Loyalty Rate / Return Guest Discount
A Loyalty Rate, or Return Guest Discount, is a preferential pricing strategy that offers a reduced rate to guests who have previously stayed at one of an operator's properties. This incentive is designed to encourage repeat bookings, typically through a direct booking channel.
Why it matters
This strategy is fundamental to increasing guest lifetime value and reducing the costs of guest acquisition. By incentivizing repeat business, operators can build a more predictable revenue stream and decrease reliance on third-party booking platforms, which also saves on commission fees. Furthermore, satisfied return guests often become brand advocates, generating powerful word-of-mouth marketing and referrals.
Operator use case
An operator analyzes their guest database to identify individuals who have stayed with them in the past 18 months. They then initiate a targeted email campaign offering an exclusive 15% discount code for a future stay booked directly on their website. The campaign is timed to coincide with the traditional booking window for the upcoming peak season to maximize occupancy with a reliable guest base.
Industry insight
A common misconception is that any discount will automatically generate loyalty. In reality, the most effective loyalty rates are part of a broader guest retention strategy, not just a standalone offer. Operators often make the mistake of offering discounts that are too shallow to be compelling or failing to communicate the offer effectively post-stay. The timing and personalization of the offer are critical; a generic email blast is far less effective than a personalized message that references a guest's previous stay. Strategically, the discount should be substantial enough to motivate a direct booking but calculated to ensure the profit margin is still healthier than an OTA booking with its associated commission fees. Sophisticated operators often use a tiered approach, where the discount increases with the number of stays, or they bundle the discount with other perks like a complimentary late checkout or a local gift, enhancing the perceived value beyond a simple price reduction.
Tech & tools relevance
This concept is operationalized through various hospitality technologies. Property Management Systems (PMS) are central for tracking guest history and automating post-stay communication. Email marketing platforms (e.g., Mailchimp) are used to segment past guests and send targeted discount campaigns. Direct booking engines are essential for creating and applying unique promotional codes that are not available on major OTAs. Some platforms also feature tools that allow operators to send a special offer directly to a guest who has made an inquiry.
How Hostfully helps
Hostfully's Property Management Software (PMS) enables operators to manage guest data and track stay history, which is essential for identifying potential repeat guests. The platform allows for the creation of custom discount codes that can be used on the Hostfully direct booking website. Operators can use Hostfully's automated messaging and template features to send follow-up emails to guests post-checkout, which can include these exclusive promotional codes to encourage future direct bookings.