The Influence of Reward Program Membership and Commitment on Hotel Loyalty [Summary]

The study reveals several implications for hotel decision makers. First, the results suggest that it is easier to attract lower tier reward members and to create high value commitment through discounts and reward program points. Also, reward members at both tier levels show much higher value commitment than nonmembers, which suggests that managers need to pursue reward membership more aggressively for all customers in order to achieve at least value commitment. To generate affective commitment, the firm must be able to create emotional bonds with their customers. Emotional attachments may be firmly established with higher tier level members by offering extraordinary rewards (such as tickets to the Academy Awards, etc.)

Although high-tier members should be appealed to on an emotional level, low–tier reward members and consumers high in value commitment show in this study that they are highly responsive to value-added benefits such as discounts, and so on. Moving low-tier members to a higher tier level or offering introductory “high-tier level” benefits to nonmembers could establish the foundation for emotional bonds for these customer categories. Alternatively, understanding customers’ motivations and appealing to those factors that are most important to them may be an effective way to establish commitment. The research showed that tier level alone did not produce commitment in all upper tier members, whereas some lower tier and nonmembers were nonetheless emotionally committed to their preferred brand. By finding out what rewards (both tangible and intangible) customers value, hoteliers may be able to provide incentives that are cost-effective yet meaningful at each level of reward membership.

On the other hand, luxury hotels can charge a premium and retain their loyal (higher tier) customers as long as they remain emotionally attached, which should be monitored on an ongoing basis by management. Furthermore, marketing research needs be conducted to inquire about maximum price levels above which this market segment will defect to the competition. Nevertheless, upscale hotels do have the opportunity to use price to attract low-tier members from competitors, whereas economy brands have less of a chance to do so in competitive markets