As the second quarter of 2024 winds down, it is a good time to assess the trends impacting hotel loyalty programs. Both macroeconomic and travel industry-specific variables can affect hotel loyalty program performance, as can the composition and evolution of the programs themselves. Midway through 2024, we may see both at play: a resilient global economy shifting travel demand from leisure to business (though leisure demand remains quite normal) and hotels expanding the earning and redemption opportunities available to members through their loyalty programs.
What do these trends signal for the rest of the year? More than anything, we predict only subtle modifications in hotels’ approaches to loyalty, most of which can be optimally implemented by utilizing a flexible, agile loyalty technology platform.
Leisure Demand “Normalizing,” Business Demand Resurgent
The post-pandemic surge in leisure travel demand – the “revenge travel” phenomenon – may finally be exhausting itself, according to many indicators. Leisure travel volume is far from declining, but demand is “normalizing,” per the US Travel Association (“Domestic leisure travel is normalizing”), Marriott International (“We’re seeing a little more normalization in the U.S. and Canada, specifically on leisure”), and analyst group Morningstar (“Travel demand has normalized not weakened”).
Meanwhile, business travel is spiking (finally!). The number of domestic trips taken by business travelers is expected to increase 7% this year, compared to a 1.9% increase for leisure travelers. Some individual hotel brands are seeing a significant performance boost from this volume increase; Hyatt saw 6% growth in global revenue from the business travel segment in the first quarter of 2024, driven by a 15% increase at its business transient properties and 2% growth in both average daily rate (ADR) and occupancy system-wide.
What does this mean for hotel loyalty programs? First, they should anticipate a shift in earning activity to the business segment, which could suggest a greater emphasis on status and perks than the discounts and rewards leisure travelers prefer. Second, they should prepare for increased competition for leisure traveler loyalty and their travel dollars. This could mean expanding both on- and off-property redemption options to generate incremental spending and keep travelers engaged with the hotel brand.
Increasing Earn and Burn Opportunities
Fortunately, many hospitality brands are already expanding their rewards portfolios and making it easier for loyalty members to earn points. Our most recent annual analysis of hotel and hospitality loyalty program offerings found that the total number of earn and burn options across all hotel brands in our study increased by 19 over 2023, led by the dining and wellness categories. This contrasted with a multiyear trend of slow-growing or plateaued volumes of points-integrated reward options from 2022 to 2023.
Hotels and hospitality brands are showing a willingness to invest in their rewards portfolios and enhance the member experience through expansion. To do so more effectively, they also need to invest in loyalty platform technology that can provide the array of options travelers expect and deliver them with an optimized user experience that maximizes the potential for redemption and increased spending.
Hotel Loyalty Members Hungry for Dining Options
Among the expanded earning and redemption options hotel loyalty programs offer is a broader array of dining options. This generally aligns with consumer demand for these choices, which we explored in this article last year. Many hotels are making it easier for guests to access third-party food delivery during their stay, but only one hotel brand in our analysis allows loyalty members to earn points for this service (Marriott Bonvoy, through their partnership with Uber Eats).
We expect hotels to continue the overall trend toward offering more food and dining options within their loyalty frameworks to better engage with (and compete for) leisure travelers and enhance the overall value perception of their programs. As travelers continue to show strong demand for these options, we anticipate that hotels that pursue this trend aggressively will be rewarded financially.
As hotels react to a shifting demand profile and make efforts to expand their rewards portfolio, they would do well to consider a loyalty technology platform that can pivot easily to accommodate these developments. A flexible platform that allows hotels to highlight specified reward options or perks can help hotels better target business or leisure travelers, depending on their strategy. And a platform with a robust array of lifestyle and travel options can also help hotels deliver the options and value their guests desire more.
The iSeatz platform may be the ideal solution for your hotel. Contact us here to learn more from one of our experts.
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