Doomed: Is There Any Hope For Hotel Chains?
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Doomed: Is There Any Hope For Hotel Chains?
Home 5 Blogs 5 Doomed: Is There Any Hope For Hotel Chains?

Would you like to learn golf from a hall of famer? How about baking some French macarons at Le Cordon Bleu in Paris?

Hotel chains, worried about competition from Airbnb, are rolling out these and other special experiences for their best rewards customers.

Marriott’s master class program currently offers a chance to skipper an America’s Cup yacht in San Diego, and past offerings have included a clinic with an NBA star and golf lessons with a hall of famer. Other experiences include a behind-the-scenes art tour of the U.S. Capitol. Customers bid points for the privilege of participating in these elite, one-of-a-kind experiences.

It’s all part of the company’s plan to deepen its relationship with loyal customers. Studies show that Airbnb’s market share is growing, especially among travelers aged 40 and under. And the big hotel chains are worried. Competitor Hyatt is offering a special Tokyo excursion to its World of Hyatt members, and Hilton offers guests at some of its Waldorf Astoria properties an opportunity to test drive a Lamborghini.

Loyalty Points Don’t Lead to True Loyalty

I think it would be a great adventure to skipper a yacht. If I had a lot of Marriott points sitting around, I’d jump at the chance. But will I stay at Marriott every time I travel so I can save up enough points to bid on this package? I really don’t think so. If I did go on this excursion, would it make me loyal to Marriott in the future? Again, the answer is no.

This is nothing personal against Marriott. I’ve stayed in their hotels many times and I like them just fine. But true loyalty can’t be bought with rewards perks. You’ve got to consistently provide an experience that makes customers want to be loyal to your brand.

In taking the rewards experience approach, hotels are making a perfectly rational assumption. If you let your repeat customers use their rewards points for elite experiences, they’ll be motivated to stay at your hotel so they can earn more points and get more experiences.

The problem is, customers are not rational!

This is explained by the theories of behavioral economics, which I explore in depth in the book I wrote with Professor Ryan Hamilton, The Irrational Customer. To give you an analogy, think of retirement savings. The rational assumption is that people will be motivated to put money aside for retirement, so they can live comfortably in their older years. But in fact, people are terrible at saving money. They know they should be saving, yet they consistently place a higher value on immediate needs and wants, like a nice dinner out or a new TV.

Irrational Customers Will Choose Accommodations for Emotional Reasons

Behavioral economics tells us that these hotel rewards are likely to play out the same way. If you have a lot of points already, you’ll take advantage of them. If you travel for business, you might try to stay at one hotel chain consistently. It’s all the same to you and you might as well get some rewards points out of it. But for most people, the choice of accommodations will involve a complex combination of emotional, rational and subconscious factors.

Furthermore, there are plenty of emotional reasons you might choose Airbnb instead of a high-end hotel chain. You might want something charming and ‘authentic’, or you might prefer a quiet neighborhood to a downtown location. You might like to cook some of your own meals instead of going out three times a day, or you might want an entire house to yourself because you are traveling with your kids. All of these are potential reasons to go with Airbnb instead.

Hotel loyalty is a more complex subject than you might imagine. If hotels truly want to stem the tide of people flocking to Airbnb, they need to look beyond loyalty programs and address the subconscious and emotional reasons people are choosing Airbnb instead. When they can improve their experience in those areas, they’ll truly find loyal customers.

What about you? Why would (or wouldn’t) you stay at a high-end hotel chain? Does a better rewards program help? Share your thoughts in the comments section below.

To learn how to create wonderful memories and truly understand how your Customers make decisions register for our on demand Secrets of Customer Decision Making training. Purchase here for $50 using promocode DECISION.

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Colin Shaw is the founder and CEO of Beyond Philosophy, one of the world’s leading Customer experience consultancy & training organizations. Colin is an international author of six bestselling books and an engaging keynote speaker.

Follow Colin Shaw on Twitter @ColinShaw_CX