Using Hotel Data to Identify Recurring Customers Versus Loyal Guests

With AI at the gates, 2025 is already shaping up to be the Year of Data; it’s all about getting your data rivers flowing into a lake, cleaned up and curated for machine learning (ML) applications. One of many lucrative prospects pertains to segmentation and answering a question that in the past we’ve treated with more an ounce of human-bias-driven hunch: how can you tell the difference between recurring guests and truly loyal customers?

At first blush, you may think, “What’s the difference and who cares?” But there are subtleties here that can inform how a hotel brand scales across different geographies, how it’s able to grow ancillary spend and how it’s able to grow its customer base.

Recurring guests choose your hotel because you offer the best price or have the best location, but don’t necessarily sing your praises or would book if you raised the price by a significant margin. Loyal guests are those who chooses you in spite of an above-market rate because they value your brand, your standards, your design, your loyalty program and the feeling they get when they stay with you.

We don’t mean to besmirch the recurring road warrior’s patronage; rather in understanding their distinct motivations, you can guide commercial strategy with more effective operational improvements and rate plans that let you build grow the top and preserve the bottom while differentiating the brand.

Most significantly, appealing to only recurring guests means that your hotel perennially has one hand behind its back with respect to rate growth. Market forces dictate your nightly rates, save for the magic of a great RMS and CM. Nevertheless, there’s money to be made in knowing the difference, which really is just a matter of using your data effectively.

Recurring Guests Versus Loyal Customers

At a glance, a recurring guest and a loyal customer might appear identical: both return to your “brand” multiple times. The word is in quotes here because a recurring guest may have a higher property-level frequency while a brand advocate’s regularity may only be properly revealed when looking portfolio-wide”

The 20th century motto would dictate that “revenue is revenue” and you take what you can get. However, it’s the psychographics, interests and underlying motivations that set these two segments apart, and these motivations can represent the difference between commoditization and the nurturing of a Veblen good (luxury items where demand increases as price goes up).

From past consulting assignments where we diagnosed this problem then mapped plans to untether hotels from market forces, to get owners in the right headspace there’s an important quote to insert at this point. We’ve posed this to ownership and executives, and it comes from none other than Henry Ford who said, “If I had asked people what they wanted, they would have said faster horses.”

Replace faster horses with more cost-effective hotel rooms and you understand the slippery slope of prioritizing recurring guests over true loyalty in your long-term planning. Bold innovation and creativity lie at the core of what uplevels any property or brand to garner true loyalty to it.

Recurring, transient guests often choose your hotel because of convenience – be it proximity, competitive pricing or corporate partnerships. These guests may pivot to competitors at the slightest inconvenience or price drop. Think of them as transactional buyers; they return because it’s easy, not because they feel an emotional connection to your brand. This isn’t to say you can’t foster an emotional connection through service with a smile and what not, but the core motivation will almost never be in a place to let your hotel evolve into anything more than a faster horse.

On the other hand, loyal customers are driven by something far deeper. Call it heart, soul or gut feel. They choose your property not because it’s the cheapest or most convenient, but because they genuinely value the experience you provide. Loyal guests will often go out of their way to stay at your property. They are still price-elastic and will be chagrined by service errors, but their loyalty stems from trust, a shared purpose or a sense of belonging that emerges from the sum of your features, amenities and teams.

Integrated and centralized data can give you hints about the ‘why’ behind these guest profiles, which is what you should embrace as a way of attaining any combination of positive growth metrics like:

• Above-market nightly rates that resist low occupancy, promo periods
• More direct bookings and channel shift, increasing flowthrough
• Greater suite or premium room product usage versus only standard rooms
• Higher net promoter scores, social media impressions or whichever word-of-mouse metric you track
• More earned media as various features get recognized as exceptional
• Total revenue increases via packaging and attracting guests that want to use your facilities rather than just your room for sleep
• Longer length of stay because the onsite experience is trusted to be worth it

If there’s another quote that can complement Henry Ford’s rationale for not treating all information at face value, it would come from Claus Sendlinger, founder of Design Hotels, when he described the fine line between lodging and hospitality. “I need a room; I need something; it needs to be clean; I need to get from point A to B and I get some food if I need some food. I think 90% of what we see in hotels is lodging. Hospitality, for me, is where you care; where you’re generous, where you’re happy, not because a textbook tells you to smile when you check someone in but where you’re just happy because you love the job.”

Leveraging Hotel Technology to Differentiate Guests

Recurring guests treat your hotel as lodging; loyal customers think of you as hospitality. Distinguishing between the two requires actionable insights that only a machine may be able to pick apart as patterns from the thousands or millions of fields your hotel may have at its disposal once all the silos are matched and merged. That said, we mere mortals can offer some hunches about what to look for to help distinguish between these two segments besides simply segregating by corporate versus leisure versus group.

1. Recency, frequency and monetary value (RFM): By the numbers, road warriors may have a high frequency but low monetary value, while brand advocates may have the reverse. This isn’t always the case, but integrating CRM data and testing changes over time can tell you what’s correlated with growth within these two buckets. Moreover, analyzing RFM within a CRM (had to go there with the acronyms!) can guide the buildout of lookalike audiences.
2. Some other fun data points: Have you ever tried cross-referencing booking lead times with LOS, room types booked, RevPOR or TRevPAR? This is but one cool question you can ask out of dozens. Barring high-demand compression events where MICE travelers may want to secure their rooms a year in advance for fear of missing out, our hypothesis is that the trust bestowed by true loyal leads to those types of guests wanting to reserve their rooms farther ahead than those who are brand agnostic.
3. Well-designed guest feedback systems. It’s well-known that incentivizing survey participation with loyalty points ensures you gather richer data while also engaging guests. So, who is actually taking the time to fill out those surveys? We caution here that while reducing the feedback friction – for instance, by reducing answers to one-to-five-star clicks – you may also be reducing the overall quality of the answers you get. The classic Amazon stat about how at least 80% of all reviews are five stars is indicative of this. Instead, the best systems aim to frame the feedback around quality not quantity.
4. Sentiment analysis. Have you run any sentiment analysis on the qualitative answers within a feedback survey? What are they saying? What specific features or services are they calling out? In today’s ever-hectic world, who even bothers to write a review? Can you tie these sentiments back to a guest folio for deeper analysis?
5. First-party data and zero-party data. This is a nuanced area that deserves some unpacking. For first-party data, hotel marketers already know that tools which integrate travel intent and other ‘dream phase’ data can help predict future patronage by identifying those guests, and their behavioral patterns, who are more likely to book. Zero-party data is quite meaningful because this indicates intentionally shared information, rather than only what you can gather passively through direct customer interactions. This distinction can be sliced up in many ways to show what sorts of guests are actively sharing with you and what’s motivating them to express outward loyalty.

Asking Better Questions

It’s often said that AI pattern recognition doesn’t just help you derive rather operational efficiencies, but that it lets you ask more specific questions about your customers. Because there are fewer businesses more complex than hotels, AI thus has perhaps the greatest potential to help once all the data points are strung together.

Pondering whether someone is a recurring guest or truly loyalty attempts to comprehend not just what your guests need, but why they choose you. Knowing the why – or at least having greater confidence for that why – gives you more solid ground upon which to design memorable experiences and tailored stays. This can go far beyond only rate engineering or channel distribution; it’s feedback on product design and evolution.

Some other questions that you may be intrigued by:

• Knowing that happier employees translate into happier guests, what are the most cost-effective ways to boost team morale?
• How are my booking lead times changing over time and are there any trends that indicate increases such as specific packages or amongst different channels?
• If our hotel introduces a new product offering, what guest behaviors would be most highly correlated with early adoption so that a ‘first look’ package can be built?
• What specific survey questions and types of responses are correlated with recurring bookings or total guest spend?
• What prearrival or onsite incentives are most likely to encourage unknown OTA guests to hand over their personal email or phone number?
• What onsite experiences or those offered through partners are generating the most enduring loyalty as observed by positive reviews, total revenue, social media engagement or return visits? Are there any other associated metrics?
• How does the brand currently skew according to disparate generations and what patterns exist amongst millennials and Gen Z so we can engender future loyalty?

A buzz term nowadays that describes this level of analysis is ‘conversational reporting’ and hopefully you can see where things are headed. More data and more data flows are the future, but they can also be quite liberating in their ability to unlock new sources of revenue or finetune operations. Ultimately, the only bottleneck will be what types of questions you decide to ask.

Together, Adam and Larry Mogelonsky are the principals at Hotel Mogel Consulting Ltd., an asset management and hotel development consultancy. Their experience encompasses properties around the world, both branded and independent in the luxury and boutique categories. Their writing includes eight books: “Total Hotel Mogel” (2024), “In Vino Veritas: A Guide for Hoteliers and Restaurateurs to Sell More Wine” (2022), “More Hotel Mogel” (2020), “The Hotel Mogel” (2018), “The Llama is Inn” (2017), “Hotel Llama” (2015), “Llamas Rule” (2013) and “Are You an Ostrich or a Llama?” (2012). You can reach them at [email protected] to discuss business challenges or for speaking engagements.

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