How to Build Customer Loyalty in Tourism & Hospitality

Have you ever searched for “best Italian restaurant near me” and ended up at a place that served what seemed like microwave lasagna? I have.

We’ve all been burned by bad recommendations. That’s why building customer loyalty in the tourism and hospitality industry is more critical than ever.

Today’s travellers and diners are savvy. They’re bombarded with choices, and brand loyalty is a fleeting concept. To thrive, you need to be more than just “good”; you need to be unforgettable. This means mastering the art of guest retention strategies. It’s about creating a system where visitors don’t just come once but become passionate advocates, spreading the word about your incredible personalised guest experience. Think of it this way – they are better for your business than even the greatest advertising campaign!

Building customer loyalty isn’t some fluffy marketing exercise. It’s a competitive advantage that can dramatically boost your bottom line. We need personalised interactions, thoughtful programs, stellar service, and the smart use of tech to glue those relationships together. The boost to your business focusing on these things creates will be worth effort!

The Foundation is Understanding Guest Commitment & Its Value

So, what is customer loyalty in hospitality? Let’s be clear: it’s more than just repeat bookings. It’s about building trust and creating an emotional connection. Loyal customers actively choose your hotel, your restaurant, or your tour company, even when cheaper options exist. It means they have faith in your products and services and have great trust in your staff. Trust in what you do, how you do it, and they see value beyond just the transaction.

Why is it important? Well, here are a few important points:

It’s Cheap! (Seriously): One of the best guest retention strategies is understanding the cost of customer acquisition versus customer retention. Did you know that it’s roughly 5 to 25 times more expensive to acquire a new customer than to retain an existing one? Focus on keeping your current guests happy and keep the money in your pocket!
Steady as She Goes: Loyal guests provide a predictable, reliable income stream, even during off-peak seasons. Loyal guests provide a predictable, reliable income stream, even during off-peak seasons. There are plenty of tourist towns that see an influx of visitors at certain times of the year. A business that focuses on guest loyalty can stay busy while everyone else in town is experiencing their quiet period. That steady stream of revenue can be a lifesaver, especially when the tumbleweeds start rolling through the main street.
Free (and Effective) Marketing: Happy, devoted guests become walking billboards for your brand. They rave about you online, recommend you to their friends, and become your best (and cheapest) marketing force. It’s why that great restaurant in your neighbourhood is still running strong!
The Power of CLV (Customer Lifetime Value) Hospitality: Calculating the customer lifetime value (CLV) hospitality is an indication of your overall service, and the loyalty of your clients. This represents the total revenue a guest generates for your business over the course of your relationship. A loyal guest is significantly more valuable than a one-time traveller who finds you on a discount site.

The impact of solid customer loyalty is so large that we are constantly telling businesses that highlighting the premium aspects of their work can allow them to charge more! It’s true. We’ve even seen cases where loyal customers tell businesses they should be charging even more because the experience is worth it! That level of devotion is the mark of a truly exceptional business. So, how do we build that? How do we ensure that your customers value your personalised guest experience to such a degree that they practically demand you raise your prices?

Key Metrics for Tracking Devotion Success

You can’t manage what you don’t measure. Tracking guest loyalty metrics helps you understand if your efforts are paying off. Plus, they’ll help you show the ROI of your loyalty programs.

Here are some great questions you can ask yourself:

What are customers saying about my business?
How often to customers come back?
What actions can I take to maintain our current customers?

What metrics should you be tracking?

Customer Lifetime Value (CLV) Hospitality: This is your guiding star. Figure out how to calculate it specifically for your business. A good example is: (Average Spend Per Stay) x (Projected Stay Frequency Per Year) x (Remaining Lifespan in Years as a customer). Having a clear number is important for those who aren’t “marketing minded,” as they’ll be able to see what the end goal is! It will help non-marketers see that long term relationship is what makes it valuable!
Repeat Purchase/Booking Rate (RPR/RBR): What percentage of guests book with you more than once? That number tells you how well you are keeping customers. You want to get this above 25%, that is where the rewards start coming in!
Customer Retention Rate (CRR): What percentage of your customers do you keep over a period of time?
Net Promoter Score (NPS): What number of customers will recommend your services?

Here’s the thing: don’t just focus on one metric. You need a balanced view – transactional, attitudinal, and engagement data. Studies show that a holistic view is the best way to truly understand loyalty.

Using Personalisation to Create “Wow” Moments That Build Connections That Last

If you’re still sending out generic emails that start with “Dear Valued Customer,” you’re doing it wrong. People expect you to know them! Did you know that a crazy 71% of consumers expect personalisation and 76% get frustrated if they don’t get it? You have to do better than that!

Think of that last customer who complimented your business! What do they rave about?
What can you deliver more of, at a high quality, and retain a loyal client?

Personalised guest experience is about using guest data to make each guest feel seen, heard, and valued. It’s about making them think, “This place gets me!”

Here’s how:

Data, Data, Data: Collect data from everywhere. PMS, CRM, surveys, social media. The more data, the more connections you can make. Use zero-party data (what guests tell you) and first-party data (what you collect directly). It helps you give the personal touch!
Technology is a Friend, not a Foe:
- CRMs: Centralise data for a 360-degree view of your customer.
- AI & ML: AI & Machine Learning (ML): AI can help in many ways, and the specific use of machine learning helps you predict preferences and automate recommendations. Hilton’s “Connie” concierge chatbot uses AI to answer guest questions and provide personalised recommendations. Marriott’s Bonvoy app uses ML to suggest nearby restaurants and activities based on your past travel history. Hilton and Marriott use data and machine learning to figure out where you will want to go, and when you’ll need to order food from room service. You can use them too!
Personalise Each Touchpoint:
- Pre-Arrival: Create special itineraries based on a customer’s previous destinations. Send pre-arrival surveys to capture their requests. Make sure they feel cared for before their holiday!
- During Their Stay: Greet them by name. Know their past requests. If you learnt on their first visit that they love marmalade, make sure there’s some in their room when they visit again.
- Post-Stay: Send a great thank you, and follow up with some personalised suggestions for their next visit!

Here’s the kicker – you have to ask for consent, too! “Do you mind if we store some data to make your next trip better?” It can go a long way to reassure some guests!

Loyalty Programs are more than just Points and Discounts

Let’s set the scene here – hospitality loyalty programs can’t just offer discounts and perks. It goes way beyond that! They need to be valuable. Ask yourself – are my guests getting any value from this program?

If you don’t think about it from this perspective, your guests will consider your program like a Netflix subscription – if they’re not getting any value from it, they’re not going to keep it.

Here’s what you need:

Different Kinds of Programs:
- Points-Based: Get some points for spending. Everyone is doing it, but it’s a starting point!
- Tiered: Create levels, such as Gold, Silver and Bronze. If you can give better perks, that is all for the best!
- Premium: Pay a set fee to have even better benefits! Don’t make it too steep, though.

Here’s how to ensure they have value:

Keep it Simple: The less people need to read, the better!
Make it relevant: Make sure people like the rewards! You can determine this by looking at some simple stats.
Personalise: Know what people like, and offer offers based on these factors.
Gamify: Have some fun with the customer!

As long as you do all that, you’re going to improve engagement with your members. A mobile app can amplify these efforts, providing a convenient hub for members to track their progress, redeem rewards, and receive personalised offers. Need help building a killer mobile app? SATM can help! However, a mobile app isn’t essential. You can still create a successful loyalty program through email marketing, a dedicated website portal, or even a simple punch card system. It’s about choosing the tools that best fit your business and your customers.

Customer Service is the Human Connection in a Tech-Driven World

All of this needs to stem from good customer service. You can’t fix poor service with tech. The most successful programs and tech rely on a good foundation of client care.

So, what does that mean?

Always Be Consistent: Deliver high-quality service. Every time.
Put Yourself in Their Shoes: Make sure you emphasise some empathy and kindness! Listen to clients, get their names, and show that you care.
Act Quickly: Make sure you’re prompt and are getting things done quickly. Guests love that!

But it goes further than that:

Proactive Service: Put things into action before being asked. Check in with the guest regularly.
Fix problems: You can always find yourself in hot water, and sometimes you need to give a little (or a lot) to turn things around! The Ritz-Carlton, known for its exceptional personalised guest experience, has a program to empower its employees to spend up to $2000 to help customers. Now, you might be thinking, “I’m not the Ritz-Carlton!” and that’s okay! You don’t need a $2,000 budget to make things right. Even a small gesture – a free appetiser, a complimentary upgrade, a sincere apology – can turn a potentially negative experience into a loyal customer. The key is to empower your staff to make those decisions on the spot. Be careful not to get taken for a ride, though.

You also want to take care of your employees! If you treat your staff well, they’ll treat clients well. We covered this in more depth in our article “How Employee Happiness Fuels Hospitality Success”

Why Digital Engagement and Online Reputation are So Important

Being online is part of the game. Digital is now the norm, so you want to ensure you’re hitting every mark.

Invest in Mobile: Put your app on your client’s cell phone!
Go Social: Use TikTok, Instagram and Facebook to connect with clients. Ask your audience what they want, and get to know them!
Implement a CRM: Centralise all of your client interactions to make sure you can personalise your communication. As you’ve no doubt read about in our article, Crafting a Killer ‘About Us’ Page.

Of course, one of the most important things that you want to do is ensure that you’re up to scratch with your online reputation. It’s essential to listen to your guests, see where they are having problems and implement improvements to your offering.

Here’s an example. Let’s say that you are the owner of a local agritourism attraction that includes a farm shop. How are you responding to the reviews? Are they engaging, kind and well written? Or do they say nothing? As discussed in What We’ve Learned From Reading 500 Negative TripAdvisor Reviews a quick note can go a long way towards a great marketing campaign.

What this all comes down to is the quality of your online presence. A good way to think of this is to take things one step at a time and implement the following tips.

Know What People are Saying: Keep your ear to the ground and see what clients are saying on TikTok, Instagram, or any other major social media platform.
Address Issues: Give advice, tips and tricks to calm any concerns from your guests. This will show you care about more than their wallet.
Ask Questions: Encourage your guests to leave reviews so you can improve. Make sure this is an open line of communication.
Work On Yourself: Figure out what people are talking about, and make actionable plans based on this.

Future Trends to Stay Ahead of the Game

You want to look at what’s coming down the line. Here’s what to look for:

Hyper-Personalisation: Make your customer feel like they are dealing with a friend!
Experiential Rewards: Give great rewards to show how much their loyalty matters to you. What’s a unique experience you can deliver in your region that people can’t get anywhere else?
Instant Gratification: Everyone loves instant rewards!
Sustainability: Make sure your practices are sustainable, so everyone knows you care!

The Goal is Building Relationships That Last

Make sure your guests have an experience with your business, not just with your product. Make it special, make it tailored to their needs, and they’ll not only come back to your services, but they’ll ensure they are the best advocates you could possibly have!

You need to build relationships that foster value, reliability and clear communication. When those are implemented, the rest flows from there!

Do you need a hand with that? Contact SATM for more help! It’s what we do!