Have Millennials Killed Hotel Loyalty Programs?

Millennials. Everyone’s going mobile. Raging commitment-phobia. Times, they are a-changing. These are notions that have become common themes in the past few years, but what does that mean for the hotel industry?

Henry Harteveldt, travel industry analyst for Hudson Crossing has released a white paper, “Who’s Sleeping With You? Detailed Look Into the U.S. Online Hotel Guest,” based on data from Adara, which helps hotel brands leverage Big Data to target prospective guests.

He concluded that as the average guest gets younger, the more difficult it is to land a hotel booking.

The study found that 40% of U.S. travelers who book on hotel websites belong to that hotel’s loyalty program at an elite level, but still average 9 searches of other brands. Those who are members of a loyalty program on a basic level are averaging 11 searches. For hotels and their guests, it appears monogamy really is dead; loyalty programs are no longer sacred.

Hoteliers should know that their loyalty members “are also members of their key competitors’ programs,” Harteveldt says. “Even among your elites, they will shop other brands.”

The State of Loyalty Programs

Loyalty programs have more hip and happening competition in online travel agency websites that do not belong to any hotel loyalty program. 92% of people who book through one of these sites do not belong to any loyalty program and nearly half (47%) of people who DO use direct booking are not members of the loyalty program, suggesting that these programs are not making a significant impact on bookings.

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Hotel Guests are Also Skewing Younger

Travelers of Generation Y (ages 24-36) now make the largest group, accounting for 33% of guests. Guests 18-23 make up about 10% of U.S. hotel guests. With the Baby Boomers beginning to bust (they are now 29% of guests), our youth are not inclined to feel loyal to one particular brand for their lodging choices.

What Can Hotels Do to Keep Up with Millennial Guests

This younger demographic often uses mobile devices for research and booking. Hoteliers need to take this into account when considering how to reach out to potential customers, particularly because they are competing against online travel agencies.

If the hotel doesn’t effectively advertise, then the traveler might not consider that hotel’s brand, or may consider another brand first. The key to reaching this demographic is marketing your hotel as an authentic guest experience.

Adara’s data reveals that members of a hotel loyalty program are 2.5 times as likely to “take action” after viewing online ads that are relevant to their travel-related searching and booking patterns, and that adding more customer data points in the messaging leads to better performance of travel ads.

“Understanding the guest on every possible level isn’t a ‘nice to have’ for hotels,” says Layton Han, Adara’s CEO. “It’s a key strategic priority.”

For more, read Harteveldt’s full study here.

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