Owner-brand friction still hinders loyalty value
Owner-brand friction still hinders loyalty value
15 SEPTEMBER 2016 8:37 AM

Given the need to balance guest experience, ease of use and value creation for owners, loyalty programs remain a sticking point between brands and franchisees. 

NASHVILLE, Tennessee—Hoteliers and brand companies have long sought the perfect solution to capture customer loyalty, and questions concerning the true loyalty of guests and whether brands are doing all they can continue to go unanswered.

Panelists who participated during the “Loyalty or lunacy?” debate during last week’s Hotel Data Conference aimed to answer those very questions.

Ali Merali, director of strategic initiatives and analytics for Starwood Hotels & Resorts Worldwide, said the fundamentals of hotel loyalty remain the same.

“The question is what is your future action going to be for us?” he said. “If you are considering us, then you are loyal. I’d prefer that you’d only think of (Starwood), obviously, but if you are using an efficient channel outside the (hotel) box, then still my answer would be yes.”

Jeff Good, president of Good Hospitality Services and president of HRC Hotels, said hotel companies need to fully analyze what loyalty data they have.

“Break down your diamond, gold members, your full mix,” Good said. “Even when it comes to development or moving into a new market, we look at loyalty, as well as the comp set. Brands will not drill down as much as owners would like.”

Hotel chains have to do much more, according to Jeff Low, founder and CEO of Stash Hotel Rewards, who was the only representative of a third-party company on the panel.

“Brands made sense 40 years ago when you drove down the freeway, but now with perfect information, I really do not know the purpose of it,” Low said.

Crunching context
Merali said the most important point in the current loyalty discussion is that “context matters, there cannot be one point of reference across the board.”

Loyalty usually does not work consistently across a chain’s portfolio or in any one market, but Good said HRC—which has properties including TownePlace Suites, Hampton and Homewood Suites by Hilton in its portfolio—was able to glean meaningful loyalty data from those properties.

“Much of (my company’s guest) information is consistent. … We’re a conservative, mid-America company,” Good said.

Merali gave some booking statistics from the Starwood Preferred Guest program and said the program "allows us to provide (guests) their experiences of the future.”* Good replied that hotel companies see various forms of return on investment from loyalty programs.

“(Loyalty) is driving business to hotels at the least cost, but when you are talking about different companies, it is not an apples-to-apples approach,” Good said, who added he regarded loyalty as one part of his entire guest delivery system.

“Loyalty is very powerful, but you are still building the same box with every hotel, so make sure you have the optimum engine working it,” Good said.

That optimum engine, Merali said, might mean customer-relationship management and property management systems are better integrated.

“We have to conduct personal research to know what type of marketing works best for each customer, and we would not be able to do that if the push came from what owners were pushing at any one time,” Merali said. “To be as efficient as possible translates to less cost and more value to the owner.”

Owners would love some of that data, Good said.

“It comes back to transparency,” Good said. “It cannot be proprietary information as it is our guest. All the time this (scenario) continues, it will hit both our bottom and top lines, and these conversations will continue. I am not asking the hotel companies to open up completely.”

Customers also still need to be reminded that loyalty points come only through booking direct, panelists said. It’s an issue that’s reached a point of exasperation, but the miscommunication goes both ways, Low said.

“I find it astonishing that hoteliers say, ‘Expedia is our best partner,’ when all they do is suck out value,” Low said.

Points pain
One lingering loyalty issue is the 95th percentile occupancy benchmark—which is what designates properties to be reimbursed for loyalty stays at noticeably different dollar amounts—and the effect this has on the guest experience regarding redeeming earned points.

Panelists said this often resulted in hotels not being aligned with loyalty guests.

“I’ve been loyal and saved my points, and now the brand is not happy to see me,” Low said. “Shouldn’t (a free stay) be the point of celebration? Points are not loyalty, trust is.”

Good brought up the need for consistency in loyalty platforms, which he said would aid revenue managers.

“We basically built our company around these (hotel loyalty) platforms,” Good said.

Merali said major brand companies can always be better at loyalty programs. He also said millennial guests don’t seem to act any different toward loyalty programs.

“SPG is a big driver for what Starwood does, to capture and deliver on preferences, but there is always room for improvement,” he said. “The first thing, though, to do is to make guests safe, and we will not go below that threshold.”

Merali would not say how Marriott International’s acquisition of Starwood would affect the two companies’ loyalty programs and what integration of Marriott Rewards and Starwood Preferred Guest could look like.

*Clarification, 16 September 2016: An earlier version of this story included data that was intended to be off the record.

1 Comment

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