Using Big Data to Capture an Estimated $20 Billion in Hotel Guest Loyalty (Whitepaper Highlights)

This is an abridged 4-page summary of the full 25-page whitepaper, which can be found in totality at


Why Should I Change My Loyalty Program?


Hotel industry loyalty programs are failing to promote true loyalty.


Airlines and hotel chains – widely regarded as the masters of the loyalty program – are faring no better than the rest of the business world in terms of actual customer loyalty. According to our survey of 4,000 travelers, hotel loyalty program members are not loyal to their preferred brand and loyalty programs drive undesirable brand-switching behavior.” (Deloitte)

Despite the industry-wide investment in rewards programs, the impact on sales numbers has room for improvement. “Travelers spend as much as 50 percent of their spend with non-preferred brands and 65 percent  of high frequency travelers report having stayed with two or more brands in the past six months.” (Deloitte)

Hotel loyalty programs aren’t delivering ideal results. “The best-case scenario is that hotel loyalty programs as they are constituted today have either little or no impact on travelers’ purchase decisions, and, worst case, these programs drive undesirable brand-switching behavior.” (Deloitte)

There is a glut of identical loyalty programs with no meaningful differentiation.


Hotel Loyalty Program Memberships in 2012 reached an approximate total of 223,550,000. (COLLOQUY) Nothing is stopping those customers from subscribing to every hotel loyalty program that appears before them and, indeed, many do. “Our research found that approximately 45 percent of hotel travelers, and 80 percent of high frequency hotel travelers, hold two or more loyalty cards. Of the high frequency travelers, 41.6 percent are members of four or more loyalty programs.” (Deloitte)

In particular, the notion of collecting points towards a reward is no longer unique or especially motivating. “Accumulating reward points towards a free night’s stay was meaningful at one time—before the landscape became saturated with loyalty programs and consumers’ kitchen counters were littered with account numbers and point-summary statements.” (Deloitte)



Customers are expressing a desire for better experiences, not better prices.


In the US hotel industry in just 2013, 6% of hotel customers switched preferred hotels due to an inferior customer experience. (Accenture) That 6% represents billions of dollars of lost revenue.

50% of customers who switched could have been retained just by being made to feel more appreciated. (Accenture) Customers who would forsake a better price for a better experience are not a gentle-hearted minority. 31.7% of mobile savvy customers, many of a generation considered by traditional wisdom to be fickle and price-motivated, surveyed by Aimia fell into the category of “Experience-Seekers”, who “value the best experience, not just the price.” More customers fell into this category than any other category. (Aimia)

This is no small trend – all referenced studies made a positive link between better customer experience and higher brand loyalty. “Past customer experience trumps loyalty programs. High frequency travelers rated past experience as being the most important attribute to their overall hotel experience.” (Deloitte)


Billions of dollars in unclaimed loyalty and wallet share are waiting to be captured.


“Genuine loyalty drives share of wallet, migrates customer behavior, and, ultimately, enhances shareholder value.” (Deloitte) There is undeniable potential for revenue increase for those companies who can secure the loyalty of their competitor’s customers.

24,590,500 hotel loyalty program subscribers are highly likely to switch and do not feel compelled by today’s loyalty program models. The total unaffiliated and at-risk walletshare from hotel loyalty program members without strong attachments to any one brand is approximately $20 billion per year. (See appendix). This means there is $20 billion of annual hotel spend up in the air that has not been “claimed” by loyalty to any one hotel chain.



How Should I Change My Loyalty Program?


Differentiate from your competition by personalizing and customizing interactions.


If a hotel wants their loyalty program to be memorable and unique, this represents an opportunity to get ahead of the competition. “Even in industries such as hotels only 36% of customers acknowledge receiving a tailored experience.” (Accenture)

“To build affinity and loyal customers, hotels should consider reinventing what their customers overwhelmingly consider to be uninspired loyalty programs that lack personal and customized experiences.” (Deloitte)

It is the superior customer experience that will help to secure the loyalty of the younger generation, too. “Empowered by technology and influenced by social media, [members of the new generation of travelers] make informed travel decisions and are likely to give their attention to hotels with personalized, differentiated loyalty programs.” (Deloitte)


Leverage a deep understanding of the customer by adopting a more data-driven approach.


Traditional wisdom or common assumptions about customer segmentation is not effective in understanding the modern customer. “Many businesses fail to utilize valuable consumer data collected at enrollment and point of purchase to differentiate their loyalty programs across customer segments.” (Deloitte)

Organizations are increasingly turning to data mining to drive better business decisions and customer experiences. “More and more companies are seeing the value of offering loyalty programs and – more importantly – the value of tracking, reporting, and drawing actionable insights from customer data.” (COLLOQUY) This data is absolutely essential for providing each customer with the ideal experience at every point of contact with the company.

“Mining [customer] data will likely produce a rich understanding of discrete customer segments with distinct service preferences. These data-driven insights can be used to determine which customers’ brand loyalty is critical to build and maintain.” (Deloitte)

The loyalty program revolution will happen; the early adopters will profit the most.


“We expect the entire loyalty industry to grow, on average, in the years to come. But those companies that study the data […] will be the ones to finish first in terms of growth, and will make the most of the economic comeback.” (COLLOQUY) This next step in loyalty program evolution, says the research, is all but inevitable. Those companies that hesitate and lag behind will likely find themselves losing their “at-risk” loyalty program members to more data-driven programs that deliver a highly customized and ultimately more impressive customer experience.


For the full article, which includes the full appendix, please download the unabridged version of this whitepaper.



Deloitte: A Restoration in Hotel Loyalty: Developing a blueprint for reinventing loyalty programs

Deloitte: Rising above the Clouds: Charting a course for renewed airline consumer loyalty

Bulking Up: The 2013 COLLOQUY Loyalty Census

Accenture 2013 Global Consumer Pulse Survey

Aimia: Showrooming and the Rise of the Mobile-Assisted Shopper

Big Data, Customer ConnectId, Customer Loyalty, hospitality, hotel industry, loyalty, loyalty programs, Retail, social media, whitepaper

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