Although loyalty programs have become widespread in the hospitality industry, it's still not clear how loyalty programs contribute to increased sales—or whether they work at all. The featured article in the February 2010 issue of the Cornell Hospitality Quarterly (CQ) focuses on how to make the most of a hotel, restaurant, or casino loyalty program. The article, "The Drivers of Loyalty Program Success: An Organizing Framework and Research Agenda," by Michael McCall and Clay Voorhees, will be available as a free download at www.hotelschool.cornell.edu/research by special arrangement with Sage Publishing, which manages the journal.

"Loyalty programs must go beyond simply looking at repeat purchases," said McCall, a professor of marketing at Ithaca College and visiting scholar at the Cornell Center for Hospitality Research. "Programs must be designed to encourage engagement with the brand, including online communities and brand-related events. The program's rewards need to provide high value to the consumer at low cost to the company."

Looking at the structure of frequent-guest programs, McCall and Voorhees note that most are structured in tiers according to customers' purchase frequency. "Businesses need to determine whether it makes sense to separate their customers into platinum guests and losers," suggested Voorhees, an assistant professor at the Eli Broad College of Business at Michigan State University. "You may need to combine tiers, develop a structure that does not involve a hierarchy, or perhaps create a structure based on common interests." Studies have found that top-level tier members are more likely to use the program to acquire luxury items, but in general, loyalty program members prefer direct rewards (that is, rewards specifically tied to the provider and its products).

Above all, say McCall and Voorhees, businesses should avoid focusing their loyalty program on price concessions. This simply converts potentially loyal customers into price-sensitive vagabonds. McCall explains some of the key points of constructing an effective loyalty program in a podcast, found at sagepub.com/.

With the February 2010 issue, CQ is observing its 50th anniversary of publication. In addition to this featured article, the issue looks at the status of brand strategy in the hotel industry, the outcomes of industry merger and acquisition activity, revenue management, and current challenges in employment law. CQ subscriptions and article downloads are available exclusively through Sage Publishing.

About The Center for Hospitality Research
A unit of the Cornell School of Hotel Administration, The Center for Hospitality Research (CHR) sponsors research designed to improve practices in the hospitality industry. Under the lead of the center's 77 corporate affiliates, experienced scholars work closely with business executives to discover new insights into strategic, managerial and operating practices. The center also publishes the award-winning hospitality journal, the Cornell Hospitality Quarterly. To learn more about the center and its projects, visit www.chr.cornell.edu.

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