From the Cornell University Hospitality Program:

Reward programs are incentives designed to create loyalty among customers and to provide the best rewards to the "best" customers. 

These programs have proliferated in the hospitality industry for nearly three decades, with little direct evidence that they actually build either attitudinal or behavioral loyalty. 

While program implementation seems to have expanded exponentially, the actual components and structure of any given program appears to be driven more by what the competition is offering rather than demonstrated effectiveness. 

This report by Cornell  (1) identifies program components that have been shown to be effective, and (2) offers a series of guiding principles that hospitality and marketing managers should find useful in designing and modifying their reward programs.

Here is a summary of the 10 loyalty principles, by eHotelier.

The hospitality research shows that the ten most successful methods of improving loyalty programs are as follows:

  1. Foster customer engagement, 
  2. Establish a two-way value proposition, 
  3. Capitalize on customer data, 
  4. Properly segment across and within tiers, 
  5. Develop strategic partnerships, 
  6. Develop dynamic tiers, 
  7. Cater to customers' desires for choice and fairness, 
  8. Avoid commoditization by differentiating, 
  9. Avoid the price sensitivity trap, 
  10. Embrace new technologies.

You can download the report online, and I have read it.  

Tell me what you think, but I rather like what the strategic response by IHG hotel, as reported by Tom Rapsas

When Hilton Hotels decided to raise the number of loyalty points required for a free hotel stay earlier this year, IHG pounced. 

They launched a campaign for their Priority Club rewards program that called out the changes to the Hhonors frequent guest program via a contest called the "Luckiest Loser".

The consumer who was the "luckiest loser"--the one with the most points invested in the HHonors program--won 2 million Priority Club points. 

Additionally, 20,000 "lucky losers" got up to 20% of their current HHonors balance in Priority Club points. Everyone else got 1,000 points just for entering.

Does this make long term sense according to the Cornell report, I wonder?  It seems to make a lot of good short term sense.

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