What are the evolving trends in hotel loyalty programs? Like the airline loyalty prgorams, are they sustainable in the medium to long run?

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What's new about hotel/lodging customer loyalty programs is - essentially - nothing. Most of them were launched five to ten years ago, with little or no modification since then. They are points-based, miles-based programs with partnerships among airlines, home loan companies, newspapers, rental car companies, charitable organizations, telephone companies, and merchandise companies. They are tiered based on frequency of usage. They provide communication through newsletters, emailed statements and announcements, and toll-free numbers. Above all, like most frequency programs, they are complicated, requiring members to convert points to miles, to dollars, for percentage reductions/service upgrades at hotels, etc. so they can take advantage of their intertwined partnerships.

Missing from all these programs, to my mind, is strategic differentiation. Where is the differentiating value and benefit that would earn my repeat business and would make me an advocate of that hotel/chain? Wyndham Hotels is attempting to provide more value, although their program is a rather pale reflection of what Ritz-Carlton has been doing for years.

Ritz-Carlton Hotel Company doesn't need a loyalty or frequency program to assure high occupancy rates, even though they have sky-high room costs. They have focused on the high-end business and personal traveler by providing equally high-end service, accommodations, and cuisine. Their company culture matches the dedication to differentiated service.

Though the Ritz-Carlton has won the Malcolm Baldrige National Quality Award twice - and no other hotel company has won it even once - it's not so much the winning but the tight processes inherent in getting to the award that are important.

The company is dedicated to leadership, quality, staff training, teamwork and cross-functionalism. Rather than offer complex and layered frequency/reward programs, the chain earns customer advocacy by such novel services as "Flight Bites", boxed/bagged breakfasts or lunches available to guests at a low price, and offered as a response to airlines' meal cutbacks.

Another example: while most hotels provide dial-up Internet access, Ritz-Carlton is the first luxury hotel chain to offer high-speed Internet access.

This was first published in May 2002

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