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Hotel Loyalty Program Membership Surges 14.5% in 2024 – Image Credit Unsplash+
The challenge for hotels lies in transforming ‘retail’ travelers into frequent, high-value guests.
Hotel loyalty programs have grown substantially in their role, from simply retaining frequent travelers to becoming robust tools driving demand. According to 2024 data, membership in these programs surged by 14.5% in 2024, exceeding room growth and increasing members per room by 7.4%. This growth trend indicates the continued cost-efficiency of hotel loyalty programs to boost occupancy.
Despite the increase in members, room nights per member saw a dip. The likely reason is the inflow of credit card members and the dilution of the traditional “road warrior.” This presents an opportunity for hotels to focus on converting these “retail” travelers into repeat customers.
The expansion of loyalty programs and their associated benefits (e.g., free Wi-Fi, early check-in/late check-out, etc.) have increased guest satisfaction scores since 2016. However, it has also resulted in margin headwinds for hotel owners. Therefore, the challenge lies in balancing attracting new members and ensuring profitability.
In 2024, loyalty program revenues and liabilities saw balanced increases of 8.3% and 8.4%, respectively. This balance led to post-pandemic highs of $1.2 billion and $2.4 billion. However, liability per member decreased by 5.3%, suggesting that members are redeeming points as fast as they earn them.
Loyalty members accounted for 52.8% of occupied rooms in 2024, a notable increase from 2023. This was despite a decrease in the average room nights per member, suggesting a rise in the number of dormant members or those participating in multiple programs.
Hotel loyalty program fees increased by 4.4% in 2024, surpassing the revenue growth of 2.7%. While the costs of these programs are rising, they are still considered cost-effective. They act as “occupancy insurance,” ensuring steady room demand even during off-peak seasons.
In conclusion, while loyalty programs have diversified demand sources and provided a buffer against economic cycles, they pose challenges. Brands must work hard to convert infrequent guests into more frequent high-value members. Additionally, owners, asset managers, and developers should benchmark total program ROI against alternative distribution channels to ensure maximum profitability.
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