The Use of Smart Card Technology to Develop a Destination Based Loyalty/Affinity Scheme for SMEs in Tourism and Hospitality

Abstract

Given the increasingly high cost of creating new customers, organisations have turned to developing ways of retaining the loyalty of existing ones. The current visible exponents of loyalty schemes are the large retail organisations, although some of the major players in tourism and hospitality have started to develop similar programs. In some cases they have forged affinity schemes with their strategic partners, thus allowing participants to earn discounts and points across several product ranges (e.g. BA’s Executive Club). In general, the hospitality and tourism industry fails to take advantage of the marketing intelligence gathered during visitor stays. Smart card technology provides an efficient way to gather extended information about customers and develop a pool of information about buying behaviour and lifestyle that could be used to effectively market the tourism products of a community. This would lead to effective market segmentation and targeting and, ultimately, to one to one marketing of customised tourism products. This paper examines the feasibility of implementing a PC based destination focused loyalty scheme by developing a theoretical model of probable participants and stakeholders. It considers who would be responsible for developing/maintaining such a scheme, and also questions whether the benefits, both to consumers and participants, outweigh the costs of development/implementation. Lastly, it examines the possibility of incorporating such a scheme within an intelligent destination system.