Understanding Active Loyalty in Hotel Reward Programs Through Customers’ Switching Costs and Perceived Program Value
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Abstract
The hotel industry continues embracing loyalty/rewards programs as a major platform to nurture customer relationships as well as reaping return business. The reality is that major hotels have been aggressively spending more on gearing the program value but achieve less in defending the customer base and nurturing active loyalty. This study addresses this void by examining the structural relationship among perceived program value, switching costs and active loyalty. The proposed model is supported by a unique online survey dataset collected from the US national sample frame of tourists. The effect of perceived program value and switching costs on active loyalty has been validated, suggesting a focus on switching costs in driving active loyalty. The findings contribute to the body of hospitality literature and the industry practice.
