What are hotel referral programs?
Referral programs reward guests who refer new customers. Every referral comes with a reward, so the more referrals they make, the more they can cash in on. Guests don’t necessarily have to be a member of your loyalty program to refer others, but the two can complement each other well.
What are the benefits of hotel referral programs?
A hotel referral program offers several benefits, from increasing direct bookings and enhancing guest loyalty to generating higher-quality leads and improving marketing conversion rates, making campaigns more cost-efficient.
Higher-quality leads
Generating leads is one of the costliest parts of marketing. Referred guests have a stronger intent to book – because if they’re asking for a suggestion, they’re probably already planning their trip. This increases their lifetime value, as engaged leads are more profitable in the long term.
More direct bookings
When someone signs up for a referral program, they receive a code to book directly with your hotel. This increases the profitability of the booking because you don’t have to pay third-party commission fees and can boost your own hotel website’s performance.
More cost-effective
Word-of-mouth is one of the most effective and affordable marketing strategies. When Referred guests not only have a higher likelihood of booking, but they also trust the brand more, reducing cost barriers.
More loyal guests
Guests who participate in referral or loyalty programs are more likely to return, as they have an added incentive to do so.
How do these programs work?
The program works by inviting guests to participate, which can be done through emails, loyalty programs notifications, or in-person promotions and check-in or check-out.
Once guests are enrolled, they receive a referral link or code to share with friends and family. When the referred guest books using the code, the referrer earns a reward – such as a discount, a free night’s stay, or loyalty points – while the referee benefits from special pricing. Tiered incentives can further encourage engagement, offering greater rewards for more referrals.
4 examples of good hotel referral programs
Let’s look at some examples of good hotel referral programs.
Marriott
Marriot’s referral program rewards guests for referring others to book directly. It’s a great way to incentivize direct bookings, and it’s free for members to join. The good news is it can be used in 8500+ hotels in 132+ countries across Marriott’s brands, with a best-rate guarantee.
In addition, the Marriott Bonvoy program awards points to both referrers and referees, enhancing the loyalty program engagement.
NH Hotels
NH Hotels offer a best-price guarantee with a 12% welcome promo for the first three months of activity. After this, referrers earn a 10% commission on post-click sales, based on the invoiced accommodation amount.
Hilton Honors
Hilton Honors rewards both referrers and referees with bonus points when a referred guest completes a booking. This program integrates seamlessly with Hilton’s loyalty program.
IHG Rewards Club
IHG Rewards Club offers tiered bonuses where you can earn loyalty points. Whether it’s shopping, dining, or traveling, these accumulated points can unlock perks to further incentivize participation.
How to create an effective referral program for your hotel
Personalization is key
Use your hotel management software to tailor incentives based on guest preferences and behaviors. Ultimately, personalized rewards drive higher engagement and participation within the community.
Simplify
An effective referral program should be easy to use. Ensure any referral platform is user-friendly, make sharing on social media seamless, and personalize referral links for easy tracking.
Monitor performance and optimize
It’s important to closely monitor your referral program’s success, looking at key performance indicators like conversion rates, participation rates and reviews. Use this data to drive change and optimize areas that aren’t working as well.
Promote via different channels
Maximize participation by promoting the program through social media, email campaigns, loyalty program communications, push notifications, and in-person reminders at check-in or check-out.
Signage throughout the hotel, including in rooms, can also further boost awareness.
Have a clear reward structure
Having a clear reward structure is crucial to your hotel referral program’s success. For example, higher-value bookings should be eligible for a higher reward bonus. You also need to decide whether you will solely offer a reward for the referring guest, or also the referred guest. Generally speaking, rewarding both will boost the success rates and enhance the amount of participation.
For repeat bookings, consider providing ongoing discounts to encourage long-term engagement.
The future trends of hotel referral programs
Hotel referral programs are an age-old strategy, but digital strategies now play a bigger role. Mobile apps are becoming essential for seamless referral sharing, while blockchain-based rewards offer secure and transferable incentives, boosting trust.
Social media integration is key, with hotels increasingly partnering with influencers to amplify program visibility. Gamification is also gaining traction, making participation more interactive through challenges and tiered rewards.
Conclusion
Referral programs should be a core part of your hotel’s marketing strategy. They are cost-effective, drive guest loyalty and direct bookings, and generate higher-quality leads. Together, these benefits make referral programs an essential tool for boosting profitability.
By turning guests into brand advocates, you create a win-win scenario – driving business growth while enhancing the guest experience.
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