Loyalty As a Value Multiplier in Hospitality

In the hospitality industry, loyalty is essential for guest retention, profitability, asset valuation, and sustainable growth. Loyalty programs of major hotel chains had gained over 500 million members by the end of 2024, marking a 69% increase since 2018. (Source: Financial filings, Skift reporting)

Currently, over half of hotel stays result from loyal customers, contributing significantly to occupancy, profitability, and income stability (Source: Marriott, Hilton, Hyatt, Wyndham and Choice public filing). Strengthening loyalty programs is a strategic priority in Europe; in Spain, some chains boast over 15 million registered users, generating more than 50% of direct channel sales. (Source: Hosteltur)

Loyalty = Long-Term Value

Loyalty extends beyond emotional attachment, functioning as a revenue strategy that converts occasional guests into brand ambassadors, reduces third-party dependencies, and boosts profitability. Retaining customers is significantly more cost-effective than acquiring new ones. Well-structured loyalty programs consistently support stronger revenue performance by boosting direct bookings and encouraging repeat visitation. Loyal members now represent more than half of hotel occupancy and continue to grow, staying longer, spending more on additional services, and showing less price sensitivity. (Source: Marriott, Hilton, Hyatt, Wyndham and Choice public filing). Strategic data management linked to these guests enables deeper personalization, enhancing emotional connections, income stability, margins, and operational resilience.

The Role of Brands

Brands serve as emotional and functional guest connectors by shaping promises, experiences, and affinity through loyalty programs. Major hotel brands increasingly rely on their own digital platforms to drive bookings, with loyalty programs playing a key role in shifting demand away from third-party channels. Extending loyalty benefits beyond stays through strategic partnerships with mobility, entertainment, and payment sectors is critical to expanding guest engagement. Tiered reward structures reinforce traveller preferences, foster competitor lock-in, and build engaged user communities. Loyal guests travel more frequently, prefer chain hotels, and respond positively to targeted promotions. Hotel loyalty programs blend technology, tangible benefits, and customer recognition to enhance perceived value.

The Role of Operators

Operators execute the loyalty promise by maintaining and enhancing guest experiences through service quality, consistent benefits delivery, and personalized interactions. They actively enrol new loyalty members and engage existing ones through technology-driven solutions such as digital check-in and contactless services, elevating guest experiences and satisfaction. High operational standards correlate directly with increased loyalty rates, superior average rates, and stable revenue streams, transforming operations from purely executional roles into strategic growth levers. Successful operators effectively become brand ambassadors.

The Role of Owners

For hotel owners, loyalty drives asset value by ensuring predictable occupancy rates from repeat guests, enhancing profitability, and increasing asset valuations. Loyalty program costs remain below traditional distribution channels, providing substantial returns through direct revenue and operational stability. Affiliations with established brands, supported by loyalty-driven performance, can constitute 20–25% of a hotel asset’s total value. (Source: The Role of Brand Affiliation in Hotel Market Value John W. O’Neill and Qu Xiao) Additionally, loyalty reduces risk during market downturns, enhancing asset resilience.

Key value levers for owners include:

• Selecting strong brand and operator partners aligned with asset positioning.
• Investing in strategic locations and growth markets.
• Reinvesting through capital expenditures (CapEx) and asset repositioning.
• Optimizing capital structures for strategic exits.

Strong RevPAR, net operating income (NOI), and predictable cash flows enhance market value and attractiveness to buyers.

Alignment = Amplified Value

When brands, operators, and owners align their vision, metrics, and responsibilities around guest loyalty, value creation is amplified. Joint funding of loyalty initiatives shared strategic data usage, and alignment of key performance indicators (KPIs) significantly improve outcomes. Contractual models promoting alignment, such as franchises or owner-operator arrangements, have proven successful, delivering higher margins and profitability. In Europe, these formats balance standardization, control, and adaptability effectively.

Key Actions and KPIs

Brands should:

• Design attractive loyalty programs with engaging points, tiers, and perks.
• Invest in technology and partnerships to attract and retain members.
• Ensure global reach and standardized service quality.
• Analyse data for personalized offers.

Operators should:

• Consistently deliver excellent service aligned with brand promises.
• Train staff in service excellence and loyalty recognition.
• Seamlessly implement loyalty benefits.
• Provide operational insights to improve programs.

Owners should:

• Invest in maintaining and enhancing properties according to brand standards.
• Support brand initiatives that enhance the guest experience.
• Collaborate on pricing strategies focused on long-term loyalty.
• Monitor and maximize loyalty program ROI.

Guest Experience: A Common Goal

The guest experience underpins the loyalty ecosystem, shaped by coordinated efforts among all stakeholders. Every touchpoint, from booking to check-out, determines guests’ perceptions and their likelihood of returning, making collaborative excellence essential for long-term success.

Philip Bacon – Senior Director, Madrid, Spain at Horwath HTL. Connect with Philip on LinkedIn.

This article originally appeared on Horwath HTL.