Elite Loyalty Programs: How do they rank with hotel guests?

With the woes of air travel and higher room rates, the value of hotel loyalty programs seems to be the only good news for frequent travelers these days. Unlike airline frequent-flier programs, which have been cutting rewards, hotel loyalty programs are actually adding perks and in many cases offering them just for signing up.

Many hotel loyalty programs reward the long-term benefits of membership. The extras -- which range from points for free stays and airlines tickets, to room upgrades and free coffee -- get sweeter as you move up to the elite tiers of a membership program by staying more nights. Due to their increasing popularity, we decided to take a closer look at hotel elite programs and ask members of these top tier programs to evaluate their experience.

Obviously guest satisfaction with elite membership is linked to the benefits delivered by the programs. But other elements, such as program image and execution, can also impact overall satisfaction with these premium programs.

To compare these programs we evaluated “Program Effectiveness”. This critical measure identifies the amount of influence a loyalty program exerts in hotel selection (“How important was this loyalty program in your decision to stay at "hotel name?”). Based on this measure, here is a look at how selected brands stack up:

Harrah’s Total Rewards was the clear winner for program effectiveness. Through Harrah’s Total Rewards program, customers earn credits each time they visit and play. Accumulated credits are traded for rewards, cash, coupons or complimentary services, and tallied to determine customer loyalty levels of gold, platinum or diamond. Associated services and privileges become increasingly valuable with each new level.

According to Gary Loveman, Harrah’s President and CEO, “Total Rewards is much more than a loyalty program. It is a key element of one of the most advanced customer relationship management systems found in any industry today.” Using information gathered mostly from card use, Harrah’s data warehouse and analytic tools allow them to offer customers individually tailored incentives to visit and play at different properties. Most loyalty programs simply use historical data, which shows how often customers visit and how much they spent. Harrah’s program goes further by identifying an accurate estimate of each customer’s potential value. Based on this potential value, casinos distribute generous benefits which help move their guests up the loyalty ladder.

We also compared elite members to non-elite members and to non-members. The results clearly demonstrated that elite guests are different and important to hotels. Guests with elite status are, on average, older, male business travelers with higher incomes. This privileged group of guests is more satisfied, reports fewer problems and is more likely to recommend the hotel brand to others. But perhaps most important is these guests perceive a higher value for their experience and would be willing to pay significantly more (17%) before switching hotels.

Jonathan Barsky is a principle with Market Metrix LLC (MarketMetrix.com), a firm that provides multi-channel survey, analysis and service improvement tools and benchmarking data for the hospitality industry. For more information, call (800) 239-7515 .