The new guest-centric look of loyalty for hotels

Consumer devotion has become the holy grail of the hospitality industry, and the battle for it is more intense than ever.

Whereas not too long ago brands offered monotonous renditions of loyalty programs with complex and uninspiring earn-and-burn formulas, in recent years innovation has ramped up - driven by the demands of consumers who can now easily search and buy with a few clicks.

As a joint Phocuswright/Jumpshot report, The Battle for Lifetime Value: Customer Loyalty in Online Accommodation, states, “Given the rising costs of customer acquisition, repeat visitors are more valuable than ever. While today’s travelers are notoriously fickle, repeat visitation data suggests that loyalty perks and a satisfying customer experience can still entice travelers to come back for more.”

And those returning travelers not only reduce acquisition costs, but they also spend more at the hotel than a new customer - 67% more, according to Roiback - and they're likely to recommend the hotel to friends and family.

At the heart of the evolution in hospitality loyalty is technology, which gives brands data and capabilities to understand and serve guests with offers that are personalized rather than generic.

A report from Amadeus and InterContinental Hotels Group, Drivers of Change in Hospitality, says, “ ...technology that extrapolates emotionally sensitive data could pave the way for more brands to reach a cult status at scale. Information about the guest, from their temperament to their hobbies, will create a holistic understanding of each individual.

"This in turn facilitates thoughtful interactions and a personalized experience that will truly resonate. ... Holistic data can also inform the type of third-party partnerships companies could enter as part of their efforts to connect with like-minded brands and popular services.”

Experiential emphasis

Hilton is seeing these types of benefits in its Hilton Honors program, which now has more than 100 million members who accounted for 62% of occupancy across its portfolio of hotels in 2019.

Members use the Hilton Honors app for things such as pre-arrival room selection, as a digital room key and control of in-room technology. But Jonathan Nouri, vice president and global head of Hilton Honors, says he is also focused on driving value for members outside of their stays.

“Our program is growing at a faster rate than ever, and a lot of the member we are enrolling are much younger than our core demographic,” Nouri says.

“They don’t have the occasion to travel quite as much yet, so our ability to engage them with ... the ability to earn and burn points with Lyft and the ability to redeem points on Amazon becomes increasingly important, so when those travelers do have a travel occasion Hilton is at the top of their minds.”

Hilton has also revamped its “experiences” redemption options in the last couple of years, adding more choices at lower point levels to make it more accessible rather than purely aspirational.

“To get a pair of concert tickets to really good artists through our partnership with Live Nation for only 10,000 points ... the chances are the next time they think of traveling they will probably book with us versus just being brand agnostic and booking through an OTA because they had that experience with us,” Nouri says, adding that the company will “double down” on the Live Nation partnership this year.

Accor has taken a similar experiential approach with its redesigned loyalty program, Accor Live Limitless (ALL), which launched in early 2019 and comprises its digital platform, loyalty program and visual identity.

According to Accor’s chief digital officer, Maud Bailly, the strategy is based on the concept of “augmented hospitality” which is “an everyday lifestyle companion, both at home and everywhere in the world” that enhances members’ lives with extraordinary experiences.

To do this, the company works with partners such as AEG to offer members access to tickets and private suites at arenas in Europe, Latin America and Asia. Accor also has a partnership with IMG that gives ALL members access to chef masterclasses and culinary encounters as well as to “Taste Festivals” in cities around the world, and it partners with Paris Saint-Germain football club that gives members exclusive access to tickets and VIP box seats for all matches.

They clearly ask for instant and tangible gratification, instead of endlessly waiting for using their points and finally seeing the benefit of being a loyalty member.

Maud Bailly - Accor

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And in January, Accor announced a partnership with Southeast Asia super app Grab, which enables GrabRewards members to use their points to book Accor hotels and ALL members to earn points from  Grab rides and participating merchants.

Says Bailly: “We have the opportunity to collect more insight about our members and their expectations from a relevant loyalty program: globally they are looking for seamless digital interfaces, on website as well as on the app. They clearly ask for instant and tangible gratification, instead of endlessly waiting for using their points and finally seeing the benefit of being a loyalty member. 

"Sixty-percent of millennials consider that ‘fun’ is also an important loyalty driver. And, last but not least, our guests want more choice, diversification, among more brands, but also more services, breaking down the walls of the hotels.”

In releasing its full-year 2019 financial results last week, Accor says it expects revenue from partnerships to double by 2022 when it is expected to reach €100 million.

A simple approach

But the loyalty strategy for large global brands such as Hilton and Accor is not necessarily a fit for smaller hotel companies.

North America-based RLH Corporation, which operates franchise brands including Red Lion Hotels, Hotel RL, Signature Inn and Knights Inn, has taken a more focused approach for the 2.6 million members of its Hello Rewards program.

About 18 months ago the company introduced a new loyalty currency, Hello Bucks, with members earning between 10 and 30 Hello Bucks for every stay depending on the length. The Hello Bucks work like cash – each one equivalent to one U.S. or Canadian dollar – that can be applied toward the next reservation or saved to cover the cost of a full free night.

“We designed it to be really simple and easy to understand,” says Whitney Swales, RLH Corporation’s vice president of guest recognition and loyalty.

“You don’t have to calculate complicated point structures, you don’t have know certain hotels you can and cannot go to. There are no blackout dates. It’s really just based on being simple and providing something to guests that they could use after their first stay.”

The company’s previous program rewarded guests with tokens that could be redeemed for a free night after seven stays, but Swales says that was not a good fit for the brand that has many leisure guests that travel less frequently.

In November, RLH launched a partnership with Grubhub that allows members to get free delivery and earn 10 Hello Bucks rewards for each Grubhub order. 

Swales says she is interested in adding more partners in the future – but only if they are a good fit.

“Having partnerships is definitely important but not overdoing and having it be so complicated that people get paralysis by analysis isn’t necessarily beneficial to the program,” she says.

“So to me having something like Grubhub really matters to our particular guests given that not all of our hotels have an onsite restaurant.”

One of the company’s most innovative initiatives is its partnership since 2016 with Expedia, which Swales says drives about half of the new enrollments in its rewards program.

Through the partnership, consumers looking at Red Lion properties on Expedia see member-only rates. If they choose that rate, they are automatically enrolled in Hello Rewards and earn Hello Bucks for the booking.

“This allows us to have an acquisition channel outside of our regular booking channel on Redlion.com, and it allows us to reach guests that we may not be able to reach otherwise in a place that we know they are already shopping,” Swales says.

“And given that we’re a smaller franchisee company, it allows us to reach people that wouldn’t necessarily know about our brands.”