Brand executives said the companies will not share data but will offer members perks and points from both programs.
GLOBAL REPORT—Two high-profile Asian hospitality companies have formed an alliance to share loyalty programs, but that’s all they will share, said executives at both Hong-Kong-based Shangri-La Hotels and Resorts and Mumbai-based Taj Hotels Resorts and Palaces.
“Warmer Welcomes,” set to launch in March, will integrate the Taj InnerCircle and Shangri-La’s Golden Circle guest loyalty programs and promises to provide members “reciprocal and seamless benefits,” according to an announcement last week by the companies.
With the alliance, loyalty members will:
- Enjoy elite status at hotels of both brands;
- earn points across 200 hotels in 27 countries; and
- be able to redeem awards between both programs.
It’s a unique arrangement in that the two companies have no shared ownership, Wee Kee Ng, VP of loyalty and partner marketing for Shangri-La, said via email.
“Never before have two separate hotel groups integrated their loyalty programs without a business merger or financial investment in one or both companies,” he said.
The distinction is important, said Taj Hotels’ Chief Revenue Officer Chinmai Sharma, and means that there will be no sharing of data.
“Customer privacy is of paramount importance, and there will be no data sharing between Taj and Shangri-La,” Sharma said via email. “The Taj InnerCircle and Shangri-La Golden Circle programs will continue to run their own databases, and these will remain separate. Based on member profile and stay patterns, both sides might send relevant communication and offers that benefits respective loyalty members.”
The executives are less concerned about competitiveness between the brands.
“Because we are not merging, the alliance places no restrictions on where we or Shangri-La can develop or manage new hotels,” Sharma said. “Our current location overlap is only in a couple of locations, and even there both brands would rather see some cross pollination within each other versus a member choosing a third brand due to location or loyalty affiliation. The overall benefits of the alliance far outweighed the location overlap.”
The benefit, Ng said, is that “Taj gives Shangri-La greater access to high net-worth travelers in India; and Shangri-La gives Taj greater access to those travelers in China.”
China, he added, “is one of the top ten destinations for Indian travelers and is a rising source market for India with the largest potential for growth.”
Taj owns 70% of its properties and has management agreements for the remaining 30%, while Shangri-La owns 77 hotels and manages an additional 19.
A good fit
The two companies are both hotel owner-operators that share similar values and service philosophies. They both also tout high engagement and recall among high-net-worth travelers in their respective home markets and in key destinations where they operate.
“The alliance allows both brands to ring-fence their loyal members by partnering with a like-minded partner,” Sharma said. “This is especially important in the wake of industry consolidation on both supply (hotels) and demand (online travel agencies, for example) sides.”
The main goal of the alliance “is to offer greater value to the most valuable loyalty members of both brands,” he said.
“Our guests and loyalty members had shared their desire for a wider selection of world-class hotels in key destinations, where they could be recognized and also utilize their loyalty program. This alliance gives our members more destinations and opportunities to do just that. “
Ng added the alliance “gives our brands exposure to new markets and the broader scale necessary to compete in an era of mass consolidation and disruption.”
He said it makes sense, too, from a financial strategy standpoint, “given the two companies’ ability to execute quickly and the low capital requirement.”
“We will be able to improve brand awareness and increase market share in the two biggest outbound travel markets – India and China – by leveraging each other’s reputations and key customer bases – which are located in non-overlapping geographics,” he said. That will mean guests have “more destinations choices and more reasons to stay with us.”
The Warmer Welcomes program will be launched in March across all Taj and Shangri-La properties, along with a joint microsite, www.warmerwelcomes.com, that will include details about the program, point conversion rates and other benefits.
There will also be a marketing campaign targeting both Taj InnerCircle members and Shangri-La’s Golden Circle members, which will run over owned, paid and social media channels. In addition, there will be alliance branding at various consumer touch-points—including in-room video and digital banners—and creative assets such as posters, tent cards and email direct marketing templates to promote the program.
While the initial phase is focused on loyalty members, the executives at both companies expressed interest in exploring partnerships in other areas. Such partnerships, they said, could include cross-sell capabilities via respective brand sites and call centers, deeper redemption opportunities for members, and broad sales collaboration in different geographies. No timeline for any second phase has been set.
*Correction, 7 December 2016: An earlier version of this story incorrectly identified the Shangri-La property used in this photo.