Hotels usually offer rewards to customers in form of economic or social benefits. Dr Lee Jin-Soo, Dr Nelson Tsang and Dr Steve Pan at PolyU's School of Hotel and Tourism Management have recently conducted a study to explore how customers perceive different types of rewards and how those perceptions influence customer loyalty.
They conducted an online survey with 334 participants (almost even gender distribution) who were members of hotel reward programmes. They had stayed in related hotels at least once in the past year and had subscribed to various loyalty programmes. They were presented with one of two scenarios describing a hotel reward programme. The "social reward" scenario offered preferential benefits, including personal recognition and extra attention as well as a member-exclusive personal services and invitations to special events. On the other hand, the "economic reward" scenario offered financial incentives, such as reward points for redeeming a service or room upgrade. After reading either one scenario, they indicated their hypothetical loyalty to the programme, their perceptions of the rewards, the hotel's efforts in building customer relationship and the five dimensions of relational worth (namely, advocacy, immunity, openness, acquiescence and honesty).
Results showed that participants who were presented with the "social reward" scenario perceived that the hotel put more efforts in building customer relationship whereas those presented with the "economic reward" scenario had opposite perception. These findings demonstrated that providing social rewards increases customers' emotional attachment and affective commitment to a hotel. According to researchers' explication, economic rewards are attractive to customers and promote loyalty, but they alone are not sufficient to prevent customers from switching to other programmes. On the contrary, social benefits generate more loyalty from customers as personal services facilitate them to become emotionally attached and committed to a hotel.
In sum, the researchers suggested hotels to consider offering just-sufficient financial incentives to meet but not exceed customers' expectations. At the same time, hotels are recommended to offer social rewards with more customised offerings to instill a sense of belonging and emotional attachment in customers. The study findings were published in the International Journal of Hospitality Management.