Cornell Study Demonstrates the Value of Hotel Loyalty Programs
"The interesting thing here is that the ADR paid by the loyalty-program guests increased only modestly, and it was the increase in the number of annual room-nights that caused the revenue increase that we noticed," added McCall, who is a professor at Ithaca College and a visiting scholar at the Cornell School of Hotel Administration. "We must acknowledge the hotel groups for sharing the data from tens of thousands of guests. Both of these hotel groups are participating in the Stash Hotel Rewards frequent guest program."
"One purpose of our study is to offer different approaches for hotels that want to measure the effectiveness of their frequent guest programs," said Carroll, who is a senior lecturer at the Cornell School of Hotel Administration. "We know that most hotels offer a loyalty program to match the competition, but a complete analysis of program return on investment may be too involved for some hotels. That's why we are suggesting ways to determine the value of programs with more accessible methods."
In addition to making a paired assessment of incremental revenue lift of members versus non-members, as demonstrated in the report, the authors suggest the following approaches for gauging the value of loyalty programs, ranging from simple to complex: asking consumers about their attitudes toward a program, measuring consumers' attitude change, measuring customer behavior change, and conducting a complete ROI analysis.
About the Center for Hospitality Research
The purpose of the Center for Hospitality Research is to enable and conduct research of significance to the global hospitality and related service industries. CHR also works to improve the connections between academe and industry, continuing the School of Hotel Administration's long-standing tradition of service to the hospitality industry. Founded in 1992, CHR remains the industry's foremost creator and distributor of timely research, all of which is posted at no charge for all to use. In addition to its industry advisory board, CHR convenes several industry roundtables each year for the purpose of identifying new issues affecting the hospitality industry.
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