Are We in 1983 or 2023? Guests are Asking for an Upgrade to Their Points Programs

In a world with Siri and ChatGPT, why is the lodging industry still delivering loyalty points like it’s 1983?

It’s official, this year we wish a Happy 40th Anniversary to points-based loyalty programs! That’s right, they were first rolled out by Marriott in 1983, which I know doesn’t seem like that long ago for many of us, but alas these programs are officially “over the hill”. So why haven’t they changed much since then?

Sure, these programs are rebranded and given a nice makeover every once in a while, but at the end of the day, the core model remains the same: accrue points over a long period of time. And in the end, most consumers are frustratingly stuck between their current loyalty tier and a much more desirable top-tier status.

If we think about all the things that have changed between 1983 and 2023 (the internet, a few economic recessions, that whole global pandemic thing…), there might be no shift more significant in the past few years than Artificial Intelligence. Its impact is felt across multiple industries and is now in the hands of nearly every individual consumer in the form of Siri, Alexa, and most recently, ChatGPT.

Note: Even parts of this article are written by AI (we’ll let you guess which parts).

So, why is AI winning the game with consumers? Two big reasons - instant gratification & personalization. Which also happen to be two factors particularly key in successful hotel loyalty programs. Do you see where I’m going with this?

Accumulating points is the antithesis of instant gratification

A recent study found that 78% of customers prefer immediate gratification over accumulating points for future rewards. This makes perfect sense in a world where we can have just about anything we want at the click of a button. We now have smart home devices like Alexa that can tell you what your kids want for their upcoming birthday, and forget typing something into Google when you can just ask Siri how long to cook chicken in the air fryer. Why wait months or even years to accumulate enough points for a reward when we can have what we want right now?

Several other high-growth industries see incredible results when they implement instant gratification into their business. For example, the rise of on-demand food delivery services like Uber Eats and DoorDash shows that people are willing to pay a premium for convenience. Do you think these services could achieve such high adoption rates just by offering points for ordering through their app? Rather it’s the convenience factor of having food delivered to their door in minutes, without having to leave their home, that keeps users buying more.

Or look at lead companies in the gaming industry, who offer microtransactions that allow players to purchase in-game items or upgrades immediately, rather than having to earn them through gameplay.

What’s also changed since the introduction of points-based loyalty programs is the way people travel. With the rise in remote-work and the decreased reliance on in-person meetings, corporate “road warriors” are fewer and far between. And without constant work-paid travel, who else is accumulating enough points with their leisure adventures alone? Today’s hoteliers need to entice the majority of casual travelers to book and interact with their brand through instant gratification.

The good news for hotels looking to benefit from loyalty-based programs is that hotel tech is keeping up with these trends. At Laasie.ai, we created a way to help hotels incentivize customers to convert with instant rewards. Hotels can choose from a network of 1,000+ instant gratification partners to showcase relevant rewards to travelers at the time of booking.

The result? A 40% increase in direct bookings and as high as 82% adoption.

Rewards are best served personalized

While the importance of converting direct bookings is high on any hotelier’s wish list, the reality is that hotels need to play the OTA’s game to achieve success. Due to the variety of booking channels at a traveler’s disposal, and the increasing expense of customer acquisition, it's crucial for hotels to not just get the booking stage right, but also create a retention strategy that works for today's traveler.

To solve for this, all we need to do is look at how some of the most successful companies have managed to make their brands “sticky” through personalization. Amazon is a PRIME example, as well all know they keep us “adding to cart” over and over again. While the overnight delivery is a nice perk, the real secret to their success is machine learning, which provides recommendations based on previous shopping history. Streaming services like Netflix, who once found success by offering instant access to thousands of movies and TV shows, had to rethink their strategy when the new varieties of streaming services were introduced. Now, the company relies on personalized viewing suggestions based on watch history to keep users logged in and pressing play.

Offering generic gifts or commodities in a loyalty program simply won't cut it in 2023. Customers are looking for personalized experiences, rewards, and a sense of connection with the brands they do business with.

Therefore, when hotels consider their rewards-based loyalty programs, the commodities are not a good place to start. For example, while cashback may seem like an easy way to provide travel rewards, it’s anything but personal. While this idea, which began from the credit card industries, might be perfect for them, today’s savvy consumer may not find it enticing enough when they have several other booking options at their disposal.

Using advanced technologies like AI, hotels can mimic the Amazon shopping experience and provide highly-personalized and customizable rewards options to entice repeat customers. Lassie’s personalization engine will match your traveler to rewards that make most sense for them - such as a Broadway show experience for the traveler who lives and soaks up experiences in NYC.

Go All-In with AI

It's time for travel companies to embrace new loyalty strategies that better reflect the needs and wants of today's customers. Whether that means offering personalized rewards based on individual preferences, or using advanced technologies like AI and machine learning to deliver instant gratification, the time for change is now.

If you’re currently running an outdated loyalty program, and wondering why you aren’t achieving success, say “Bonvoy-age” to those old ways and enter the world of AI technology in 2023. By doing so, you can stay ahead of the curve and provide the best possible experience for your customers.

We’re in 2023 after all, not 1983. 

Jen Wong
Founder and CEO, Laasie