Hotel Referral Programs: Entice More Guests Through Word of Mouth

Looking for new ways to entice guests through the doors of your hotel? A hotel referral program represents an effective way to grow your business, with referral marketing generating three to five times higher conversion rates than any other channel. 

How can you grow your pool of guests and secure long-term growth through referrals? We’ve put together a handy guide to hotel referral programs to help with your referral campaign. 

What is a hotel referral program? 

Hotel referral programs reward previous guests with gifts and deals in return for recommending your hotel to their friends and family members. The more referrals your guests successfully make, the more rewards they earn.

While keeping track of referrals may sound a little complex, it’s easy to streamline the process with referral software. Software automates referral tracking, and sends automated emails and referral links to customers when necessary. Forget manually tracking the names and email addresses of your existing customers – referral software makes running a referral campaign smooth and simple. 

Why does your hotel need a referral program?

There are plenty of reasons to invest in a hotel referral program, including:

• Referral programs make it easier for enthusiastic guests to share information about your hotel with friends and family.
• You can reward your guests for publicizing your hotel through word of mouth, incentivizing them to continue this valuable work. 
• Prospective guests are around four times more likely to engage with your hotel when recommended by a friend, because they trust their friend’s word far more than they trust ads.
• Referral programs represent a significantly more cost-effective method for increasing bookings, compared to paid ads.
• Referred friends tend to be more loyal to hotels their friends enjoy, as they’re likely to trust their judgment. 
• Referral software allows you to track every referral your guests make, generating data you can analyze to improve your offering and attract even more new guests

In addition, many well-known hotel chains and booking sites run referral programs throughout the year.  Marriott, for example, runs a program where guests can earn points for every stay their referrals make. They can then redeem such points for complimentary perks and stays in Marriott hotels. Hotels.com also offers discounts and perks for users who refer friends.  So, running a referral program of your own can help your hotel stay competitive.

Before you start a hotel referral program

Before you launch a referral program, you must ensure you have a healthy pool of loyal customers. Ideally, you’ll have guests who love staying at your hotel and have booked rooms several times, as they’re more likely to convince their friends and family members to stay. You should also ensure your hotel has a strong reputation and excellent customer service, by checking out your online reviews. 

Once you’re in a position to launch a referral marketing program, you should analyze the needs and preferences of your customer base. Consider questions such as:

• What are your key demographics?
• Do your existing customers stay for personal or business reasons?
• How do your customers communicate with friends and family members?
• What referral rewards would motivate guests to refer friends to the hotel?

These questions will help you run an effective marketing campaign around the referral program and maximize hotel booking rates. 

You should also ask yourself the following questions to identify your most loyal guests:

• Who has made the most bookings?
• Who has recently provided positive reviews or left positive comments on social media?
• Has anyone already referred your hotel to friends on their own initiative?

Once you have identified your best guests, you can ask them for referrals first to ensure the referral program gets off to a strong start. 

Hotel referral program best practices

An effective hotel referral program requires careful planning. The following best practices will help you avoid common mistakes and maximize the cost-efficiency of your referral program.

Choose the right rewards

Offering attractive referral rewards will maximize the efficacy and sustainability of your referral program. You’ll need to choose incentives that motivate customers to recommend your hotel, without breaking the bank. Popular rewards include:

• Credits or points toward future hotel stays (Often, hotels give this reward in the form of points. But we recommend spelling out the monetary value of these credits, as they will seem more attractive)
• Credits toward room service or other perks
• Room upgrades
• Booking fee waivers
• Cash back incentives
• Gift cards that suit your customer base (e.g., Amazon vouchers)
• Discounts or promo codes that suit your audience’s needs (e.g., Uber discounts)
• Tangible rewards that suit travelers, such as a travel bag or sunglasses

Pro tip: Offering credit toward future bookings represents one of the smartest moves for hotel owners, as it promotes loyalty among customers who make successful referrals. 

Choose your reward structure

Next, you should consider the structure of your program. For example, will you only reward the referring guest? Or will you also reward their friend for making their first booking? As a general rule, rewarding both parties (also known as a double-sided reward) is likely to attract more attention and drive a return on investment. This will both motivate more referrals and encourage referred friends to book their first stay.

You should also consider paying out higher-valued prizes as advocates make more successful referrals. For example, you could provide a simple discount coupon or promo code for an initial customer referral, progressing to much higher payouts for those who attract many new customers. This is known as a tiered referral program.

Higher-priced bookings may also warrant a higher referral bonus. You could offer cash back on a percentage of the friend’s booking, for example, or a higher number of room credits for expensive bookings. 

You might also give the advocate a percentage of multiple bookings that their friend makes in the future, as credit towards future bookings. As you’re offering the repeated savings in credits, it will promote strong customer loyalty among the customers who make successful referrals.

Promote your hotel referral program

Once you’ve established your referral program and invested in the relevant software, you’ll need to spread the word about your fantastic new initiative! Here are a few vital steps for promoting your program:

• Make your program highly visible on your hotel website, by placing a hero image or banner on your homepage.
• Send mass emails containing details of your referral program to existing customers.
• Send personalized emails about the program to your most frequent visitors.
• Launch social media posts and ads.
• Add information about the program to the news section of your website. 
• Talk about your referral program in newsletters, update emails, booking confirmation emails, and other emails unrelated to your referral program.
• Promote the program in your guest booking portal.
• If you’ve got a mobile app, incorporate mobile referral program promotion.
• Mention the program during conversations with guests (don’t underestimate the power of word of mouth!)
• Add a program logo to your email signatures and social media bios.

Ensure the sharing process is quick and easy 

Guests are more likely to get involved with your referral program if it requires minimal effort. Start by generating an enticing headline that spells out precisely how customers can participate in your referral program and share information with their friends, as well as the rewards on offer. Then, explain the program in three or four simple steps, including a clear and exciting call to action button. 

The referral form should be short and easy to complete, only asking for essential information. You should be able to pull guests’ personal information from your booking portal to your referral software, meaning participants don’t have to reenter information they’ve already provided. 

No matter how intuitive your referral page and directions are, your customers are likely to have a few questions. As such, you should add an easily accessible FAQ page on your website, containing as many potential questions as possible. You can keep adding to this page as your referral program progresses and customers ask more questions. 

Finally, remember to provide multiple sharing options based on how your key demographics tend to share information with their friends and family members. For example, young professionals may prefer to use social media and QR codes, while retired vacationers may prefer to send emails or traditional website links. 

Use referral software to track your program

As we mentioned before, referral software is the bedrock of any successful referral program, as it streamlines and automates processes to ensure accuracy and cost-efficiency. By generating unique referral links for every guest, referral software allows you to track the origin of every referral and instantly issue rewards for successfully referred bookings. 

Referral software can also collect and measure data regarding the success of our program, which you can use to refine your processes and incentives. For example, you may discover that issuing free stays or hotel credits generates more traction than offering vouchers for other businesses, which will allow you to alter your reward structure accordingly.

Wondering where to find the best referral software? Referral Rock offers best-in-class referral tracking, sharing, and engagement experiences, including dedicated onboarding specialists. You won’t need any developers, and you won’t have to implement any complicated coding.

Harness the power of referral marketing today!

Hotel referral programs represent the future of marketing in the hospitality industry. If you’re looking to maximize bookings, build a loyal customer base, and remain competitive in today’s sector, there’s never been a better time to invest in referral marketing software. Once you start tracking the success of your program, you can begin refining your incentives and reward structure to maximize results and drive higher booking levels.

Ready to harness the power of referrals with the right software? Contact us to learn more about how Referral Rock can scale your business.