< PrevNext > Hoteliers Are Looking to Loyalty to Drive Down Distribution Costs, Attract New Travelers, & Track Existing Customers By Julie Sickel / 27 January 2017 / Contact Reporter Share In 2016, major hotel companies revamped their loyalty programs and introduced direct booking discounts linked to loyalty membership.The factors that drove these decisions are still in play now, and the stakes are arguably higher in 2017, as Marriott International more fully integrates with Starwood Hotels & Resorts; as hotel owners pressure hotel companies to make sure the ends justify the means for discounted pricing; and as the industry's business cycle continues to soften.Direct Booking DiscountsWhen Hilton Worldwide introduced its direct booking campaign, CEO Christopher Nassetta said the initiative wasn't "a flash in the pan." Hilton and the other companies that introduced such discounts to attract customers and to bring travelers into direct channels to lower distribution costs seem fully committed to keeping their programs in place. And according to these hoteliers and industry analysts, the discounts are working.Some investors are asking, however, whether the loyalty rates provide discounts to travelers who already would have booked with a property, discount or no. Revenue per available room is forecasted to be weaker in 2017 than during the past few years, and hotel owners may push back on these discounts or opt out entirely if they think the discounts are dragging down revenue.2017 also could shine a brighter spotlight on the true value of corporate and travel management company discounted rates versus these direct booking rates. Travel managers in 2016 already found some of their rates were lackluster when compared with loyalty rates at certain properties. According to figures provided by TripBam, loyalty rates are beating corporate negotiated rates at small and midsize programs 5 percent of the time, just as frequently as TMC discount rates do.New Tech & Digital MarketingPart of drawing travelers into loyalty programs is offering them an improved experience via mobile apps, and this will be a big area to keep an eye on in 2017. Already in January, Marriott has expanded its app-powered Mobile Key from 25 properties to 500 and rolled out mobile service requests at 4,000 hotels. With Marriott's now massive scale, both in portfolio size and loyalty program members, competitors will be looking to attract and hang on to customers through their own enhancements. Hoteliers like Intercontinental Hotels Group and Hyatt Hotels Corp. that have toyed with keyless entry may go all in, while those that have already made advancements in mobile, such as Hilton Worldwide with its Digital Key, could move forward with other, more creative initiatives. Hotel companies have always had an eye on driving incremental new revenue. In 2017 and beyond, though, they'll look more to digital channels and data to do this. Hoteliers are trying to find out as much about individual travelers as possible and will use everything they learn from analytics and loyalty membership information to drive booking conversions through hypertargeted advertising and marketing. Duetto VP of managed services Calvin Anderson, an advocate for using Big Data to drive revenue opportunities in the hotel industry, is optimistic about how this will affect corporate travel. With hypertargeted advertising and conversion tracking, he said, broad marketing campaigns won't lure travelers away easily because each traveler's data will tell hoteliers that that individual is in a managed program. Until that day comes, however, travel managers should be aware that the problem of managed travelers being marketed to directly could get much worse before it gets better.