Using the Internet of Things to Drive Hotel Loyalty

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By Michael McCartan, Duetto Research

The Internet of Things (IoT) is not a new concept to hotels. It has been saving properties money for years. Motion and heat sensors can detect when a room is occupied or not and then adjust lighting or the temperature control.

Similarly, housekeeping will know if a room is occupied before they go up to clean it — there’s no need to make wasted trips anymore.

But as our lives become more connected, could IoT also be used to drive guest loyalty and revenue, as well as save money?

IoT connects people via smart devices and then goes on to connect those smart devices via systems and processes. At the crux of this data exchange is a lot of valuable information about how, when and why the guest likes to travel.

A new eMarketer report entitled “The Internet of Things: What Travel and Hospitality Marketers Need to Know Now” explores this relationship and how the data from these connections can be used to drive more personalised campaigns and enhance traveller experiences. The opportunity is there for hotels to use this data to connect with customers on a one-to-one basis to provide unique prices and promotions.

eMarketer is not the first to join the dots between IoT and Revenue Strategy. Tata Consultancy Services (TCS) conducted an industry-wide survey on IoT and the travel and hospitality sector in late 2015. TCS found that the travel, transportation and hospitality industry spent approximately $128.9 million on IoT in 2015. The guest was at the centre of this with 30% of IoT spend going toward customer monitoring.

The aim of this IoT spend, TCS found, was to push tailored marketing, followed by the development of more customised products and services. Using integrated technology, hotels could also offer personalized pricing based on a customer’s loyalty or value.

THE CHANGING FACE OF LOYALTY

Hotels were quick off the mark with the loyalty programme back in the early 1980s. Following the trail of airlines such as American Airlines, hotels started to reward their most loyal guests with points that built up to free stays or added extras.

Today, travellers are less concerned with points and being a Bronze, Silver, Gold or Platinum guest. The personalisation has gone out of the hotel loyalty programme.

Now, there’s a new form of loyalty, and it comes through a smart device. OTAs have been quick to embrace the digital revolution. Now, hotels need to get on board. According to the TCS data, 72% of travel and hospitality companies now use mobile apps to track customer data. The app is the new Platinum Card.

Some hotel companies have already developed their own apps and are using them to great effect. People want information at the touch of their thumb, and in exchange they are willing to part with their own personal information.

Whether it is through traditional loyalty programs with physical cards or through mobile apps, hotels must adapt their loyalty marketing to better meet consumer expectations.

USING IOT TO DRIVE REVENUE

So how does this new wealth of information and connectivity really help hoteliers improve their Revenue Strategy both in terms of room revenue and total property spend?

Hotels need to move away from a pricing strategy centered around one Best Available Rate and think about developing personalized rates and offers. Imagine your guest is a keen runner. You know this because she always uses the gym when she stays with you. Via social media she has shared the fact that she is running the London Marathon this year.

How would she react if she logs in to her hotel app or Facebook feed and sees a remarketing ad asking, “Have you booked your marathon stay yet?” The ad details a special offer just for her: two nights in a London hotel for marathon weekend, with a special runner’s breakfast and post-race massage. The special rate is timely and relevant, and it is personal.

The aim is to use data and insights to take smarter, more personalised actions that improve the guest experience.

A recent Skift report on The Future of Hotel Loyalty 2016 showed that 51% of people don’t mind when hotels use their personal information to offer them relevant deals or discounts.

Instead of flash sales, IoT enables you to get very targeted. You can incentivise the people that already have an interest and deliver a specific offer for them.

The aim is to drive your most profitable guests to book direct. Using IoT they can get instant gratification and take advantage of this special rate.

1:1 PRICING: THE FUTURE IS NOW

IoT can help hotels take that next step to true loyalty pricing — whether it be with mobile devices or customers visiting a hotel’s own website. Improved integrations between customer relationship, revenue, property and central reservation management systems can enable innovative hotels to price rooms based on a guest’s value or worth to them.

Hotels can determine how they want to value their guests, based on frequency of stay, total spend on property or booking patterns. This information can then be used to match personalised prices to customers based on how a hotel values them.

Here’s an example: Your BAR on your website and on OTAs like Expedia or Booking.com is $200. You could offer a new loyalty member a slightly reduced rate of $195 via the website to encourage booking direct. A frequent guest, who has stayed 10 nights in the past year, could be offered a further reduced rate of $185, while another who has stayed 20 nights and spent more on property might warrant a rate of $170 per night. You are rewarding their loyalty, acknowledging their value to your business and encouraging them to keep coming back.

These special rates would be fenced, accessible only via a login on your website or through your app, and would therefore not violate any rate parity agreements. By offering even slight discounts to all members, even those just signing up for the loyalty programme, a hotel could attract the most price-conscious guests who would typically be the ones shopping around and booking through third parties.

IoT can provide hotels with the ability to tap into the psyche of their guests — to truly get to know their wants and desires, and then communicate back to them a personalized price via their preferred media, be it a website, app or traditional loyalty programme. With 1:1 pricing, hotels can attract, nurture and retain their most valuable guests, lowering marketing costs and driving more profitability.

See original article at http://duettoresearch.com/reimagine-hotel-loyalty-internet-things/

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Founded by two travel and technology professionals with years of experience in Asia, Representasia specialises in sales & marketing representation throughout Southeast Asia for travel/hospitality technology providers and travel-related startups, as well as providing marketing consultancy services for hotels and travel businesses in the region.

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