Never say goodbye

Hotels are wooing a growing band of travel enthusiasts with a range of flexible and lucrative loyalty programmes

There are some who chase the best sunsets, some want the best pools to laze beside, some come looking for adventure and many beat the travel drums because the bug refuses to let go. Whatever the reasons, hotels are doing their best to make sure that one-time guests turn into long-term patrons with lucrative and flexible loyalty programmes.

With room occupancies increasing by 17 per cent over the six years ending 2014-15 and total number of rooms set to swell by 71 per cent by 2020, this is hardly surprising. Hotels want to tie in customers with schemes that fetch free stays, discounts on food and beverages, free room upgrades, subsidised charges on essentials and hefty discounts on additional facilities. There are two reasons for the renewed interest in the guest list: one, the rising number of travelling Indians and two, competition from the large number of global chains have unveiled big plans for the country.

According to Delhi-based consultancy firm HVS India, average occupancy in 2013-14 was 57 per cent. The hospitality sector is among the top 15 |in terms of foreign direct investment (FDI). Between April 2000 and February 2015, nearly $8,000 million worth of FDI has poured into the sector, according to Department of Industrial Policy and Promotion (DIPP). Total supply of branded rooms was 108,000 in 2013-14 and is expected to grow to 184,745 by the turn of the decade. Foreign tourist arrivals in India during January-May 2014 stood at 3.33 million, a growth of 4 per cent compared to 3.21 million for the corresponding period in the previous year and total visitors in 2014 was 7.7 million as compared to 6.96 million in 2013 and 6.57 million in 2012, according to the ministry of tourism.

More and more Indians are travelling and they are also being presented with an array of choices. Marquee brands like Marriott, Hyatt, Intercontinental, Starwood, Accor, are rapidly hoisting their flags in India. Others have plans to move in soon: Thai firm Onyx Hospitality and Kingsbridge India hotel asset management firm have set up a joint venture (JV) to open seven hotels in the country by 2018. ITC is planning to invest about Rs 9,000 crore in the next three to four years to expand its hotel portfolio to 150 hotels. Thus the competition to retain and acquire customers is gathering pace.

According to UK-based Second Opinion Marketing, it is 5-8 times cheaper to have repeat business instead of chasing new ones. Repeat business is particularly welcome in the digital age, as given the ease and frequency with which new places are listed online and the social media chatter that drives people to try them, travellers have become more fickle.

A study by US-based Center for Hospitality Research published in 2014 for a two-year period found out that once a guest signed up to a hotel's loyalty programme the frequency of stays booked by that guest at that hotel chain rose by an average 49 per cent. In the case of corporate engagements, the benefits could be several times more.

No wonder then that most hotel chains have stepped up efforts. Indian Hotels Company (IHCL), which owns the Taj chain of properties has topped up its schemes. Chinmai Sharma, chief revenue officer, IHCL said, "Taj loyalty programme on its own has been working very well. New enrolments have increased by nearly 3-4 times. Redemption rate has increased by 7 times and people are doing this on the fly." He has seen a sharp rise in customer interest after IHCL revamped its loyalty programme. It added a new tier 'Platinum' at the higher end for premium customers where for every Rs 60 spent the guest can earn 1 Point. Whereas for the base level 'Copper' one has to spend Rs 125 to earn 1 Point (see table). It has also partnered with Tata Sons-promoted Vistara for packages of 50 per cent bonus points to guests who use both services. Loyalty points are applicable across Taj properties and can be redeemed in other countries too. About 80 per cent of IHCL's guests are business travellers who accumulate and redeem their points on leisure trips. Taj deposits the points in the guests' account even when the stay is sponsored by the employer.

Many hotel chains are appointing third party contractors to acquire new guests and maintain their travel history. "High spending clients are the cash ringers but they are seldom easy to acquire. Hoteliers want to tie down a guest to its brand for life but that is easier said than done," said a consultant.

Another consultancy, the Delhi-based TLC Consulting, helps with acquisition, engagement and retention of customers and has almost every top hotel chain as a client. Loyalty gets even more premium when we consider the impending increase in average room rates (ARR), which according to HVS, is expected to grow to Rs 9,508 by 2019-20 from Rs 5,687 in 2013-14. The schemes are a drain on resources. But neither the hotels nor the guests are complaining.