Millennials: The Death of Hotel Loyalty Programs?

by Francesca Pinder,

30 November 2020

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Hotel Loyalty Programs

They say that stats never lie, but some tell more truth than others. And in the case of hotel loyalty programmes and the Millennial generation, their candour is particularly brutal.

Millennials are telling us, loud and clear, that the current hotel loyalty programmes are not up to standard. Surveys published in 2018 found that just 30% of Millennials are satisfied with the programmes they are offered, compared to 56% of baby-boomers. In fact, 57% report that they have let their hotel loyalty points disappear, significantly more than any other age group.

These figures will provide a major cause for concern for hotel chains. Millennials travel more than any previous age group in history. With boomers telling us they are reticent about venturing abroad in the wake of Covid, the value of this demographic will only increase.

But to secure their loyalty, hotel chains face a rather inconvenient truth. Millennials aren’t particularly loyal towards, well, anything. They change jobs more frequently than their predecessors, they’re less interested in getting married, and they’re happy to ditch brands that don’t align with their own values.

This outlook has led many Millennials to already turn their backs on megabrands like McDonald’s and Coca-Cola, and they seem equally suspicious of major hotel chains, too. At least, that much may be inferred from their well-publicised love of hostels and Airbnb, and their fondness for cheap hotel chains (according to research carried out in the UK, the most popular hotel brand for British Millennials is the belt-and-braces Premier Inn).

Positive side

It’s easy for hotel leaders to dismiss this as starry-eyed romanticism (or self-obsessed narcissism, for those who are really cynical). But that would be a major mistake, not to mention a wasted opportunity. For all the suggestions that hotel loyalty programmes are a dying breed, there is plenty of evidence that Millennials can be more loyal to hotels than their predecessors, provided their needs are met. Research from Deloitte has shown that once a Millennial business traveller establishes allegiance to a loyalty scheme, he or she will spend up to $41 extra per night to use that particular brand.

So while Millennials may be harder to please than predecessors, the value of their loyalty is possibly even greater. Rather than scoffing at the high-minded fussiness of this emerging generation, hotel chains should view it as a challenge to raise their own game.

Going above and beyond

To win the loyalty of Millennials, hotels must understand what this demographic needs. Millennials have told us that they need cleanliness, comfort and excellent Wi-Fi in their hotels; that’s not a request, it’s a demand. What’s more, they are “all-in” travellers who look for unique experiences in all aspects of their trips, including the hotels they stay in.

At the same time, hotel chains must ensure that their loyalty programmes offer something beyond generic discounts and upgrades. A 2018 survey of 1,000 U.S. consumers from research firm Colloquy found that Millennials are drawn to loyalty programmes because of the members-only benefits they offer. In fact, 40% of Millennials, 7% more than the general population, said they joined a reward programme primarily to acquire members-only sales, products and services.

The proliferation of digital solutions gives hotels the ideal portal to provide this kind of value-add — and deliver the sort of connectedness that also features among the Millennial’s demands. Using apps and social media channels, they can provide flash offers to their members in response to breaking trends and news events, and even provide individual benefits tailored to the user’s preferences.

Above and beyond

But to really win the hearts and minds of the Millennial generation, hotel chains must go further than mere incentives. They must think about their fundamental brand image, and what their company represents. Simply offering decent accommodation at a reasonable rate is no longer enough: brands need to tap into the Millennial’s sense of mission and meaning.

As the British polling company YouGov put it in an article in 2019, “[Millennials] look for more than just quality when buying or investing, they constantly look for brands that have a purpose that resonates with them. Being ethical consumers, they don’t believe in putting a price on value-rich products that offer sustainability.”

The article focused primarily on environmental issues, and the need for brands to lead the way on green issues. But hotel chains must consider a range of other issues. Millennials are hugely committed to diversity, to racial equality and on the improvement of society as a whole. Above all, they feel that companies should matter, striving to make a difference in everything it does.

Some hotel chains are making great strides here. Chains like Marriott, Radisson and Wyndham have consistently topped lists of the world’s most environmentally friendly companies. But now other companies must follow suit. Ethical policies are no longer an option for the hotel industry; if they want to secure the loyalty of Millennials, they must match the principles this group demonstrates.

The rewards will be manifold, and not just in additional spending. Millennials are avid ambassadors for the brands they love; their endorsement will provide the perfect marketing for the hotels that can win their loyalty. And their own commitment will be unwavering.

As Deloitte’s researchers put it, “put a bad taste in a Millennial’s mouth, and you’ve likely lost that customer for good. Convince a Millennial you really care, and you may have a customer for life.”

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