Hospitality companies have experimented with many new types of loyalty schemes since the pandemic began. In the Americas, subscriptions have become an especially popular option. Subscriptions is a fast-growing segment for hospitality loyalty, with several successful and unsuccessful examples emerging in recent years. This report defines subscription services and identifies best practices for how hospitality companies can incorporate them into a broader loyalty strategy.
This report comes in PPT.
The pandemic had an outsized impact on the hospitality industry. While this disruption created many challenges, it also created an opportunity for companies to re-focus on customer loyalty. Across the hospitality industry, companies are looking for new solutions to prioritise loyalty in their recovery efforts.
Inflation will be one of the most important factors impacting subscriptions and loyalty programmes in 2023. Subscriptions are especially well suited to target customers’ sense of rational loyalty, which prioritises cost savings in loyalty decisions. These cost-saving considerations are especially important in challenging economic environments.
Subscriptions are not a one-size-fits-all loyalty product. Companies that implement subscriptions should consider how they fit into their larger loyalty ecosystem. These companies should especially consider whether their products have the right price point to make for a successful subscription or whether other loyalty solutions may be a better fit.
Unlike other loyalty programmes, subscriptions generate a consistent revenue stream for their operators. This is one of the main features that pushes companies to adopt subscriptions. Companies may also use subscriptions as loss leaders, in order to get customers in the door and purchase higher-priced items.
Subscriptions create more loyal customers than free loyalty programmes. Consumers will be much likelier to stay loyal to a company they pay to subscribe to than one where they have joined a free loyalty programme. Subscriptions’ member base, however, will be smaller than for free loyalty programmes, creating a trade-off for hospitality companies to consider.
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