How Preferred Hotels & Resorts Successfully Built Hotel Customer Loyalty & Business Sustainability with Loyalty Prime

Preferred Hotels & Resorts is a global collection of independent hotels, destination resorts, city center hotels, luxury residences, and unique hotel groups. It consists of more than 700 hotels in 85 countries across various families of brands.

In the effort to strengthen their umbrella brand, foster customer loyalty, promote direct bookings, lessen their reliance on external OTAs (online travel agencies) and thus drive revenue and profits, Preferred Hotels & Resorts worked with the hotel loyalty software provider Loyalty Prime to create their hotel customer loyalty program known as “I Prefer”.

Learn how our work together resulted in a powerful and highly effective points-, benefit-, and tier-based rewards program for the hotel industry in the case study below.

Hotel customer loyalty

Why Was a Hotel Customer Loyalty Program the Choice for Preferred Hotels & Resorts to Drive Business Success in the Hotel Industry?

As a luxury hotel group that spans the globe, Preferred Hotels & Resorts was faced with the challenge of satisfying their customers, while also consistently improving revenue and profit.

Many travelers prefer to book with OTAs for convenience and pricing, but hotels listed there pay high levels of commission that heavily affect their profit margins.

Preferred Hotels & Resorts realized that if they were to lessen their dependence on OTAs, they would need to develop strong hotel customer loyalty for their own brand, which would in turn increase direct bookings.

They decided to overhaul their existing guest rewards program to leverage the power of a state-of-the-art, data-driven points and tier-based rewards program.

By enlisting the expert help of Loyalty Prime and our powerful loyalty engine known as “Prime Cloud”, Preferred Hotels & Resorts was able to quickly launch their revamped hotel customer loyalty program “I Prefer”, which proved highly successful in driving customer engagement, satisfaction and retention as well as their top and bottom line.

Hotel customer loyalty

What Business Challenges Did Preferred Hotels & Resorts Want to Solve by Developing a Hotel Customer Loyalty Program?

Tough competition, a lack of customer data, and complex technological systems made it difficult for Preferred Hotels & Resorts to use their legacy loyalty program to success and drive the desired customer behavior. The below section outlines how these challenges affected business success for their global alliance brand and its member hotels.

CHALLENGE 1

Fierce Competition from OTAs As Well as Large Hotel Chains and Their Loyalty Programs

The concept of a hotel customer loyalty program is nothing new. Large-scale OTAs (online travel agencies) such as Booking.com and Expedia have long hosted their own hotel customer loyalty programs. This model clearly works: bookings with Expedia accounted for one-third of global OTA revenue in 2018 after consistent growth over the last decade. Another OTA, Kayak, also saw triple the number of searches between 2012 and 2019.

Hotel customer loyalty

Despite these daunting figures, it often makes more sense financially for hotels to focus customer attention on direct bookings, largely due to the large commission that OTAs take (as much as 30% depending on the platform).

Well-known hotel brands like Hilton and Marriott have responded by offering comprehensive customer loyalty and reward programs that include price-match initiatives to encourage customers to book with them instead of using a third-party OTA with the goal of increasing brand loyalty and improving their bottom line.

As a global brand that represents many independent hotels, Preferred Hotels & Resorts recognized their own need for a stronger emphasis on direct bookings and customer loyalty. Instead of relinquishing control of how their customers book and paying commissions to OTAs, keeping their customers “at home” via a powerful, highly competitive customer loyalty program was the way to go for Preferred Hotels & Resorts.

CHALLENGE 2

Complex System Landscape & Multiple Booking Channels Due to High Number of Independent Hotels

Preferred Hotels & Resorts represents over 700 hotels across 85 countries. With so many different booking channels, audiences, independent hotel systems, and technical infrastructures to be harmonized and catered to with a global loyalty program, a highly sophisticated, enterprise-grade loyalty program technology was required.

Hotel customer loyalty

The loyalty technology needed to integrate with all POS and customer communication channels, mirror required data structures, and combine them so that they could be used in powerful joint coalition loyalty program – while allowing all participating hotels to access the system in a decentralized manner.

Preferred Hotels & Resorts was using legacy loyalty technology that did not live up to these requirements, which led to a loyalty program that was yielding insufficient results.

CHALLENGE 3

Lack of Data and Customer Insight to Build an Effective Rewards Program, Efficient Loyalty Marketing As Well As High End Customer Care Activities

If you don’t know who your customers are, it’s impossible to inspire them to become loyal to your brand in way that is profitable to your business. This concept is especially true in the hotel industry, where customer satisfaction is paramount for driving repeat bookings.

Hotel customer loyalty

Preferred Hotels & Resorts understood the need for comprehensive data (such as contact data, demographic data, behavioral data, and purchasing data) in order to give their customers the best possible experience and drive their business goals.

But without a centralized loyalty system, they had far too little information to know how to incentivize, reward and treat customers in a way that would foster their loyalty and yield a high ROI. This was due to the fact that:

  • The data that was available was inconsistent and inaccurate.
  • There was a lack of tools to analyze the data for actionable insights.
  • There was a lack of tools to use the data for targeted customer segmentation, engagement, rewarding and service.

What Type of Hotel Customer Loyalty Program Did Preferred Hotels & Resorts and Loyalty Prime Create to Overcome These Challenges?

Preferred Hotels & Resorts and Loyalty Prime joined forces to create a holistic hotel customer loyalty program that not only benefitted their brand as a whole, but also the independent hotels under their brand, and of course, their customers.

Preferred Hotels & Resorts Customer Loyalty Program in a Nutshell

Points-Based
Benefits-Based
Tiers-Based

Known as “I Prefer”, they created a points-, benefits- and tier level-based loyalty program that rewarded the desired customer behavior in a targeted manner with benefits such as:

  • Free internet
  • Room upgrades
  • Priority early check-in and late check-out
  • Exclusive member rates
  • Member-exclusive promotions
  • Redeemable points for free nights, hotel activities, meals, and more

These rewards wrapped into a complete hotel customer loyalty program that involved 3 core elements:

  • A data-driven points-based reward scheme with redemption options at all participating hotels.
  • A tier-based system that incentivized customers based on their value.
  • A powerful data-driven promotion engine that could be used by Preferred Hotels & Resorts as well as participating hotels to drive desired customer behavior.

Similarly to Hilton and Marriott as mentioned above, Preferred Hotels & Resorts also created a “Best Rate Guarantee” that can be claimed within 24 hours of making a reservation. If a customer finds a cheaper price from another OTA or other website, they will match it.

In working with Loyalty Prime and our hotel loyalty software, Preferred Hotels & Resorts was able to migrate from their existing non-points based guest benefit program to a much-improved points, benefit and tier level led program with over 1 million members. The program was officially launched in 2013 and has remained highly successful.

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    Which Prime Cloud Features & Functionalities Did Preferred Hotels & Resorts Use to Build Their Hotel Customer Loyalty Program?

    Our leading loyalty software ”Prime Cloud” was the perfect match for Preferred Hotels & Resorts. Not only was Prime Cloud able to integrate with their existing technological infrastructure, we also gave Preferred Hotels & Resorts the comprehensive customer data and direct marketing tools required in order to understand and profitably drive hotel customer loyalty and behavior across their member hotels.

    1

    Functionality Powered by Prime Cloud #1:

    Seamless Integrations & Simplification of the Existing Highly Complex System Landscape

    With a current system of 1 million members and more than 700 participating hotels and brands, it takes a true loyalty expert to make integration for a complex new system as smooth as possible.

    A major reason why Preferred Hotels & Resorts chose Loyalty Prime as their hotel loyalty software provider was

    their experience with complex IT system landscapes integrations and high scalability. We guided them from the beginning, to ensure all integrations were accomplished in the most efficient manner possible.

    The result? A centralized loyalty system that:

    • could easily be accessed and used by all alliance partners across the globe.
    • ensured a holistic, seamless customer experience across channels and partners.

    2

    Functionality Powered by Prime Cloud #2:

    Complete Data for Targeted Customer Engagement

    Our highly flexible loyalty program software allowed Preferred Hotels & Resorts to mirror required data structures – even across their highly complex and diverse partner landscape.

    As a result, all data was available via a central loyalty system and could be used for:

    • Data Analysis: understand customers, identify relevant customer segments (such as high value customers for VIP benefits) and gain insight into how to drive desired changes in customer behavior.
    • Customer Engagement, Promotions and Rewarding: use data to engage customers via personalized communication and incentivize desired customer behavior efficiently via targeted rewards and promotions.
    • Customer Service: make data available for the customer service teams to ensure great customer satisfaction also via this important customer retention channel.

    3

    Functionality Powered by Prime Cloud #3:

    Fast Set-up of a State-of-the-Art Points and Tier-based Hotel Rewards Program

    Prime Cloud had all the features available out of the box that were required for the new, state-of-the-art hotel customer loyalty program Preferred Hotels & Resorts needed. We simply needed to configure the features to their individual needs, which enabled an extremely quick time to market.

    The configuration included:

    • Virtual currency earn rules: how many points can be earned for which member behavior?
    • Virtual currency redemption rules: when, where and how can points be redeemed? How long are points valid?
    • Tier level rules: what are the criteria to reach and retain a certain tier? Which benefits are available in each level?
    • Sponsorship rules: Who sponsors the various benefits and points liabilities within the coalition set-up?
    • Data Structures: which data is to be collected, tracked and stored in which format to enable:
      • Real-time incentivization and rewarding of customers
      • Real-time access to customer data for customer care personnel
      • Real-time access to customer data for analysis, insights, segmentation, and data-driven promotions

    4

    Functionality Powered by Prime Cloud #4:

    Smooth Technical Operation of the Loyalty Program According to Individual Business Rules

    After all business rules had been configured to the needs of Preferred Hotels & Resorts, our hotel loyalty software ensured that the program operates smoothly and reliably according to these rules.

    The hotel customer loyalty program operation enabled by Prime Cloud includes:

    • Management of members accounts (including their personal & contact data, their points & benefits accounts, as well as their tier levels)
    • Real-time points earning and redemption across partners
    • Targeted loyalty program promotions
    • Reliable settling of points & rewards liabilities across the participating hotels via a state-of-the-art accounting module

    5

    Functionality Powered by Prime Cloud #5:

    Continuous Engagement Via a State-of-the-Art Loyalty Marketing & Promotion Engine

    A well-designed hotel customer loyalty program, not only enrolls as many high-value customers as possible, it also continuously keeps them engaged based on data-driven marketing. As engagement is built, customer loyalty is built, which in turn strengthens the brand.

    In this same line of thinking, Prime Cloud enabled direct customer communication channels for Preferred Hotels & Resorts that were entirely driven by 360° customer data.

    Based on a data-driven promotion strategy, Preferred Hotels & Resorts could communicate with customers in an increasingly improved manner, which powered a whole new level of business sustainability. As the data was based on customer behavior mapping, they could target, for example, customers who were most likely to book again or customers who had a high propensity to churn.

    6

    Functionality Powered by Prime Cloud #6:

    Central Loyalty System with De-centralized Access for Independent Hotel Partners

    All of the above aspects were made possible due to one central loyalty system. The central loyalty system gave Preferred Hotels & Resorts the much-needed holistic overview over customer behavior across all their member hotels

    At the same time, the system was de-centralized in its access for individual hotels, as well as customer care and loyalty managers.

    It created a win-win-win scenario for all parties, because customer satisfaction could be improved not only locally, but also globally, which in turn developed a better bottom line.

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    What Could Preferred Hotels & Resorts Accomplish After Working with Loyalty Prime?

    As a result of working with Loyalty Prime and using our Prime Cloud software, Preferred Hotels & Resorts has not only launched and maintained a highly successful hotel customer loyalty program, they also improved their bottom line and business longevity.

    Added Value for Customers: Increased New Member Enrollment by 74% Just One Year After Program Launch

    After “I Prefer” was launched, new member enrollment skyrocketed by 74% in just one year. This is a clear indicator that the program was highly attractive for the exact customer database Preferred Hotels & Resorts is targeting. As Prime Cloud easily scales with these new members, Preferred Hotels & Resorts continues to satisfy those customers at increasing rates.

    New USP: Reduced Booking Commission Cost by Over 3x And Increased Revenues by over 20%

    A major factor behind developing “I Prefer” was to drive direct bookings and foster strong customer loyalty from high-value customers.

    “I Prefer” gave Preferred Resorts & Hotels a new USP (unique selling point) that differentiated their brand from other hotel chain competitors and OTAs. As customers started to experience the many benefits of the “I Prefer” hotel loyalty program, it gave them a strong reason to book directly via Preferred Hotels & resorts – and to do so repeatedly.

    As a result, Preferred Hotels & Resorts and their partner hotels reduced booking commission costs by more than 3x and were able to increase revenues by more than 20%.

    That revenue could then partly be applied to promote re-bookings to loyal customers, which created a cycle of consistently satisfied customers, more bookings, and reduced costs to obtain those bookings.

    With Prime Cloud as their software, Preferred Resorts & Hotels now has a tool at hand to sustainably drive their financial goals based on their hotel customer loyalty program.

    Efficient Direct Marketing Channels: “I Prefer” Members Open Communication E-mails Twice as Much as Non-members

    Email marketing is one of the most effective forms of marketing. It’s clear why with the fact that email has an average ROI of $38 for each $1 spent. The goal with a hotel loyalty program like “I Prefer” is to gain access to direct marketing channels like email with members. If customers find your program valuable, they will voluntarily share their customer and contact data, because they want to hear more from you.

    In the case of “I Prefer”, members opened email marketing campaigns twice as often as non-members, revealing the level of engagement that “I Prefer” achieved. By staying directly in contact with their hotel guests, Preferred Resorts & Hotels could cater the appropriate promotions towards the right guests so that they consistently engage and re-book.

    Powerful Coalition Effect: 72% of Revenue Came from Enrollments that Originated at Another Hotel

    The “I Prefer” rewards program created a win-win scenario for both Preferred Hotels & Resorts and the independent hotels they represent. After the program was launched, they found that 72% of revenue came from members that had originally enrolled at another partner hotel.

    This reveals how “I Prefer” is highly successful in fostering hotel customer loyalty across the strong network of independent hotels and partners that belong to Preferred Hotels & Resorts Alliance. This truly is the power of coalition loyalty at its finest!

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      Why Loyalty Prime has Remained the Ideal Hotel Customer Loyalty Partner for Preferred Hotels & Resorts

      We at Loyalty Prime specialize in powering world-class loyalty programs with our software called “Prime Cloud”. Built by our loyalty and IT experts, our product has revolutionized loyalty programs across the globe. Prime Cloud is adaptable for any loyalty program required and is continuously updated to align with new trends and customer expectations.

      And most importantly, we know the hotel industry at an in-depth level. These combined factors convinced Preferred Hotels & Resorts that we were the exact hotel loyalty software provider they needed to bring their hotel customer loyalty program to the next stage.

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