Hotels Using Loyalty Programs To Get You To Book Directly

Image courtesy of Neff Conner

If you’ve noticed more solicitations from hotel loyalty programs lately, there’s a good reason for that. Hotels would rather give you free rooms now and then than keep losing the commissions that they pay when you book through aggregators like Expedia or Trivago.

Hotels earn more profit when you book directly on their sites, but enticing customers to do so means being more generous with rewards programs. In an interview with Reuters, one industry expert called this endeavor “costly, but necessary.”

Rate parity is a thing

Why can’t hotels just charge less when customers book on their sites? Signing up with online travel agencies means making rate parity agreements that they’ll charge the same price everywhere. Yep, that includes the hotel’s own site.

Loyalty programs give hotel chains one way to give a discount. Instead of giving a discount for booking on the chain’s site, customers get a discount for being loyalty program members, and it happens that they can only sign in to that program on the site.

Wyndham, the owner of brands like Ramada, Days Inn, and Travelodge, only got 9.6% of its reservations directly on its own site, according to third-party audience data company Hitwise. If that seems tiny, it is: Ramada, for comparison’s sake, got over a quarter of its bookings directly on its site in 2017. However, Wyndham tripled its direct bookings in just a year.

Wyndham’s chief marketing officer told Reuters that changes to its loyalty program were really helpful in convincing more customers to book directly. It also helped that the chain made its brands’ websites more friendly to travelers using mobile devices while they’re, you know, traveling.