Do loyalty programs really matter for hotel operational and financial performance?

Nan Hua, Wei Wei, Agnes L. DeFranco, Dan Wang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

10 Citations (Scopus)

Abstract

Purpose: This study aims to use a sample of 2,120 individual hotel properties between 2011 and 2013 to evaluate the impact of loyalty programs on hotel operational and financial performance. Design/methodology/approach: This study provides empirical support for the impact of loyalty program based on both cross-sectional and panel data analyses and uses the instrumental variable technique to avoid potential heteroscedasticity, autocorrelation and simultaneity issues. Findings: Findings of this study show that loyalty program expenses have a significant and positive impact on all three operational performance indicators of RevPAR, ADR and Occupancy and the financial performance indicator of gross operating profit. Research limitations/implications: This study suggests that the benefits of loyalty programs should be understood against the backdrop of a reasonable set of controlled variables such as e-commerce, franchise, advertising, other marketing expenses, hotel size and hotel chain scales. Originality/value: Given the conflicting viewpoints about the positive and negative impacts of loyalty programs, and that the literature is scant on empirical validation of the impact of loyalty programs on the overall operational and financial performance of hotel properties, this study is an early attempt to empirically test the impact of loyalty programs on a number of hotel operational and financial performance indicators by using an extensive list of individual hotel properties between 2011 and 2013.

Original languageEnglish
Pages (from-to)2195-2213
Number of pages19
JournalInternational Journal of Contemporary Hospitality Management
Volume30
Issue number5
DOIs
Publication statusPublished - 1 Jan 2018

Keywords

  • Financial performance
  • Hotel performance
  • Loyalty programs
  • Operational performance

ASJC Scopus subject areas

  • Tourism, Leisure and Hospitality Management

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