Loyalty Programs - A thesis on its effectiveness at one hotel.

[markis10]

I stumbled on this today, while its related to Priority Club, it does talk about the value of loyalty programs in general in terms of their aims, so I thought I would post the link in the general discussion area!

http://aut.researchgateway.ac.nz/bi...d=545996751BA5592F378756CC6811F69E?sequence=2

While its a little old now, its a good view of loyalty programs including quotes and references from Radisson etc!

 

[juddles]

markis, I think you have breached an unwritten rule here in internet forums, by expecting others to read more than three paragraphs before they get to express an opinion!

 

[markis10]

Maybe I should have said - Proof that Gold members are more valuable than Platinum! (And it takes only 108 pages to explain why)

 

[albatross710]

Nice find Markis10.

I liked

pp34

Moreover, some industry professionals argue that revenue management often contradicts
the traditional “first come, first serve” business dilemma, as it focuses on turning away
willing customers in favour of saving your products for others who will be willing to pay
more at a later time (Siguaw and Bojanic, 2004).

Platinums getting the lowest room rates (p96) but they spend more on F&B. (p97)

One of the benefits that these elite level guests have at the Auckland property is a
complimentary upgrade to a suite room upon arrival. As a result, for those Platinum
members who stay at the Crowne Plaza Hotel regularly and know about this service offered
to them, it is obvious to conclude that these guests will constantly book standard rooms but
then will end up staying in a suite or a club floor room.

Finally p99

To conclude, this finding shows that the hotel is in a good position to price the rooms more
aggressively, since this type of guest will be more focused on the cost of food and beverage
items rather than the room rate itself.

 

[smeacs]

I have put it on the Ipad to read at some point..

 

[eric2011]

I have put it on the Ipad to read at some point..

You can read it on your next long haul flight and still have some left to read in bed at night

 

[beardoc]

Another interesting data point on p61:

It was quite interesting to notice the relatively high percentage of Platinum members that stay at the Crowne Plaza Auckland Hotel, particularly when considering what is suggested by the literature in terms of the participation of top tier customers in a hotel’s market mix. Abbey (2003) indicates that usually hotels are able to attract only 5% or less of those members who are categorised as elite members.

Are they suggesting that on average, 5% of guests at a hotel are elite tier members?

 

[beardoc]

Well, I've finally read it. It's a long (and for many I could imagine a frustratingly boring read, makes a lot of assumptions and has ridiculously small sample sizes (300 surveyed, only 84 responses), so you have to assume that it is not exactly conclusive.

That said, some of the things that they mentioned:

* The Priority Club program results in increased number of nights booked with the chain.
* Best in terms of total profitablity were top-tier (Platinum) members, but that was mainly because they tended to stay the longest (4 nights per stay). Everyone else was just above or just below 2 nights per stay on average. This meant that in gross terms, Platinum members handed over more money to the hotel. It's not in terms of room rates (Platinum members book cheaper rooms and expect upgrades), but they tend to spend more on in-house services (dining, telephone, etc.), and that they stay more often.
* Gold members are the highest yielding - they spend more on room rates.
* Basic tier PC members actually spend LESS than non-Priority club guests.
* Points are a massive factor affecting people's decisions to stay with a hotel.
* The higher up the tier, the more you feel loyal to the hotel and the more positive you are about them.

The interesting one I saw was:
* Gold and Platinum members are LESS sensitive to price increases - they value the relationship with the hotel/chain rather than price on its own.

 

[TheEmu]

This tells me a couple of things:
1. The scope of topics that supervisors will approve for Masters and PhDs is now obviously so broad as to include almost anything that the university thinks it can get funding for regardless of the potential value of the proposed work;
2. at the same time, the subject matter of the topic can be so narrow and introspective that at some point the researcher will doubtless disappear up their own fundamental orifice;
and 3. some AFFer will post it on this site where it will be duly read, subject to critical analysis, and given a mark out of 10!
Well done all.
Any proposals to establish AFF University?

 

[beardoc]

This tells me a couple of things:
1. The scope of topics that supervisors will approve for Masters and PhDs is now obviously so broad as to include almost anything that the university thinks it can get funding for regardless of the potential value of the proposed work;
2. at the same time, the subject matter of the topic can be so narrow and introspective that at some point the researcher will doubtless disappear up their own fundamental orifice;
and 3. some AFFer will post it on this site where it will be duly read, subject to critical analysis, and given a mark out of 10!
Well done all.
Any proposals to establish AFF University?

To be fair, this is marketing, and marketing is huge - the art of "managing" the consumer is big big business and this has big applications in all sorts of fields. I think it's a valid thesis to write - I just didn't feel it was that rigorous in its methodology.

Another thing it didn't talk about in the paper was the cost of running the program, and of providing the extra services (opportunity costs and real costs) - things like free breakfasts, free drinks, etc.

 

[Mgjdubs]

Speaking of interesting literature, I chanced upon this last month when doing some research for a business concepts essay:

Why Loyalty Programs Alienate Great Customers - Harvard Business Review

I found it to be an interesting read, but of a focus on QF as well.

 

[beardoc]

Speaking of interesting literature, I chanced upon this last month when doing some research for a business concepts essay:

Why Loyalty Programs Alienate Great Customers - Harvard Business Review

I found it to be an interesting read, but of a focus on QF as well.

Fascinating reading.

I can imagine that he's right - he had to call QF in the USA and the QF line would not have recognised his AA EXP status (at least as far as getting him onto the priority line), and he would have had to wait. The other point about servicing of the 2nd tier groups (who spend less per person, but as a group make up the largest revenue group for the hotel/airline) is important - I can imagine this is why QF beefed up the program for SG with the rise of DJ targetting business customers - it's the largest revenue group that QF has to lose.

It also matches with the original article at the hotel in the thesis - 2nd tier being the largest revenue group.

 

[JohnK]

I tried reading it but did not get very far. A little boring and repetitive.

* Points are a massive factor affecting people's decisions to stay with a hotel.

Yes and no.

* The higher up the tier, the more you feel loyal to the hotel and the more positive you are about them.

With a bigger sample size you may find people like me who earn status but do not feel loyal to the hotel or the chain. I am a huge fan of loyalty programs and have accumulated healthy points balances in both Priority Club and Hilton.

What drives me is cost and more importantly value for money.

- I won't spend $200+ on a hotel unless it was an extremely special ocassion.
- If I am forced to spend between $100-$200 then I will see if I can somehow earn points for that stay.
- And obviously I will endeavour to book most of my accommodation for <$100. At that level it is almost impossible to maintain any sort of status in Australia but is possible in the USA.
- And then there are times where I will spend the night at an airport if I feel there is no value what so ever even using points

 

[TheEmu]

To be fair, this is marketing, and marketing is huge - the art of "managing" the consumer is big big business and this has big applications in all sorts of fields. I think it's a valid thesis to write - I just didn't feel it was that rigorous in its methodology.

Another thing it didn't talk about in the paper was the cost of running the program, and of providing the extra services (opportunity costs and real costs) - things like free breakfasts, free drinks, etc.

Fair call, beardoc, I was being a little flippant at the expense of the author but some thesis topics I have seen in the past rate right up there alongside The Inside of a Pingpong Ball for interest and relevance.
I agree that this is a valid and potentially important topic for the hospitality and tourism industries. I have scanned through the document rather than setting out to critically analyse so I can't comment in too much depth other than to say the topic probably deserves more rigorous research.
The over-riding impression though is the constraints that the sample size placed on this particular work. The author himself points to the number of guest account statements available to him as a limiting factor.
Time and money also come into play from the student's perspective: the cover page reveals that the guy is doing a Masters by part coursework, part thesis, not a PhD, so he has no funding and probably only a semester to get it done. All very limiting.
I was actually impressed that a) someone stuck a thesis up for members of a non-academic forum to read, and b) people read it and commented on it.

 

[Mal]

I was just recalling something about this thread and I might have been one of the respondants to the survey. When I stayed there at one stage I was given an academic survey to fill out with points as the sweetner. When I returned it, I was told it was the first one returned lmao.