Trends in Hotel Loyalty Programmes
Members of loyalty programmes account for a large proportion of hotels’ occupancy and revenues, with many hotels reporting at least 30% of occupancy coming from their members. Not only do robust membership numbers help with potential revenue opportunities, both within programmes and in terms of sales of points to partners, but they also help persuade franchise owners to build/convert to their brands to take advantage of built-in loyal bases.
Hilton HHonors launches new global campaign
In March 2011, Hilton revealed a US$25 million global rebranding campaign for Hilton HHonors. The theme of the campaign is “Hilton HHonors, A World of Experiences Worth Sharing”. The online, print and outdoor campaign aims to resonate emotionally with travellers through intimate photographs that depict momentous, yet simple, occasions. For example, one photo is of a father and son, with the father shaving and the child using shaving cream. The tagline is “The best souvenir is the time you spend together”. There will also be a broadcast element rolled out in some markets in Europe and possibly Asia Pacific, while other media will be used in the US, Turkey, China, the UK and Italy.
Hilton caused anger among members by increasing the cost of a “free” night by 20%, starting on 15 January 2010. This new campaign may be an effort to gain approval from members and improve the programme’s image. However, the company claims that new members increased by 2.5 million in 2010, so the devaluation may not have had a strong impact, although InterContinental Hotels Group (IHG) launched a campaign entitled “Luckiest Loser” in February 2010 to steal Hilton HHonors customers.
InterContinental Hotels Group’s promotional campaign invited angry Hilton HHonors members to join IHG’s Priority Club Rewards loyalty programme. To compensate for the points Hilton HHonors members would lose, IHG offered up to 400 million Priority Club Rewards points to those who joined the programme by 28 February 2010.
Overall, each qualified participant automatically got 1,000 Priority Club Rewards points just for becoming a member. Additionally, the top 20,000 “Luckiest Losers” received up to 20% of their Hilton HHonors balance in Priority Club Rewards points. One Hilton HHonors member, Charles Rosenay, who had nearly five million HHonors points, was awarded two million Priority Club Rewards points. Priority Club Rewards membership numbers grew by 17% (or eight million) in 2010.
Starwood Preferred Guest is global
With 47% of its hotels outside North America, Starwood Hotels and Resorts’ Starwood Preferred Guest (SPG) programme has an international base, with 40% of its members outside of the US – double the percentage of Marriott Rewards, according to Starwood. The company also says that 53% of new members in 2010 came from outside the US, up from 39% in 2006.
SPG also has a co-branded credit card with American Express, which went international, with launches in the UK and Canada, in 2010. About 25% of its elite members have the card, and the company says that it has a cult following in the consulting industry.
China has been a very strong country for membership growth. In 2009, there was a 50% increase in Chinese membership, making China the fourth largest country in terms of active membership, behind the US, Canada and the UK. Chinese travellers accounted for 50% of occupancy in the country in 2009.
While earning free stays is a strong incentive, in China, status, VIP access and instant awards, such as free room upgrades and spa treatments, are also key motivators for SPG members.
62% of redemptions are at Sheraton hotels. Domestic stays in Hong Kong, Sanya, Shenzhen, Tianjin and Hangzhou are amongst the most popular. International redemptions are led by Taipei, Singapore, Bali and Kuala Lumpur.
Future trends for loyalty programmes
With increasing maturity in developed markets, loyalty programmes are likely to experience the fastest growth in membership in emerging markets, where opportunities for co-branding partnerships are significant thanks to the expected substantial growth in card spend. Loyalty programmes allow the building of a detailed profile of clients, and companies are expected to leverage their programmes not only to improve the customer experience but also to drive additional revenues. However, privacy regulations in Western Europe make this difficult.