance.• Late check-out.• 2nd guest stays free.Silver Status:• 15% Elite Status bonus.• 5th night free.Gold Status:• 25% Elite Status bonus.Diamond Status:• 50% Elite Status bonus.• 48-hour room guarantee.


• Available with number of airlines and rails companies in multiple programs: My Way Earning Style, Points & Points and Points & Miles.• Available with vehicles from Hilton's car rental partners, which include Alamo and National.• Available to purchases with Hilton's retail partners, including Nike, Vera Bradley and Samsung.

Credit Card Availability Hilton HHonors American Express and Citi Visa credit cards.Points Options Available to buy & transfer.Using Cash + Points AvailableImmediate Redemption AvailableMediums Available Hotel website, mobile platforms, multiple social media means

including Twitter, Facebook, & Instagram.10. Hyatt Gold Passport


Provider: Hyatt Hotels CorporationOfficial Website www.Hyatt.com Launch Year 1981Program Based PointsBrands Number 11Brands Name Andaz, Grand Hyatt, Hyatt Centric, Hyatt Hotels, Hyatt House,

Hyatt Place, Hyatt Regency, Hyatt Residence Club, Hyatt Zilara, Hyatt Ziva, & Park Hyatt.


587 properties.

Membership 10.2 million members (announced 2010), (Garrido, 2010).Tiers Number 3Tiers Name Gold, Platinum & Diamond.Qualified Nights for Each Tier

• 5 eligible stays or 15 eligible nights for Platinum Status;• 25 eligible stays or 50 eligible nights for Diamond Status.


Gold:• Free nights with no blackout dates.• Late Checkout.Platinum:• Point bonuses.• Guaranteed bed type.• Best room available.• Complimentary Internet access.Diamond:• Four suite upgrades annually.• 48/72-hour guaranteed availability.


• Available with Avis car rental agencies.• Available with 12 participating M life resorts in Las Vegas.• Available also with some airlines companies.

Credit Card Availability Hyatt Chase Visa credit card.Points Options Available to buy, gift, & transfer.Using Cash + Points AvailableImmediate Redemption AvailableMediums Available Hotel website, mobile platforms, multiple social media means



B. Comparing Bottom, Middle, Top Tier Elite Status

1. Comparing Bottom Tier Elite Status


2. Comparing Middle Tier Elite Status


3. Comparing Top Tier Elite Status


II. Best Five OTAs Loyalty Programs

1. Expedia

Launch Year 2011Earning and Redeeming • Hotels: 2 points per $1 on hotels and hotel packages.

• Cruises: With Expedia+ Rewards, members earn 2 points per $1 on most major cruise line bookings.• Flight + Car packages: 1 point per $1.• Flights: 1 point per $5 – pretty dismal.

Tiers Number 3Tiers Names Blue, Silver, & Gold.Qualified Nights for Each Tier

• Silver: 7 hotel room nights or $5,000 in eligible Expedia.com spend in a calendar year. • Gold: 15 hotel room nights or $10,000 in eligible Expedia.com spend in a calendar year.


Silver:• 10 % bonus on all base points earned and 250 bonus points for eligible hotel or package stays at hotels in the +VIP Access category. • Special amenities at +VIP Access hotels, • Priority call routing.• Expedia customer care.• Periodic special offers.• Dedicated concierge services in Hawaii, Orlando and Las Vegas.Gold:• 30 % bonus on all base points earned and 250 bonus points for eligible hotel or package stays at hotels in the +VIP Access category. • Upgrades based on availability at 1,400 participating +VIP Access properties.


Available with many hotels, airlines, car rentals, vacation packages and activities.

Credit Card Availability Business Rewards program exclusively for Chase Ink customersImmediate Redemption AvailableMediums Available Website, mobile platforms, multiple social media means



2. Hotels.com

Launch Year 2008Earning and Redeeming For every 10 nights guests book through Hotels.com, they earn

one free night equivalent to the average nightly rate they paid for the 10 qualifying nights.

Tiers Number 3Tiers Names Basic, Silver, & Gold.Qualified Nights for Each Tier

• Silver: 10-29 nights within a membership year. • Gold: 30+ nights within a membership year.


Silver:• Priority customer service.• A hassle-free guarantee.• Early access to deals and promotions.Gold:• Special Gold status. • Customer service line.• 10% back on spending in the form of hotel night credits.



Credit Card Availability Not availableImmediate Redemption AvailableMediums Available Website, mobile platforms, multiple social media means



3. Orbitz

Launch Year 2013Earning and Redeeming Customers earn “Orbucks” based on the kind of travel they

purchase.

Flights: members earn up to 2% of the cost of flights, excluding taxes and fees, up to $5,000 ($50 in Orbucks) annually per member.

Hotels: Members earn up to 5% (3% for Orbitz.com bookings, 5% for app bookings) of the amount paid to Orbitz for their eligible hotel booking, excluding taxes and fees.

Eligible Packages: Members earn 1% of the cost of package bookings collected by Orbitz for an entire package booking, excluding any change or cancellation fees as well as any additional charges collected by the hotel.

Tiers Number 2Tiers Names Star Members and Super Star Members.Qualified Nights for Each Tier

• Star Members: qualify by booking 4 hotel room nights. • Super Star Members: qualify by booking 12 hotel room nights.


Star Members:• Special VIP line to handle travel needs.• Concierge service.• Help booking events and entertainment while travelingSuper Star Members:• Restaurant reservations.• Scheduling meeting spaces, and activities such as golf tee times and other benefits.



Credit Card Availability Orbitz VisaImmediate Redemption AvailableMediums Available Website, mobile platforms, multiple social media means



4. Priceline

Launch Year 2013Earning and Redeeming Priceline will add “Bonus Cash” credits to guests own offer

price to increase their chances of getting a Name Your Own Price hotel or rental car reservation.

Tiers Number N/ATiers Names N/AQualified Nights for Each Tier

N/A


N/A



Credit Card Availability Credit card through Barclaycard.Immediate Redemption AvailableMediums Available Website, mobile platforms, multiple social media means



5. Travelocity

Launch Year 2006Earning and Redeeming • Guests can earn 5,000 bonus points after their first purchase

• Guests can earn an additional 5,000 bonus points after spending $1,000 on purchases within the first 90 days of account opening.• Guests can earn 3 points per $1 spent on eligible Travelocity purchases.• Guests can earn 1 point per $1 spent on all other purchases.

Tiers Number N/ATiers Names N/AQualified Nights for Each Tier

Most have Travelocity American Express from Barclaycard in order to join the program.


In general, the program “offers a dedicated customer service line, advance notice of sales and special VIP-only promotions, airport shuttle and car rental discounts and everyday exclusive discounts on hotels and vacation packages” (Todé, 2006).



Credit Card Availability Travelocity American Express from Barclaycard.Immediate Redemption AvailableMediums Available Website, mobile platforms, multiple social media means



Conclusion

To conclude, gain customer loyalty is a marketing idea emerged for the first time

since more than 120 years. The idea was simple, reward customers to ensure their loyalty.

Thus, customers’ loyalty will create a solid relationship with the merchant, which in turn

increase both the repeat business and merchants’ profits. Airlines companies have applied the

same idea in late seventies and shortly followed by hotels. Now, all hotels created their own

loyalty programs. Although, each one of these programs has its unique advantages and targets

specific guests, all of them have been built on a tiered structure and relatively have the same

rewards and benefits.

On the other hand, there is a long debate about the effectiveness of hotel loyalty

programs, whether they still generate the intended results or not. Despite this debate, statistics

showed that the percentage of members who join these programs increases day after day,

which definitely plays an important role in increasing hotels’ revenues. However, hotels

should adopt new strategies in order to enhance the relationship with their customers and to

keep pace with latest development in hospitality market. Fortunately, it seems that hotels

have already taken further steps to improve their loyalty programs. “Overall satisfaction with

hotel loyalty/rewards programs improves to 701 in 2015 from 676 in 2014” (“Hotel Loyalty

and Reward,” 2015).

Furthermore, there is a strong relationship between online travel agencies (OTAs) and

hotels as they serve as sales and marketing channels for hotels. In fact, the number of

customers who book their reservation through these websites has increased recently.

However, regardless of this fact and the recent launch of OTAs loyalty programs, hotels will

not cut their relations with OTAs. It is worth mentioning that hotel loyalty programs still have

more credibility in customer’ eyes, and it seems that OTAs loyalty programs have no

significant impact on hotel loyalty programs in the near future.


Data Collection

The research data has been gathered from the following resources:

1. Scholarly resources : including studies and surveys relevant to the research topics.

2. Journal articles : with the focus on new edition articles.

3. Official websites : including hotels, OTAs, organization websites.

4. Emails : emails have been sent to a number of hotels.

5. Personal experience : 17 years in hotel field and an enrollment in the majority of

hotel loyalty programs.


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