The Marriott Bonvoy loyalty program has around 200 million members. Their points can be spent in thousands of hotels in almost any city a guest might visit around the world. You have one hotel, if not a couple properties. So why even talk about loyalty programs?
That’s where most independent hotels make the mistake. The aim is not to build a smaller "Bonvoy", but to create an incentive program, tailored to your hotel size and demand. There are different kinds of loyalty programs designed to nurture a positive and lasting guest relationship. In fact, most boutique hotels will have a few guests who regularly come back. Setting up a simple reward system for them is already a great place to start.
This tactical guide gives you a quick test for whether a loyalty programme is worth running in your hotel, the four main to choose from, the associated costs, and how to set one up easily.
Ready to boost your guest relationships with a loyalty program? Book a free demo of Noovy’s hotel management system to see how you can track guests preferences, automate marketing campaigns, and explore the results all from one dashboard.
What Is a Hotel Loyalty Program?
Why Major Chain Loyalty Programs are Different
Should Your Hotel Have a Loyalty Program?
Loyalty Program Costs and Suitability for Independent Hotels
Hotel Loyalty Program Examples For Small Hotels
How to Launch a Loyalty Program
Hotel Loyalty Program: Wrap-Up
A hotel loyalty program is designed to give repeat guests rewards for booking directly and coming back to your hotel. The incentives could be lower rates, points to save up and cash in, a status level with perks, or standalone rewards like complimentary breakfasts.
Most independent hotels already do a version of this in the form of hotel packages, but a program helps make it official. It also gives guests an added incentive to track their rewards by gamifying their loyalty. For example, when guests earn points and save up to a big reward, it fuels the guest experience with an exciting new incentive.
The key concept to remember is that a loyalty program provides rewards in return for loyalty. This is a trade, not a simple thank you. Therefore, it’s important to first decide what the aim of a loyalty program is for your hotel. Is it more direct bookings? Repeat stays? Not all programs are built for the same purpose, and identifying the goal helps refine your strategy.
Typically, there are four main types of loyalty programs for hotels:
In all four cases, a loyalty program in hotels is designed to recognise hotel customer loyalty, not create it. Guests come back to a hotel because they were happy with it. A loyalty program simply makes coming back a bit more appealing, and lets you measure the results.
Knowing who your repeat guests are and staying in touch with them is a separate job entirely, generally managed by a modern guest management system.
Vast hotel chain programmes work on a scale that no independent hotel could replicate, nor should it. To better understand why that is, we can look at the reason why chain programs work. Here are three key reasons which set them apart from independent hotels:
The purpose of a loyalty program in an independent hotel is to incentivise returning guests, not directly earn more money. Think of it as a delayed discount that the guest can cash in when they want. One fair exception, if your independent hotel owns three or four spots in different cities, guests still get a real choice about where to spend their points.
Before initiating a hotel loyalty program, it’s worth asking if it adds value to your hotel operations. There are six key questions that can help determine whether running the wrong program will cost your hotel more than running no program at all:
Whilst most guides tend to only focus on point systems, there are actually four key types of hotel loyalty programs at your disposal. These loyalty programs mainly differ on direct and indirect costs; direct being the value of the perk a guest is receiving, and indirect being the extra labour a loyalty program produces. Let’s take a look:
| Program | How It Works | Costs | Labour | Suitability |
| Points | Guests earn per stay or per euro, then redeem in their own time. | What the hotel owes the guest in unused points. | High. Balance tracking, statements, written rules. | Rarely. Guests usually have nowhere to spend them. |
| Tiers | Benefits improve with each stay. | The cost of the perks given to your guests. | Medium. Tracking qualified members. | With volume. A top tier nobody reaches does nothing. |
| Member Rates | A lower rate for members who book directly. | A set margin on every member booking. | Low. The booking engine handles it. | High. Low cost, low effort, high returns. |
| Coalitions | Join a shared network of hotels. | A network fee, plus agreed discounts. | Low. The network runs it together. | Medium. Can help generate local business. |
For an independent hotel, member rates stand out as the strategy that deserves most attention, because it helps skew the OTA to direct booking balance to the hotels favour. This is because it’s designed to generate more guest loyalty by encouraging direct bookings. In addition, avoiding OTA commissions of up to 30% leaves more revenue with your hotel.
In the European context, coalition programs don’t get enough attention, despite being a great option for independent hotels seeking more local collaboration. Instead of facing the market alone, local restaurants, activity centres, transport services, and sightseeing spots can coordinate with your hotel to create a mutually sustainable hospitality economy.
In fact, some initiatives in the US - such as Stash Rewards - run coalition programs with a collection of unique boutique hotels across the entire country, allowing point earning guests to cash in their rewards across all participating properties.
Hotel loyalty program examples that work best are the ones that are easy to understand. Complicated schemes and stacked tiers require staff to administer and management to track. It’s best to avoid them as a small independent hotel and instead try these:
The reason why these programs work for smaller hotels is because they are not trying to emulate a loyalty program a large corporate chain would use. Effective small schemes should be designed to add benefit to your hotel operations, not strain your staff and budget.
Now that we’ve covered the types of loyalty programs that exist and the costs associated with them, it’s important to put together a solid launch program to avoid unnecessary roadblocks. Here’s our seven steps to make sure your loyalty program is up and running smoothly:
Finally, a modern hotel booking engine designed to welcome guests and entice direct bookings ensures the highest conversion rate. A member rate that is invisible online will not help, as over 80% of travelers seek online hotel booking methods (Hilton, 2024).
The most important takeaway is to remember that major hotel chains should not be copied. Their points systems work because their guests can spend them all over the world. For an independent hotel, a more strategic approach is necessary.
To put it simply, give guests something real and tangible, give it straight away, and give it to guests who book directly and keep coming back. This is a top small hotel management tip that nurtures a guest relationship built on loyalty.
Noovy’s state of the art hotel management system is designed to support independent hotels in their growth; every step of the way. Here’s how:
Noovy is built for independent hotels from the ground up. Designed to work for you, without the need of a dedicated marketing team.
Ready to see how a modern booking engine turns returning guests into direct bookings? Book a free demo with a Noovy expert today!