The global travel industry wasn’t thrown into upheaval by the COVID-19 crisis so much as it came to a dead stop. Economic engines are restarting now, but tentatively. And the months-long disruption will have a far-reaching financial consequence; international tourism will decline by 60-80% on the year, translating to billions and perhaps trillions in lost revenue.

Gen Z represents over $40B in spending power and has an outsized influence on household purchasing decisions. Already a powerful customer segment, they’ll soon be the largest population demographic and have the most disposable income. Clearly, when cultivating customers, travel brands need to ensure that loyalty programs keep pace with Gen Z’s evolving technology demands.

Today’s travelers respond positively to personalized offers; these can forge strong emotional connections as well as memorable travel experiences. And it’s these emotional connections that build a strong foundation of loyalty which directly impacts the bottom line. A recent CapGemini study found that 70% of emotionally-engaged consumers spend up to two times or more on brands they are loyal to, compared to less than half (49%) of consumers with low emotional engagement. For airlines and travel brands, the need to drive direct bookings and grow revenue is constant. Creating emotional connections with travelers is a successful way to achieve both; building brand loyalty that converts.

As we explored in our last blog post, ‘Using Flexible Loyalty Strategies to Reward Your High-Value Hotel Guests,’ travel brands can fuel greater loyalty program engagement by offering personalized and curated rewards offers to high-value guests who travel frequently and have a sizeable travel spend. But hotel brands shouldn’t discount the lower-value tier of hotel guests who might only book once or a few times a year. Your brand can unlock their potential value by keeping these guests loyal and engaged during their stay, even if infrequent. In this second part of our two-part series about successfully engaging guests across different tiers, we examine ways you can leverage customer data to identify what your lower-value guests desire most and how innovative travel ecommerce technology can enable flexible reward redemption.

Getting to Know Who Your Lower-Value Guests Are and Understanding Their Priorities

Your lower-value guests provide your hotel with a critical revenue stream and a way to help keep your rooms full. While they may exert a low social referral influence overall, if your loyalty program can address their needs with specific offers, they can prove to be a powerful revenue and referral source for your brand in future. These redemption offers are major opportunities for your hotel brand to show your guests that they’re both valued and important. That said, it can be a challenge to find the right offers to persuade them to enhance their stay with ancillary purchases and to return as future guests.

Keep in mind that although your lower-value guests often have lower points balances, they still want to burn them. Rewards that offer immediate redemption value (such as a free or discounted meal) are best for this segment. This way, your guests don’t have to wait until they accrue enough points for a larger purchase. Even simple rewards like fresh-baked chocolate chip cookies in the lobby can begin to build loyalty with guests.

Flexible Loyalty Redemption Enables Bigger Buy-In

Once your guests take notice of your personalized offers, they’ll want to start redeeming right away. How can you empower them to become active participants in your program?

No matter what their tier or segment, your guests must have actionable ways to redeem their current loyalty currency. Providing your loyalty program members with the ability to use points-plus-cash to earn and/or redeem offers increases your program’s value. When given access to points-plus-cash redemption, guests have a larger average cart size according to Switchfly data sourced from several leading hotel brand properties.

Customers often view loyalty points as their separate “bank account” and as extra money. This encourages people to spend more overall, because the rewards are being pulled from their different accounts (one in cash, one in loyalty currency). As a result, guests at all tiers have the freedom to “splurge” whenever they want. Our data also shows that offering points-plus-cash allows guests to ‘go big’ and make larger bookings contrasted with those using points only and creates engagement earlier in the rewards relationship. Points-plush-cash functionality thus doubles as a revenue driver and also an effective way to increase loyalty program participation for different guest segments.

Switchfly Platform Enables Personalization and Guest Segmentation

The full realization of points-plus-cash as a loyalty driver requires hotel brands to have a tech platform in place to turn customer data into irresistible offerings.

Switchfly’s feature-rich travel technology gives loyalty program managers an effective way to spotlight customer data and guest preferences, enabling relevant reward offers based on member behavior and segmentation. Our segmentation rules allow brands to customize their price offers for each group of users based on business rules.

By tailoring offers to your newer guests—and giving them the versatility to redeem with points and cash—your hotel brand will allow more loyalty program members to engage. You may soon find that your guests with lower balances are eager to redeem once you’ve given them added purchasing power.

Hotel brands with loyalty programs can benefit most from incentivizing different types of guests using personalized offers including rewards tailored to customer behaviors, a point I reinforced in a recent article in Hospitality Technology Magazine.

Prime among them are your high-value guests who travel frequently and typically spend more than other guests, making them your best customers. However, it can be a challenge to ensure that your brand’s loyalty program is relevant enough to keep them consistently satisfied and engaged. How can you identify the specific offers that speak directly to them? 

In this first part of our series on hotel loyalty strategies, we’ll examine what your high-value guests desire most—and how you can use innovative travel ecommerce and loyalty technology solutions to drive ongoing engagement with your brand and your loyalty program.

Travelers love having choices and will gravitate toward travel brands that give them options. But they’ll be most loyal to the travel brand that consistently presents them with the options that are best for them. Relevant, personalized and curated. According to a recent study by Accenture, 67% of travelers want brands to use their historical travel data to help them make better travel decisions, and 75% are more likely to buy from brands if they are recognized, remembered, and receive relevant recommendations based on their travel purchase history. 

Not Just More Options, But the Right Options

Simply having the widest array of inventory isn’t enough – that’s what Google is for. Travel brands that want to inspire true loyalty will lean into the curation and personalization aspects of the travel offering, providing customers with choices that are tailored to their specific interests and informed by previous interactions with your brand. 

For example, if your hotel brand were to consistently present a guest with an array of inventory curated to her interests, chances are that guest will turn to your brand for more and more of her travel needs. In other words, if you help her find something unique, relevant and “just for her” needs, you’ll earn her respect – and a much bigger share of her travel spend.

Partner with the Right Supplier Network

The first step to curating and personalizing inventory is having access to a selection of high-margin travel products and services that you can package and sell. This, of course, allows you to offer your own core product or service. However, to capture and keep loyal customers you also need to be able to directly sell – at a minimum – flights, hotels, cars, activities, or insurance (ideally at negotiated rates to maintain your profit margin). But trying to partner with hundreds or even dozens of individual suppliers is both inefficient and extremely resource-intensive.  The good news is you can turn to aggregators and tech platforms – like Switchfly’s – that give you immediate access to a vast array of travel inventory at direct rates. The result?  You can offer a much wider selection of relevant options to your customers – and with higher yields as well.

Embrace Data – Especially Loyalty Data

In order to provide curated and personalized offerings, you need insights into your customers’ behaviors and preferences – and that comes from data. Loyalty program data is critical for understanding the customer and driving program strategies; loyalty program members are incentivized to provide personal data to join a program and re-supply their member information during travel booking to earn points or other types of rewards.

But even without any prior booking data or personally identifiable information, as a travel brand you’ll already know plenty about your customers, for example:

Air Canada’s US$450 million acquisition of Canada’s beloved loyalty program, Aeroplan is further proof (as if more was needed) of the critical role loyalty programs play in driving airline and travel revenues. Air Canada’s access to and ownership of data of Aeroplan’s 5 million active members means the carrier can now integrate its CRM and loyalty systems to fuel revenue growth strategies and compete with other large multi-merchant loyalty programs in the market.

Travel brands that take control of the direct channel booking experience have the opportunity to build relationships with their customers, learn about their preferences and behaviors, present them with tailored content designed to maximize conversions, and ultimately generate more revenue.