02 Oct Which hotel guests bring more profit? Loyal customers vs. new customers
In any kind of business, maintaining existing customers with loyalty programs is one of the main goals of the company. One might wonder: why? Well, because it has been proved that searching for new customers costs more than maintaining old ones. The same rule applies in the hotel industry. Customer loyalty is something that accommodation providers are trying to earn via various loyalty programs and special offers.
Why is a loyal guest better than a new hotel guest?
- Returning hotel guests usually don’t need to pass through the same sales process as new hotel guests. This basically means that they already know about your hotel, they are familiar with your offered services.
- The previous point also means that logically, new hotel guests will cost you more. You will have to spend several resource types on reaching out to new potential customers, who may not even be aware of the existence of your hotel! Even if someone does land on your hotel website (which already costs you a nice amount of money), it doesn’t automatically mean that they will become your guest.
- You also might need to invest more time in the process of hotel guest communication. New hotel guests usually have more questions before beginning their stay at any hotel, that’s why you have to put more effort into keeping their interest before their visit. This is also important in ensuring a pleasant hotel guest experience for newcomers who have never experienced your services before, as well as establishing the bases for long-lasting hotel guest satisfaction, and maybe even positive hotel guest reviews!
- Loyal guests usually spend more money at your hotel. Since they are already familiar with certain services that you are offering, they tend to use them more than new hotel guests.
- Not to mention that loyal guests can be an effective target of hotel upselling strategies: that is, steering your hotel guests towards more expensive services. Because of the familiarity of the services, they have already experienced, and the satisfaction they have felt afterwards, loyal guests can be more willing to try out new hotel services, and therefore more willing to pay higher prices. Always consider that in your hotel pricing strategy!
- Also, the stay period for loyal guests is usually longer than that of new guests. In the hotel industry, it isn’t surprising at all to see some hotel guests coming back every single year, and even staying in the same room! The reason they are willing to spend a week or more at your hotel is that this is where they feel comfortable, this is the place they are familiar with. Never underestimate the importance of hotel guest satisfaction: it is one of the most important elements in creating loyal hotel guests.
- Even the tips to the staff members can be higher from loyal guests because they can feel more grateful to your hotel employees. This in turn also leads to your employees being more satisfied. See how an effective hotel loyalty program can work both ways?
- You can also expect word-of-mouth marketing from your returning, loyal guests. Most probably they will brag to their friends about that amazing hotel that they keep going to every year. After a few times, their friends might get curious and try to visit your hotel by themselves, giving you new hotel guests with the potential of becoming loyal guests! This reason why this is so important is that people trust the advice of their close friends and family more than any hotel strategy you may come up with.
- Loyal hotel guests can be more forgiving than newcomers. Since we are talking about satisfied hotel guests, you have already proved to them that you can provide hotel services that they enjoy returning to. Therefore, in case you make any kind of mistake, they won’t attach that much importance to your error: overall hotel guest satisfaction will triumph over one isolated misstep. People make mistakes right? Don’t expect the same from new hotel guests though: first impressions are very important!
- Last but not least – always try to maintain strong hotel guest relations with your existing customers. Get closer to them in a way that they would not be able to imagine their next holiday anywhere else but your hotel. Investing in maintaining relationships costs less than reaching new hotel guests. If you spend too much time and effort getting closer to people who are not even your hotel guests yet, it might just be a waste of time and money. If someone has already booked a stay at your hotel once, make sure they will book it the second time as well!
Next time, I will go through the best practices for turning first-time hotel guests into loyal guests. But the important thing to remember is this: once a guest arrives at your hotel, your goal is to make sure that he comes again. Naturally, you should work on attracting new guests on a daily basis, but still, the main focus of your hotel strategic plan should be about creating effective loyalty programs and maintaining hotel guest relationships with existing guests. And don’t forget – knowing your exact hotel guest profile, will help you in hotel segmentation strategies!