Can your travelers’ loyalty to their hotel rewards translate to loyalty for your travel program?
As anyone who attended this year’s GBTA in Dallas knows, travel is truly back. According to the GBTA’s 2023 Business Travel Index Outlook, “Spending on global business surged 47 percent in 2022, finishing the year at $1.03 trillion. Gains were fueled by pent-up demand from the COVID downturn in 2020 and 2021 – as well as inflationary conditions driving up prices.” Travel is expected to continue to increase, even though working remotely and blended travel are both on the rise. The biggest drivers of this increase, according to a 2023 Deloitte survey, are the growth of live events and easing of COVID restrictions.
However, with the return of business travel comes elevated hotel rates on the back of the ‘revenge travel’ boom. Hotels seem to have the upper hand, so to speak. In May 2023, PWC reported that “Despite worries of recession, bank failures, and a liquidity crisis affecting the macroeconomy, US hotels continue to outperform expectations. In Q1 2023, US hotels exceeded Q1 2019 (pre-pandemic) RevPAR levels by 13.0 percent, based on data from STR. Room rates continue to be the primary driver in this performance recovery.”
The question is, what role do loyalty programs play in establishing these room rates? Are hoteliers diminishing the impact of rate negotiations by going directly after the business traveler with loyalty points and perks? Are loyalty programs really that powerful? Well, as it turns out, they may very well be.
Hotel loyalty programs can influence booking habits to a considerable degree. Business travelers can earn reward nights, complimentary WiFi access, free meals and snacks, as well as help with flexibility during business travel – such as prioritized early check-in or later checkout.
“Most of the corporate customers that represent large travel programs recognize the power of loyalty programs, and they leverage them to drive compliance, travel satisfaction, and cost savings,” explains Tammy Routh, SVP of global sales for Marriott International. “Partnering with hotel companies to find creative ways to enhance the traveler experience, recognize the overall B2B relationship, and drive compliance is a best practice.”Travelers: We Want Our Points
Other benefits can also lure the business traveler. For example, IHG recently launched Milestone Rewards, which allows members to choose perks to suit them, from bonus points and suite upgrades to F&B reward and annual lounge membership. “Engagement with Milestone Rewards has been higher than we expected with over one million rewards chosen,” says Betty Wilson, VP global accounts at IHG Hotels & Resorts. “This is a big appeal for corporate travelers. Essentially, guests who participate in a managed travel program and are loyalty members see greater benefits. Driving loyalty through the guest experience is an important way we work with our customers to help them realize value.”
Loyalty programs have been part of the business travel picture for many years, and most business travelers are usually part of at least one or two. While travelers see them as important, in the past corporate travel managers may have held differing views. According to a joint report by Skift and IHG in 2019, “Location, ease of booking, and price were once again key factors motivating business travelers’ hotel decisions. And beyond these known priorities, many reported that loyalty programs were the next most important factor they considered when booking hotels. This stands in contrast to corporate travel managers, who ranked loyalty as the least important factor in employee booking decisions.”
But things are changing. Travel managers are not only trying to stretch their dollars but realize their travelers’ preferences are evolving too. According to a 2022 study by the GBTA Foundation, “a large majority (77 percent) of travel managers are ‘somewhat interested’ or ‘very interested’ in a corporate loyalty program that rewards companies through various discounts and perks.”
This triangle between hoteliers, travel departments and business travelers can be a win-win. “Hotels attach significant value to companies with loyal travelers as it enables them to plan for customer pricing and inventory needs, while personalizing the traveler’s experience,” according to Andy Herman, senior manager, hotel solutions at RoomIt by CWT. “All corporate negotiated rates, as well as many consortia rates, include loyalty points. Employees can book in-channel and still receive points, which will help with data insights, long-term partnerships, employee satisfaction and cost savings.”
Buyers: We Want Compliance
We know travelers love their perks and continue booking with their preferred loyalty programs. But travel buyers want the right mix for their programs and need travelers to be compliant to avoid out-of-policy bookings, which make it harder to track spend, and present challenges to the safety and security of travelers.
Travelers want to leverage points; travel managers want to leverage spend. However, these two priorities need not be mutually exclusive, as points – and the loyalty they reward – are tools that can benefit both employers and their traveling employees.
“I generally believe and have found that business travelers want to do right by both the company and the existing budget,” notes Christiane Cabot Bini, executive director of corporate travel sales at Hilton. “So, when they are taking time away from their families for work, business travelers want to be able to earn points while on the road. In my discussions with travel managers, most companies see this as reasonable, and they also want to ensure that travel is as stress-free as possible for their travelers. For instance, as business travelers achieve elite status within Hilton Honors, it unlocks additional benefits, like space-available upgraded rooms – which is a welcomed surprise for the business traveler (and the travel manager). As a result, many corporate travel managers have come to see loyalty programs as an enhancement to their travel program rather than something that undermines it,” she explains.
“Loyalty points do add value to the managed travel hotel program, as they incentivize travel program acceptance and compliance,” adds Wendy Ferrill, vice president of worldwide sales for Best Western Hotels (BWH). “That way, when travelers book hotels within the program and gain loyalty points via their stays, they can then use those points for personal or family trips, or even redeem them for other rewards, like gift cards. And as employees amass points and see the personal benefit from business travel, they are more likely to book the hotels inside the managed travel program.”Balancing the Scales
If travel buyers play their cards right, loyalty points can add significant value to their hotel programs. Hotels too, can find balance with corporate travel programs. For example, CWT’s Herman points out that many hotel chains will also offer status matches for companies that are looking to move market share. “This is a great way for travelers to switch to a different brand, without losing the status they worked hard to achieve, provided the capabilities of an alternative partner continue to meet their needs and footprint,” he says.
“We see loyalty programs and managed corporate travel programs working together,” Wilson says. “Our aim is to always understand the goals customers have for their travel and then cater to these needs. This includes understanding their spending limits and how they want to be recognized for their loyalty. From there we build solutions that incorporate both.”
At the end of the day, there are several factors that add to a successful hotel program, beyond loyalty programs. “Employee communication and education is key for corporate travel managers to help employees understand the company’s strategies and goals when it comes to finding the balance between managing programs and loyalty programs,” Herman explains. “Forming close partnerships with key hotel providers allows managers of travel programs to convey the needs of their business in terms of pricing and product, which in turn supports hotels in meeting those needs. In doing so, spend leverage doesn’t necessarily have to come at the expense of travelers not accumulating points, because they will be willingly compliant to programs that best represent their needs and preferences.”
Herman notes that clear travel policies can help guide employees on booking procedures while supplier diversity helps ensure options are available for different employee levels in each market. “And, of course, sustainability initiatives are huge right now,” he continues. “Travel managers should partner with hotels that align with their companies’ goals and values. Consider travelers’ feedback on individual hotel service and cleanliness levels to ensure that travelers have a comfortable experience away from home. If travelers don’t feel like they are being heard, they may look outside preferred hotel options, reducing compliance.”
Building relationships and creating effective experiences are at the core of most managed travel strategies. For hoteliers across the industry, how these factors play out will look different. “At BWH, this includes ensuring that negotiated rates are easy to access and book, having the right content populate online booking tools, recognizing high-tier loyalty members and welcoming every guest through the door with a warm smile and great service,” says Ferril.Putting People First
Most hotels offer loyalty programs when negotiating with buyers. However not all programs are created equal. The concept of positioning hotel loyalty programs to enhance value in managed travel programs has gone through something of an identity crisis, thanks to the pandemic. Today, business travelers’ needs have changed, with many reporting that they are more concerned now about their health and wellbeing while on travel, compared to before the pandemic, and are often feeling stressed.
Thus, one-size-fits-all loyalty programs are unlikely to succeed. Modern business travelers want real value from their points or perks, not just a free water bottle at check-in time. They’re looking to upgrade the quality of their experience, and make it healthy, safe, personal and unique. What could this look like? For a business traveler going overseas, maybe it means a free voucher to a famous tourist site at the destination; for a novice business traveler it could mean a complimentary vegetarian dinner on site (and thus the chance to socialize with others); for a frequent traveler, maybe it means admission to a free yoga class at the hotel.
Or maybe it means more cash in your pocket for traveling. An example of a rewards program that goes beyond just loyalty points is Navan’s Rewards program, in which employees manage their business, personal and blended travel in one place. This simple platform is seeing some success with companies experiencing up to 15 percent travel cost savings and 19 percent higher adoption rates. “Loyalty programs are typically associated with the relationship between a brand and a customer, but they can also be a great incentivization tool for employers,” explains Kelly Soderlund, Navan's travel trend expert.
As Hilton’s Cabot Bini explains, “Listening to what’s important to the travel buyer when establishing a hotel program and understanding the needs of their travelers is our focus. We work closely with our customers to help them curate a mix of properties in their desired markets with the on-property facilities and amenities that their travelers want and need.” Ultimately, loyalty programs are just one aspect of taking care of your people, and the more creative they are, the better chance they have of producing a more enduring kind of traveler loyalty.