Revitalizing customer loyalty with innovative rewards programs

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Earning and redeeming points just not enough in an ever-increasingly competitive market

Consumer loyalty is one of the most essential ingredients for brand success in any niche. This is particularly true in the hospitality sector, where numerous players offer their own loyalty or reward programs.

Business intelligence firm Research and Markets predicts the loyalty market in the United Arab Emirates (UAE) could reach $1.57 billion this year and expand to $2.24 billion by 2028, growing at a compound annual growth rate of 9.2 percent. As this sector expands, hospitality brands have significant opportunities to improve their loyalty programs.

Breaking free from the traditional

According to the 2023 TravelBoom Leisure Travel Trends Study, 7 in 10 travelers have joined at least one hotel rewards program. Respondents cite free on-property perks and instant discounts as the most important benefits they consider, alongside dedicated staff and future stay discounts.

However, the market is evolving. Loyalty programs have transcended their traditional roles of merely allowing members to earn and redeem points for perks. Today, these programs are highly customizable, enabling brands to strategically tailor and refine their offerings based on the observed behaviors and preferences of their members. As technology advances, brands have the opportunity to continually innovate and adapt their programs, making them increasingly attractive to their target audience.

Tronic, a company specializing in delivering Web3-based transactions via digital brand wallets, underscores the power of technology in innovating loyalty programs.

“As the hospitality industry continues to evolve, there are three key areas of focus that are proving to be particularly impactful in redefining loyalty programs: gamification, blockchain and cryptocurrency integration, and strategic partnerships,” the company noted.

Tronic emphasizes that members become more engaged and invested when businesses gamify the loyalty program experience (e.g., earning badges and accessing higher membership tiers). Meanwhile, rewards for certain actions (e.g., taking part in exclusive challenges) provide instant gratification. These rewards can be stored as digital tokens or cryptocurrencies secured in digital wallets, which people can use to purchase something.

Marriott International and Shangri-La Hotels and Resorts are just some brands that have introduced reward programs that rely on blockchain technology.

Innovation is the name of the game

Indeed, in a landscape as ever-evolving as hospitality, businesses must find clever ways to convert prospects into patrons.

In the UAE, the Dubai-based Global Hotel Alliance (GHA) earned the 2022 Freddie Award for the “Best Up-and-Coming Program.” The alliance, comprising independent hospitality brands, was awarded for its innovative product DISCOVERY Dollars (D$), the industry’s first digital rewards currency.

This feature of its loyalty program, GHA DISCOVERY, has proven beneficial. In the first three months of 2024, currency redemption substantially increased 109 percent year-over-year (YoY). The main drivers of growth are members in Singapore, China, and Spain. In addition, the loyalty program itself posted impressive membership expansion, with new membership jumping by 28 percent YoY.

When members make direct bookings, they can earn DISCOVERY Dollars (each D$ is equivalent to USD 1). These dollars accumulate when members avail of various hotel services, such as luxurious rooms, fine dining, and specially curated activities. The currency can be redeemed for hotel stays, room upgrades, and late checkouts, among other things.

Since its inception just over two years ago, the GHA DISCOVERY program has already issued D$206 million to its members. It also helped increase direct hotel bookings, contributing to a substantial 40 percent increase in this metric in 2023.

Loyalty programsLoyalty programs

Diversity and flexibility are key

Diversity and flexibility are also vital in fostering a solid and appealing loyalty program.

Take Hyatt, for example. The hospitality brand acknowledges that its World of Hyatt loyalty program is relatively smaller compared to industry giants. This is why it is focusing on enhancing the ease of use and customization of its rewards and elite benefits this year.

Amy Weinberg, Hyatt’s senior vice president of brand, loyalty, and data, explained, “The new Milestone Rewards are rooted in what we heard from our members — we understood they wanted more rewards and more choice. So, we are offering a wider array of options to craft their travel journey.”

Now, members can earn rewards every 20 nights, with additional benefits accruing every 10 nights up to 150 nights per year. This structure allows members greater flexibility in earning and using their rewards, including the innovative option to gift nearly any Milestone Reward to another person.

Diversification is another huge leverage for companies whose portfolios extend beyond hotels. With a broad array of brands, such businesses can offer a comprehensive loyalty program to their consumers.

One fine example is the UAE company Aldar Properties. In 2020, the leading real estate player unveiled DARNA, a pioneering digital loyalty program in Abu Dhabi.

As the first of its kind in the city, DARNA offers an unmatched diversity and flexibility. It spans Aldar’s entire portfolio, which includes 12 hotels, 34 residential communities, 12 malls and community centers, eight schools, three golf courses, five beaches and parks, 20 spas and gyms, 16 entertainment attractions, and over 750 retail stores and restaurants. This integration allows DARNA members to earn and redeem points within the Aldar ecosystem and its partners.

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Forging partnerships

Attracting loyalty program subscribers isn’t a walk in the park. As Research and Markets notes, alliances are also vital.

In its February 2024 report, the market intelligence firm stated, “The demand for better redemption capabilities and higher points earning possibilities is driving alliances in the loyalty programs market in the Emirates.”

Earlier in March this year, Marriott Bonvoy — the global travel program by Mariott International — announced a landmark partnership with Emirates NBD and Mastercard. The new endeavor introduced two new co-brand credit cards in the UAE. Cardholders can earn Marriott Bonvoy points from their purchases and access Elite status, exclusive benefits, and unique experiences across Marriott’s extensive network of over 30 brands and 10,000 destinations worldwide.

Commenting on the program, Sandeep Walia, chief operating officer of Middle East, Marriott International, said, “We continue to explore ways to provide Marriott Bonvoy members in the UAE with unique and diverse travel experiences, along with personalized benefits that they can access in the market and across the globe.”

“Through the launch of these credit card offerings and the expanded collaboration with Emirates NBD and Mastercard, we aim to reach more travel enthusiasts in the UAE and provide them with a seamless experience to enjoy more member benefits and maximize rewards on everyday purchases,” Walia further stated.

This three-way partnership exemplifies how hospitality brands can collaborate with other entities to enhance their services. And as the hospitality sector experiences significant growth in loyalty and rewards programs, it becomes clear that such initiatives are not just fleeting trends. If anything, they are essential tools for boosting customer engagement and driving business growth.

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