Are Loyalty Schemes Still Relevant? Aviation & Hospitality Analysis

This report examines the contemporary relevance of loyalty schemes within the aviation and hospitality industries. It begins with an introduction to the concept of loyalty schemes and their impact on customer retention and business strategies. The report then delves into the benefits of loyalty schemes, including cost-effectiveness, improved marketing through word-of-mouth, increased customer spending, and the creation of unique customer experiences. It explores different types of loyalty schemes, such as partnership rewards, point systems, and personalized rewards, providing examples from the Ritz Carlton and Premier Inn. The report further analyzes the suitability of loyalty schemes in the current aviation and hospitality landscapes, emphasizing the importance of understanding customer needs and providing tailored experiences. It concludes that loyalty schemes are a crucial marketing strategy for encouraging repeat business, retaining existing customers, and fostering a positive brand image, and provides strategies for effective implementation of loyalty programs. The report highlights the importance of customer experience and data collection in maximizing the effectiveness of loyalty schemes.

Debate on
Contemporary issues

Table of Contents
INTRODUCTION...........................................................................................................................1
Are loyalty schemes still relevant within the current aviation and/or hospitality industries?.....1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Contemporary issues are those issues which is affecting people and business currently
and remain to resolved. There are various issues occur in business in different industries which
crate impact on their business. Issues occur in hospitality industry are related to loyalty schemes,
global pandemic and many more. Loyalty scheme are are those which are used to increase
loyalty level of old customer and to retain them with business. This scheme helps business to
encourage customer to repurchase products and service for customer and increase satisfaction
level of customer of business (Apte and Davis, 2019). This helps hospitality industry to ignore
price war and to compete in terms of additional service as well as loyalty scheme offered by
them. This project report include study of loyalty scheme to analyse whether it is relevant for
current aviation and hospitality industries. It also include benefit of loyalty scheme helps in
hospitality business, types of loyalty scheme used in hospitality industry.
Are loyalty schemes still relevant within the current aviation and/or hospitality industries?
Loyalty Scheme: Loyalty scheme refers to a strategy which is prepared to encourage
customer to repurchase product as well as servile of enterprise. This scheme include various
feature as well as rewards that helps to provide various service including banking, hospitality,
travelling and entertainment (Chan, 2019). It helps an organisation in avoiding price competition
as there is no impact of price reduced by competitor on business as we are offering them other
services. This scheme helps business to retain old customers as cost to retain old customer is
comparatively low than acquiring new customers. It increase value of customer as it helps to
build relation between customer as well business.
These loyalty scheme are relevant for current business as it provide various benefit to
business. It is important for business to retain their old customer which can be done through
loyalty scheme. There is intense competition in market in terms of price, profit, cost of business.
These loyalty scheme helps to provide a firm competitive advantage in market as it avoid price
competition and allow enterprise to focus on their loyalty scheme. These loyalty scheme is based
on capacity of organisation to offer their customer as some organisation provide gifts to every
customer while welcoming them and some organisations are offering gifts and special treatment
to their special guest. For example Ritz Carlton is offering loyalty program which helps to
increase their sales. In this loyalty scheme, they are offering collection of point in which they can
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redeem points in exchange for valuable service. This service include free stay, VIP experience
and other services.
Types of loyalty scheme in hospitality industry: Loyalty programs are developed by
organisation based on their work. These are depend on factors like frequency of guest to stay in
hotel, use of program, point collected by them, etc. On basis of these factors, there are three
types of loyalty scheme and these are as follows:
Partnership Reward: It is a traditional form of reward which is a part of loyalty scheme.
Hotels include ancillary service including cab, laundry, Wi-Fi and spa which they offer for free
or by charging some amount (Ferguson, 2016). Organisations can outsource these service and
facilities with vendors. This partnership helps enterprise in better way which is beneficial for
both business as well as vendors. Guest of hotels can get benefit of service provided by vendors
which helps to reach to benchmark set by business. These benefits include services like airport
transfer, free spa therapy and discount in pub and other place. For instance, Premier Inn is having
partnership in companies like Marhaba airport, Travelex foreign exchange which include greet at
Dubai airport and also offering them coffee.
Point System: This is one of newly developed system which is developed and used by
premium hotels. In this, point in form of reward is transferred in profile of guest in hotel every
time when they book room in hotel which is of same brand (Wang, Wang and Tai, 2016). After
reaching to a threshold of coin, guest can use these coin by redeeming them for free stays in
hotel. For instance, Intercontinental Hotel Group is one of hotel group which is offering point
system as they are offering points to their member and redeem them in exchange of valuable
rewards. They are also include membership tiers, earning points and redeem wards and travelling
for free. It helps them to increase loyalty level of customers as well as attract new customers
towards their organisation. In this profile generation of guest is on digitalised basis. In this
profile generation, system of hotel create enroll of guest in loyalty program. It also helps to
understand booking pattern, behaviour as well as expectation for customer related to service.
Personalised Reward: This reward policy is one which is upfront reward policy and not
include any fixed criteria for reward. In this, reward is depend on capacity of hotel to whom they
can offer their reward and what they can offer in reward (Helms, 2016). For instance big hotels
provide gifts to their customer while cheeking out to thank them to visit hotel. Some hotels are
using reference based reward which helps business to attract customer as if they have booked
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room on basis of reference then organisation provide them a gift. These rewards include free
meals, free night and gift hampers.
Benefit of Loyalty Scheme: There are various benefit of loyalty scheme which a
organisation get (Zizka, 2017). These schemes helps an organisation to increase their sales as
well as profit. It is a cost effective medium to increase loyalty of customers. These loyalty
scheme are relevant for hospitality industries as it provide various benefits to business which are
as follows:
Cost effectiveness: It provide cost effectiveness to organisation as it is cheap for
organisation to keep an old customer rather than attracting new customers. To attract new
customer, organisation has to spend more on advertising, discount to new customers, additional
services and all these cost are more ta retain an old customers.
Better marketer: Loyal old customers is beneficial for a company as it helps in
marketing for business by using word of mouth which is free marketing tool for business(Leisen,
Steffen and Weber, 2019). It helps to create positive image of organisation which is more
relevant than any other source of marketing. Customer are more likely to trust opinion of other
customer which is beneficial for enterprise as it helps them to get more new customers. Old
customers are acting like brand ambassador of business as they helps to provide honest review
about service of company.
Spend more: Loyalty scheme helps to increase loyalty level of old customer which allow
them to spend more than new customer as they has trust on organisation. This trust built between
hotels and their guest which encourage to book all services instead of new customer. For
instance, a person when need to buy something to eat will buy from same restaurant where they
has enjoyed their meal.
Source of Enchantment: Loyalty scheme helps business as well hotels to know their
customer in better way which can be done by collecting data of customers (Maniora, 2018).
Felling pleasure and enhanced experience provide an advantage to a organisation to differentiate
them from other organisation in minds of their customer. This can be done through loyal
programs which can be better source of pleasure feeling or enchantment. This also provide
competitive advantage to organisation helps them to compete with other market player industry.
Hospitality industry is working on basis of providing a customer proper rest and fun and using
these loyalty scheme can helps them to enhance overall experience with company.
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Earn better revenue: Loyal customer provide opportunity to organisation to predict
their profit specially in peak periods. Increasing loyalty is important for hospitality business and
for small business which is facing huge competition. Loyalty scheme helps hotel business to gets
increase booking from their customers. It also helps to build relationship with customer which is
helpful to revisit of guest within industry. Loyalty schemes work as a source of profit for
organisation even in rough time.
Strategies for effective loyalty programs:
There are various strategies adopted by business in hospitality industry which helps them
in retaining old customer in a efficient way that other organisation cannot influence them. These
strategies adopted by organisation are as follows:
Be a global player: It is important for hospitality business to understand needs as well as
wants which helps them to better connect with their customers (Mooney, 2018). Guest who stay
in hotels are of different background and speaking different language, so it is not important they
are speaking language which is understandable by employees to those country. Customers are
more likely to purchase from organisation who are related to their culture, similarly an hotel
business should also hire employees which helps them to provide that language connection to
their employees. It is important for business to identify various trends in foreign market as it
helps them to provide familiar culture to their guest and also helps to enhance customer
experience. To increase their loyalty level, organisation should offer best rate, special offer and
should provide services which are needed by them.
Suitability in current aviation and hospitality industries: When traveller is at new
place and do not know about place, than they need a friendly staff who has right information in
market and who can be a hotel maker (Pizam, Shapoval and Ellis, 2016). If an organisation get
success in providing good experience to their customer which include tailored offers,
recreational options than it helps to increase loyalty of customer and increase possibility of
customer to revisit their place. Enterprise can store data of customer by analysing reason of visit
of customer as these information can be utilised by business in a wisely manner.
Reward to customer loyalty: Getting new customer in business is costlier in compare to
retaining old customers. So it is important for business in hospitality business to make their
existing customer satisfied and happy. Loyalty program that include discounts and other perks
can increase in enhancing experience of customer and result in increased value of revenue. It is
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important for business to be careful while making rewards and offer person for customer as they
need to ensure their revisit in their hotels. Customer experience work as a core for hospitality
industry as it is important to use loyalty tool as it helps them in operating more efficiently.
CONCLUSION
From above mentioned project report it can be concluded that loyalty schemes are those
marketing strategies which helps an organisation to encourage their customer to repurchase their
product as well as service. These loyalty schemes helps to retain old customer which important
for business as cost of retaining old customer is comparatively lower in terms of attracting new
customer. As to attract new customer an fir need to focus on marketing activity, promotional
campaign and also need to provide additional service which can result in increase cost of
business. Old customer are loyal ones as they promote business by word of mouth. They positive
review helps organisation to create positive image in minds of other customers. Influence of
review of customer is more in compare to other promotional or marketing strategies. They are
more likely to spend on services provided by company as there is trust between business and
their customer. Loyalty scheme provide feeling of satisfaction to customers which is beneficial
for business and also provide them competitive advantage. This competitive advantage helps
firm to avoid price war in market instead they are focusing on additional services or tools of
loyalty schemes. It also create positive image of organisation in market as they are focusing on
their old customer which is beneficial for their business.
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REFERENCES
Books and Journals
Apte, U. M. and Davis, M. M., 2019. Sharing economy services: business model
generation. California Management Review, 61(2), pp.104-131.
Chan, S. C., 2019. The antecedents of workplace fun in the hospitality industry: A qualitative
study. Journal of Human Resources in Hospitality & Tourism, 18(4), pp.425-440.
Ferguson, D. L., 2016. Customer relationship enhancements from corporate social responsibility
activities within the hospitality sector: Empirical research from Vietnam. Corporate
Reputation Review, 19(3), pp.244-262.
Helms, T., 2016. Asset transformation and the challenges to servitize a utility business
model. Energy Policy, 91, pp.98-112.
Leisen, R., Steffen, B. and Weber, C., 2019. Regulatory risk and the resilience of new sustainable
business models in the energy sector. Journal of Cleaner Production, 219, pp.865-878.
Maniora, J., 2018. Mismanagement of sustainability: What business strategy makes the
difference? Empirical evidence from the USA. Journal of Business Ethics, 152(4),
pp.931-947.
Mooney, S., 2018. Jobs for the girls? Women’s employment and career progression in the
hospitality industry. In Handbook of Human Resource Management in the Tourism and
Hospitality Industries. Edward Elgar Publishing.
Pizam, A., Shapoval, V. and Ellis, T., 2016. Customer satisfaction and its measurement in
hospitality enterprises: a revisit and update. International journal of contemporary
hospitality management.
Wang, J. C., Wang, Y. C. and Tai, Y. F., 2016. Systematic review of the elements and service
standards of delightful service. International Journal of Contemporary Hospitality
Management.
Zizka, L., 2017. The (mis) use of social media to communicate CSR in hospitality. Journal of
Hospitality and Tourism Technology.
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