The effect of loyalty program attributes on customer's booking choice
Abstract
A loyalty program is commonly observed in our real world to establish and maintain a customer relationship. However, there is limited research information on the effect of loyalty program schemes on customers' choice in an online booking context. The current study summarized the awards currently offered by major hotels and online travel agencies (OTAs) and examined: 1) customers' preference toward attributes of the loyalty program, 2) within reward attributes, which contributes to an increase in consumers' booking choice, 3) which attributes make customers book on hotel websites rather than on OTA websites, and 4) the interaction between customer involvement and hotel loyalty programs' attributes on booking preference. The results revealed that customers prefer rewards that are related to hotel booking and immediate point redemption. Changing the reward attribute level from unrelated rewards to related rewards increased customers' probability of choice. However, timing of redemption did not affect the choice. Further, the effect of related rewards on increasing the chance of booking was stronger for consumers on a high reward program tier than those on a low reward program tier. However, no interaction was found between time and customers' tier of the program. Results suggest that the effect of hotel and OTA's loyalty program attributes on customers' choice is different from other industries' loyalty programs.
Degree
M.S.
Advisors
Tang, Purdue University.
Subject Area
Management
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