News analysis: Hotel loyalty made easy
With the importance of loyalty programmes in the hospitality industry ever growing, Hotelier Middle East takes a look at the state of the sector's offerings
New approaches to loyalty programmes and smart technology are predicted to shape the hospitality sector until 2022, according to data released by Colliers International earlier this year. Since then, we have seen Marriott announce one set of unified benefits across Marriott Rewards, The Ritz-Carlton Rewards and Starwood Preferred Guest (SPG) for its members, due to be launched on August 18, 2018.
However, the name of the unified programme is yet to be revealed, according to Marriott International chief sales & marketing officer, Middle East & Africa Neal Jones.
The hospitality industry has also seen AccorHotels — which bought the brands Fairmont, Raffles, and Swissotel in July 2016 for $2.7 billion — combine all four just a month before Marriot launches its unified programme. Until July 2018, all four were operating as separate loyalty programmes, but now, the hotel operator has finally combined all its loyalty programmes under the Le Club Accor Hotels programme.
On launching one combined loyalty programme, Flavio Leoni, vice president sales, distribution and marketing at AccorHotels, said in an interview with Hotelier Middle East that “as Fairmont President’s Club, Swissôtel Circle and Raffles Ambassadors programmes merge, the introduction of new properties unlocks Le Club AccorHotels’ powerful points-earning structure, which allows members to accumulate rewards with ease and transparency, remains the same. The concept allows members to earn, redeem and achieve a higher tier status easily.”
Leoni also said that unlike other rewards programmes, Le Club AccorHotels has a clear monetary value behind the Rewards Points accumulated by its members. For example, 2,000 rewards points is equivalent to US $47. Since there are no blackout dates as in other programmes, these points can be redeemed at any time and at any one of the 3,500 participating hotels located in 100 countries around the globe.
Marriott International is also planning on capitalising on its strengths: namely, its massive global portfolio. As one programme, Marriott Rewards, The Ritz-Carlton Rewards and SPG will give members access to the largest collection of properties in the world, allowing guests to book, earn and redeem for the first time across 29 participating brands and 6500 hotels in 127 countries and territories.
Regarding the upcoming launch from Marriott, Jones said: “together, our programmes represent the most awarded travel loyalty space. In August, we’ll be bringing together Marriott, Ritz-Carlton, and SPG under one programme with one set of benefits. This is what our 110 million members have been waiting for.”
Jones also believed that a good loyalty programme usually forms the backbone of a hotel’s business strategy. However, because of changing consumer behaviour and expectations, the landscape is changing.
According to him, modern travellers are passionate and adventurous, constantly thinking about their next great adventure and looking for brands that can help them get the most out of their travels.
“Our members do not want a one-size-fits-all, transactional programme, which is why we created one that is flexible, and places emphasis on creating an emotional connection by enabling our members to use their earned points for experiences, on and off property, personalised to them, when it matters most,” he noted.
But do loyalty programmes make sense for hotel operators and owners from a financial viewpoint?
According to Jones, loyalty drives and the subsequent returns are the lynchpin of Marriott’s success. It is therefore at the core of the operator’s strategy.
“Our loyalty programmes are one of our most strategic business assets driving long-lasting value to our hotels & owners. Loyalty delivers leading returns and creates stakeholder value. Today one out of every two guests across our hotels globally, is a member of one of our loyalty programmes,” he added.
Jones also believes that it is economically more beneficial and more profitable to retain existing customers than acquire new ones.
“Members book direct reducing distribution costs. Members pay a premium for the experiences they desire and value most. Members stay more often, stay longer, spend more and are more engaged. Ultimately engaged members drive more business through positive word of mouth,” he said.
Agreeing with Jones, Accor’s Leoni said that “for the hospitality industry, loyalty programmes are incredibly important. Happy guests translate to loyal guests. Loyal guests are not merely repeat customers, they are also brand ambassadors. This in turn has a positive impact on the company’s brand equity.”
Among the newer generation of customers, the level of priority placed on loyalty has shifted and according to Leoni, the Le Club AccorHotels programme itself is therefore driven by loyalty fundamentals, such as generosity, recognition, experience and engagement.
“These individual principles are reciprocated, in varying degrees, by our brand ambassadors and directly translate to factors that impact the business’s financial success,” he added.
The Le Club AccorHotels programme also encourages an “earning by spending” concept which drives product sales across an extensive range of brands.
However, with so many loyalty programmes out there, competition is rife between hotel groups.
“Competition is fierce in the loyalty programme industry, no doubt,” according to Jones.
He also believed that when it comes to loyalty, transaction-based relationships are no longer enough. Consumers want meaningful, personal relationships and are looking at everything from expanded buying power, new benefits, and exclusive access to smart apps.
“The biggest reason for loyalty programmes not to work, is when it takes too long to earn rewards or is too complicated to redeem points. One of the things that members love is to reach a certain status that allows them additional benefits and perks. If you’re not getting this kind of specialised communication, the programme may not be the real deal for you,” said Jones.
However, For Marriott International, the loyalty of its members is important says Jones which is why they have worked hard to create a programme that is based on the aspirations of its members and gives them what they value most- more destinations, more rewards and more experiences.
What's the real benefit of loyalty programmes?
In general, many Middle East travellers and residents are ‘missing a trick’ when it comes to loyalty programmes, according to Shaun Clark, editor and founder of Eat Drink Stay Dubai.
“They’re either in one and not getting the optimum value or benefits, or they are not aware of how almost everyone could benefit from their use,” he said.
According to Clark, the real benefit in loyalty programmes comes from transferring casual spending to earning points/miles in one programme, and then transferring to another programme for increased benefits.
“Hotel loyalty programmes are basically for marketing and promotional purposes, so without them, hotels would have to work harder on other customer acquisition and retention methods. Although hotel loyalty programmes used to be focused primarily on business travellers, in recent years there’s been increased targeting of leisure travellers,” Clark added.
Clark is of the opinion that loyalty programmes do bring travellers to a brand or chain, so they are ‘worth it’ to the companies: “Loyalty marketing influences the ‘Holy Grail’ of travellers — the returning guest, who ‘buys in’ to the brand, with more on-property spend (restaurants, bar, spa etc.) because it increases their miles/points balance.”
Hotels are also increasingly using loyalty programmes for customer insight and to tailor services to preferences. It’s not unusual for an ‘elite status’ traveller to be recognised when returning to a property, which according to Clark, builds a sense being valued.