Game of Thrones: How Hotel Rewards are Changing

November 6, 2018

When Marriott absorbed Starwood for AUD $18b in 2016, it was the hotel equivalent of two stars colliding. The merger had a price tag of AUD $18.3 billion, and resulted in the world’s largest hotel company with more than a million rooms under thirty different brands.

 

What you might not know is that the Starwood Preferred Guest (SPG) program was among Marriott’s top reasons for chasing the deal. Marriott already had a popular loyalty program (55 million members), but SPG was known to be popular with young business travellers. The program’s 23 million members were loyal to the brand, travelled frequently, and were often willing to pay more. For Marriott, acquiring these customers was arguably as important as acquiring Starwood’s hotel infrastructure.

 

Loyalty programs have long been a staple of the hotel industry, but many of them have devolved into programs that are generic, stingy and cumbersome. As the hospitality scene has undergone drastic changes, some have asked whether hotel loyalty programs will be around much longer.

 

The answer, according to none other than AirBnb, is yes. The San Francisco-based company recently announced a loyalty program of its own (which, of course, is called Superguest) to be activated by the end of 2018. The details of the program have yet to be announced, but it comes on the heels of additional rollouts, including a category of property that is curated to professional standards (AirBnb Plus) and a category of property that is luxurious or unique (AirBnb Beyond).

 

These two examples – the Marriott-Starwood merger and the new AirBnb rollouts –demonstrate an intensifying battle for loyalty. The question is, how will loyalty programs evolve? How will they be optimised for current and prospective guests of any particular brand? This is a particularly interesting question in a time where many people are seriously questioning the value of loyalty programs for both airlines and credit cards.

 

Answers to these questions are surfacing in all corners of the global hospitality industry, but are most visible at the highest levels. Early in 2018, Hyatt Hotels unveiled a new loyalty program that rewards guests not only for booking rooms, but for spending money on spa treatments, food and beverages. Choice Hotels has re-tooled its loyalty program to deliver immediate rewards for weekday stays, including discounts on fuel, credits on Uber or Amazon, and even airline miles.

 

Another fresh angle is being explored by Carlson Rezidor Hotel Group, which has started ushering its loyalty members through the qualification process for TSA pre-check. This is a government-controlled program that allows faster movement through U.S. airports. Gifts cards and late checkouts are also among that company’s rewards options.

 

Another important example is Wyndham, which has a substantial vacation rental business in addition to its portfolio of hotel properties. As you might expect, the company recently announced that Wyndham Rewards members can now earn and redeem points at 17,000 vacation properties, in addition to 8,000 hotels. Wyndham has also lowered the bar-to-entry on rewards, allowing loyalty members to stay at any of its properties for 15,000 points per night. Choice hotels, which also maintains a stock of vacation properties, has announced that it too will soon introduce wider loyalty-integration of the properties it controls.

 

Loyalty programs are also at the center of the ongoing challenge to OTAs with most global brands, (Marriott, Hyatt, Hilton Worldwide, etc.) offering loyalty members a discount for booking direct.

 

What about boutiques and independent hotels?

 

Re-shuffling the loyalty deck may seem less relevant to boutique and independent properties, who trade more on uniqueness and guest experiences than rewards programs. This is where things get interesting. Hyatt Hotels Corporation recently announced a “loyalty alliance” with Small Luxury Hotels of the World (SLH), a loyalty program shared by over 500 independent luxury hotels across the globe. So far, this is a one-way street – Hyatt members can earn and redeem points by staying at participating SLH hotels, but not the other way around. In time, this will probably change.

 

A Game of Loyalty

 

There’s no question that hotel companies and AirBnb are starting to look more like each other. The progression has been visible for some time. AirBnb has been reaching toward standardisation while hotel companies loosen their proverbial necktie. As warring tribes work to stake a unique position in the hearts and minds of travellers, alliances are taking shape. This should play well for the guest experience, and for the usefulness of the rewards to be obtained. Guest loyalty is of course a long term game and according to the National Retail Association, one that pays off with loyal members spending up to 40% more than non-members.

 

As the character Lord Varys once said on Game of Thrones: “You wish to know where my true loyalties lie? Not with any king or queen, but with the people.” In the hotel case, if that loyalty is reciprocated it will be paid back faster than the Iron Bank.

 

For further industry news and insights please follow the links below.

 

 

 

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