Hotels get nearly half of their revenues from the small segment of travelers who spend about a month each year on the road: frequent visitors make up only 10 percent of all hotel guests but account for 44 percent of hotel nights (Exhibit 1). In the early 1980s, hotel chains began to recognize the value of such customers by introducing loyalty programs patterned on the airlines' frequent-flier model. These programs have succeeded in maintaining the loyalty of people who travel moderately often (spending 6 to 22 nights a year in hotels) but are not as effective as they might be with other segments, our research suggests.

In general, frequent travelers belong to more than one program, spend less than half of their nights on the road in their favorite chains, and spread the rest around to other establishments (Exhibit 2). Light travelers—those who stay in hotels only a few times a year—have yet to build up points in any one loyalty program, so the advantages of always staying with the same chain are low. Hotels can court both groups in at least two ways: by learning...