By Justin DeRise The foundation of any hotel sales and revenue strategy lies in its distribution channels. A distribution channel is simply any forum or
Cloud-based, hotel property management systems like StayNTouch help hotels to leverage technology as a means of reducing costs and increasing profit margins.
We begin our inquiry by asking, what is driving customer retention in hotels? Answering this question requires that our readers do away with this quaint notion that all guests are of equal value to their hotel. From a simple profit standpoint, loyal hotel guests are more valuable than guests who visit your property once and never return.
An article in Harvard Business Review summarized research conducted by Frederick Reichheld of Bain & Company. Here was his head-turning conclusion: generating a new customer is anywhere from five to 25 times more expensive than retaining a current customer. Moreover, Reichheld found that increasing customer retention rates by 5 percent increases profits by 25 percent to 95 percent.
One of the clear implications of this research is the importance of customer retention strategies for hotels.
Online travel agencies like Expedia and Priceline are a mixed blessing. While they enable hotels to quickly fill their rooms and reach their occupancy and revenue goals, they also take what many hotels regard as an exorbitant commission. OTAs also intrude into hotels’ relationship with their guests — consumers are as likely to be loyal to an OTA as they are a given hotel brand. This hurts hotels’ ability to develop long-term guest relationships and hurts their retention rates.
To regain ownership of the guest relationship, hotels must be able to entice prospective guests to book directly with the hotel. Hotels can begin by neutralizing OTAs’ competitive advantages by ensuring that their own website or booking engine is fast, easy, and intuitive.
Some hotels offer a discount to guests who book directly, while others offer value-added incentives like late check-out or free breakfast.
For certain customer segments – namely, your millennial and generation Z guests – there may be no better retention strategy than integrating technology at all levels of your hotel. Some hotels already use technology to simplify and streamline the check-in process and to create unique in-room experiences for their guests – for example, drapes that open by themselves and TVs that turn on automatically to a guest’s favorite show.
Hotels that use technology to automate key functions find that it frees staff up to focus on serving guests and building deeper relationships that, over time, increase retention rates and drive their bottom line. Cloud-based, hotel property management systems like StayNTouch help hotels to leverage technology as a means of reducing costs and increasing profit margins.
Investing in room quality is always a wise expenditure of resources. PwC’s 2016 study, “What’s driving customer loyalty for today’s hotel brands?,” concluded that room quality is, in fact, the number-one factor in selecting a hotel for both business and leisure travelers. Enhancing room quality is clearly one of the most important customer retention strategies for hotels of all sizes to undertake.
Ongoing monitoring of the social media universe is critical. It might reveal that your happy guests are spreading positive word of mouth, or you might discover that they are talking behind your back. When you come across a negative review, do not become defensive. Respond to it graciously and most importantly, fast — time is of the essence. If it lingers for too long, serious damage to your brand could undermine your guest retention efforts.
To nurture guest relationships, try to avoid inundating them with sales messages but instead use email as an opportunity to build a genuine relationship. Let the guest who mentioned she loves art know about the art festival that is coming in June. As the relationships deepen and trust is established, invite your guests back with a special offer. Let them know you’re thinking about them on their birthday or anniversary, and help celebrate it by offering a special promotion.
Customer retention in hotels is not new by any means. It’s been around as long as hotels have existed. The only difference is that, back in the day, a good deal on a room or a nice location was all it took for hotels to earn loyal guests. Although retention now takes a lot more work and clever investments in technology, hotels that focus their resources on keeping their best, most loyal guests happy, end up receiving a big return on the investment in the form of lower costs and higher profit margins.
That said, no company can afford to ignore new customer acquisition, and that includes hotels and resorts. Something to consider is that customer acquisition strategies and customer retention strategies for hotels are not mutually exclusive; retention strategies such as rewards or a great customer review can also be effective in attracting first-time guests to your hotel. In fact, all new guests present the opportunity for your hotel to convert them into loyal, long-term, and high-value guests.
See how StayNtouch’s Cloud PMS, Guest Mobility, and Guest Kiosk solutions deliver better results for hotels through better front & back of house communication, increased mobile touch-points, more revenue and operational efficiency, and unlimited interfaces.
Your demo will include how to:
Manage and Set Tasks Across Your Departments
Ensure Guest Satisfaction & Safety With Contactless Check-in Options
Automate Easy Upsells & Monetized Early/Late Checkouts
Set & Manage Rates/Availability
Integrate With Tools and Platforms Essential
to Your Hotel