Two-thirds (66 percent) of millennial high-frequency travelers rate “unique rewards” as an important factor when choosing a hotel loyalty program, compared with just 43 percent of their older counterparts, according to a new Deloitte study, Winning the Race for Guest Loyalty.
“Our study indicates that customers will wait and see which program will provide them with the greatest rewards before they start to behave loyally, but they will not wait for too long,” said Guy Langford, vice chairman, Deloitte LLP and U.S. Travel, Hospitality and Leisure practice leader. “The race is on for brands to provide swift gratification, particularly for the savvy millennial travelers, who are quick to share their positive experiences or broadcast their discontent over their social networks, and who are acutely aware of the rewards that come to loyal customers. As such, the brand that locks in the customer’s loyalty first and wins that race — is the brand that wins that customer, and potentially their loyalty, for life.”
Three-quarters (75 percent) of millennial respondents also indicate they would remain loyal to a hotel brand even if they lost all their points and status, compared with two-thirds (66 percent) among other travelers.
Additionally, the types of program benefits millennial travelers expect are no longer solely points-focused.,Overall, 68 percent of frequent travelers indicate that they consider themselves loyal to the program where they have accumulated the most points. However, millennials highly value “soft” benefits such as VIP treatments and exclusive experiences more than other groups. Two-thirds (66 percent) of millennials indicate that unique experiences matter, compared with half (50 percent) of frequent travelers in other age groups.
The study also revealed that the average millennial traveler checks 10 online sources before making a travel purchase, and trusts advice from strangers online more than their own friends and family. Roughly one-quarter (24 percent) of millennials check social media or customer review sites before booking a hotel, whereas only 16 percent check with family.
The ‘tipping point’ and the power of true loyalty
The study showed that mere enrollment in a loyalty program does not alone lead to active loyalty. Seven in 10 (69 percent) of frequent travelers belong to more than one hotel loyalty program, and the average traveler is enrolled in nearly three (2.6) loyalty programs. As such, finding a traveler’s “tipping point” that converts episodic guests into dedicated loyalists — can transform the hotel loyalty program from a cost center to a revenue engine.
The study revealed that once customers establish allegiance to one brand loyalty program, they will go out of their way to patronize that brand, and millennials are most likely to do so. Millennials indicate they would pay $41 more per night and travel up to 15 minutes out of their way to stay with their preferred brand, compared with business travelers in other age groups, who are willing to pay an extra $29. This behavior spills into leisure travel, where millennial travelers would pay up to $35 more per night to stay with their chosen brand, compared with $20 among non-millennials.
Turning casual visitors into active loyalists may be easier said than done, as travelers expect services traditionally considered perks to now be a standard part of the hotel experience. For example, the study revealed that for frequent traveling millennials, free Wi-Fi ranked with cleanliness and comfort as a top three hotel attribute — not a perk, but as an expected basic.
“Ultimately, there is a distinction between a customer who has enrolled in a loyalty program and a customer who makes regular, truly loyal use of the brand because of it,” continued Langford. “In the mind of the traveler, particularly millennials, only one brand truly wins their long-term loyalty. To journey past a customer’s tipping point and turn them into loyal and enthusiastic brand devotees, companies must understand how travelers view and use rewards, and use that knowledge to craft a program that goes beyond the ordinary and the expected. The prize will be dedicated relationships that enhance long-term revenue.”
For additional information or to download a copy of the study, please visit: http://www.deloitte.com/us/thl/hotelloyalty2014.
About the Survey
The survey was commissioned by Deloitte and conducted online by an independent research organization over an eight-week period in early 2014. The survey polled 3,001 high-frequency U.S. travelers, defined as individuals who spent more than 25 nights in a hotel in 12 months prior to taking the survey.