Are Frequent-Guest Programs Effective?

Abstract

Despite the great amount of money being spent by hotels on frequent-guest programs (FGP), only a fraction of travelers think such programs are important. And many industry experts think FGPs are counterproductive. But so long as hotels offer them, it seems at least some travelers will take advantage of them. Business travelers, in particular, are willing to pay more to earn FGP benefits. On the other hand, 50 percent of FGP members said that the absence of a program would not affect their choice of a hotel. But this means 50 percent would be affected, and may take their business elsewhere if you cancel your FGP. The size of the segment that is influenced by FGP membership makes it a risky proposition for a chain to drop its FGP unless the industry as a whole were to do so.