Improving the effectiveness of hotel loyalty programs through data mining

Abstract

The hospitality product is essentially a service experienced by the customer. The industry creates expectations, and these expectations are further influenced by prior experience and opinions of friends and associates. The intangible product of service is reinforced by the tangibles such as food, physical comforts, space, etc. Traditionally, the emphasis in the industry had been on acquiring new customers. Of late a strong attempt to retain customers has been made and a realization has occurred that the lifetime value of the customer is more important in improving profits (Mukhopadhyay, 2001). It is not enough to retain the customers; they need to be drawn into the hotel repeatedly. To achieve this end, various hotels started loyalty programs patterned on the lines of “frequent flier” programs of the airlines.