Ten years ago, most airlines and upscale hotel chains were competing with one another to offer value-added frequent-guest and frequent-flyer rewards. The programs, designed for corporate travelers, didn't do much for budget-conscious families and small businesses-the reward levels were often difficult to achieve, requiring dozens of trips or overnight stays before participants reached a reward.
Conventional marketing wisdom said the economy lodging industry didn't need a guest rewards program, since the type of customer attracted to a budget chain was only interested in cost. But there was a definite shift in business and leisure travel in the early 1990s: Thanks to the corporate belt-tightening that followed the 1990-91 recession, many corporate business travelers began frequenting the budget hotels. It was clear that the experts were going to have to rethink their opinions.
Travelodge Hotels already had in place a guest rewards program that awarded an 11th night free. That level made it easy for vacation travelers to attain a reward fairly quickly. But given the shift in the travel market, it made sense to research the growing category of budget-conscious corporate clientele, and that research led to the creation of a loyalty program that offers even more rewards, at more achievable levels.
In June 1997, Travelodge launched Travelodge Miles, a revitalized guest rewards program featuring swipe-card technology. The program thanks frequent Travelodge and Thriftlodge guests for their patronage with value-added rewards such as frequent-flyer miles, free hotel nights, free rental cars, and other travel perks. Guests earn one Travelodge Mile for each qualified lodging dollar spent at participating economy Travelodge and Thriftlodge properties. Members can collect Miles and redeem them once they have just 250 Miles, or keep saving them for other rewards at higher Mile levels. At 250 Miles, members can receive Sleepy Bear dolls, T-shirts or a road atlas.
The economy lodging category is very competitive, and obviously pricing is a major factor. But it's not the only one. Travelodge believed customers would respond to a loyalty program-and that proved to be correct. In its first five months, Travelodge Miles attracted 30,000 new members, and continues to add approximately 200 members daily, with the chain on track to reach its goal of 100,000 members by the end of this year. Experience has helped Travelodge to formulate some guidelines for designing and implementing a successful guest rewards program for an economy lodging chain.
DUE DILIGENCE PAYS OFF Spend ample time and money on marketing research to make sure you know your audience demographics. Who are your customers? What do they value most?
Focus groups conducted with Travelodge's customers and competitors' customers showed that business travelers don't enjoy being on the road, and they expect to be rewarded for their trips. These focus-group participants provided insight about the types of rewards that would motivate them to choose one chain over another, and their input helped todevelop the rewards catalog.
VALUE-ADDED INCENTIVES Once you know your audience, make sure to offer rewards and merchandise of value. For instance, The Wall Street Journal recently reported that there are more than 32 million frequent flyers nationwide. According to a 1997 National Travel Monitor Survey, half of all business travelers consider earning airline miles as "very important," and as much as 60 percent of all airline miles are accumulated by doing something other than flying-for example, through hotel night stays, car rentals and dining programs. By looking at these and other statistics, as well as comments made on guest survey cards, it was clear that earning airline miles was key to a successful guest rewards program.
To launch the program, every guest-corporate or casual-was invited to join. The Travelodge Miles program became the focus of all of the advertising, and was heavily promoted with extensive point-of-purchase materials in all of the properties.
TECHNOLOGICALLY SOUND Spend the money up front to support your program with reliable technology. For Travelodge, that meant a system that is user-friendly for reservations, front-desk staff, management and corporate personnel, as well as the guests. The Travelodge Miles Program features state-of-the-art swipe-card technology which automatically updates guests' Miles each time they stay at a participating Travelodge or Thriftlodge location.
For management, the system makes it easy to track and gather data on the company's best customers, and enabled the creation of a "Gold Level" for preferred customers. These Gold Level customers receive preferred rates and free local phone calls. The enhanced level is already paying off with an increase in the average stay of preferred guests-almost a full night longer per each stay.
For guests, the technology makes it easy to access and use information about the program. Members can request an instant Mileage statement from hotel front desk personnel, and there is a toll-free number to help them redeem rewards. Guests can call, fax or mail in their redemption requests.
EMPLOYEE PROMOTIONS Hotel employees-particularly franchise managers, reservations personnel, and front desk staff-must be well-versed in the program and be given incentives to promote it. To educate employees, the Travelodge Miles program was incorporated into training tapes and seminars. The employee incentive program is tied directly to the guests-rewards program. For the 1998 spring promotion, any front-desk staffer who signed up ten new Miles members received a 30-minute prepaid long-distance phone card.
VALUE-ADDED PROMOTIONS In addition to offering fixed merchandise and incentives, special activities help to promote the program to potential members while giving loyal customers even greater rewards. Travelodge implemented several seasonal promotions that reward Miles members with everything from road maps to summer movie passes and prepaid long-distance calling cards.
And last, but by no means least, support, support, support. A program is only as good as its marketing support. Even the most loyal guests won't know about the program without ample point-of-purchase displays, newspaper inserts, TV advertising, direct mail and Web marketing. The Travelodge Miles program was the focus of all of the company's advertising and closely tied in with all the marketing material. Messages were simple and consistent. People often question the costs of loyalty programs, but Travelodge's research indicates that if you want to be a player in the lodging industry, you need to have a loyalty program. For Travelodge, the cost of developing and maintaining a loyalty program was simply the cost of doing business in the industry.