Loyalty programs

By Marni Andrews

More than half of all global hotel guests staying in a chain hotel are not members of the loyalty program. That is a lot of points left on the table every day.

Also consider that the average lodging loyalty member is bombarded regularly with messages like “Earn miles & flight discounts,” “3X the miles,” “Earn up to 5,000 bonus miles,” “Earn 2 free nights,” through e-mails, print ads, outdoor signage and online banners. According to a report from Colloquy, a loyalty marketing researcher, there were more than two billion loyalty programs in the U.S. in 2011 (that’s an average of about 18 per household). Canadians are apparently even more loyal: 94 per cent belong to a loyalty program, second only to the British in the world. However, according to Maritz Canada, nearly 70 per cent of loyalty program members have lost interest in participating in at least one of the programs they belong to. So there is a lot of ambivalence attached to loyalty.

Dr. Gabor Forgacs, associate professor, Ted Rogers School of Management, Ryerson University in Toronto, has a story to illustrate the point.

“I remember witnessing a check-in where the new arrival was asked by the GSA at the registration desk if she had a loyalty membership. She opened her wallet with at least a dozen membership cards neatly displayed and asked, ‘Which one is yours?’ Was she a loyal guest to each and every one of those brands?”

As Dr. Forgacs notes, there was a time when having a loyalty program was a differentiator. Not anymore. The differentiator today would be to not have a program. It is the same as Internet access. If a given hotel offers free Internet, it will not drive more occupancy as this is now taken for granted.

And if a hotel chooses not to offer it, the market would punish that hotel. As a result, each hotel now feels compelled to offer a loyalty or frequent guest reward program.

CAA’s rewards program has strong relationships with many highly recognized brands including lodging names like Best Western, Starwood Hotels and Resorts, Marriott, Hilton and Hyatt. Jeff Walker, chief strategy officer for CAA National says their Show Your Card & Save program is one of the largest member discount programs in the world with more than 164,000 locations for savings worldwide.

The upside of the program is the ability to create more member benefits outside of the traditional automotive and travel industries where CAA has been the leader for close to 100 years. These additional benefits not only provide valuable savings to members, but also increase annual membership renewal rates as a result. It is a model of broad coverage that the lodging industry could emulate.

However, perhaps the ultimate level of guest benefit is provided by the finest luxury operators where no loyalty card is needed, because those brands treat each and every guest with the greatest attention to detail and offer highly intuitive and personalized service, says Dr. Forgacs.

“For example, they may confirm that Ms. Mullen will again be assigned a room on a high floor with a view, close to the elevator, with a king-sized bed and hypoallergenic pillows, The Globe and Mail as a morning paper and a bottle of chilled Evian on the nightstand at arrival, just as last time. They have this on file, even if Ms. Mullen had never stayed there but had stayed at another hotel of the same brand in a totally different country.”

Sharon Cohen, executive director, loyalty marketing, with Fairmont Raffles Hotels International, speaks to creating a customer for life through this highly customized approach.

“The grand gestures are always appreciated but it can be the small things that have the biggest impact. One customer who was travelling with us in multiple hotels for a few weeks said she missed her pet parrot. The concierge at the first hotel called ahead to the other hotels and had them print out a picture of her parrot that they framed and placed on her night table for when she arrived. That’s what creates a customer for life,” she explains.

 “I love a hotel that remembers who I am when I check in. Or they know the newspaper I like—USA Today in the U.S. and The Globe and Mail in Canada,” says frequent traveller Adam Johnson, a 63-year-old executive from Toronto, who prefers to earn Aeroplan miles rather than points. “I like being a somebody as a loyalty program member. It’s more or less a recognition that I’m ‘home’ with some of the comforts of home.’”

At the end of the day, a sizeable number of hotel loyalty program members still really enjoy and appreciate the concept of recognition that comes with membership. It is an intangible element but one that is very important for the industry to remember.

LOYALTY NUMBERS

InterContinental Hotels Group (7 brands)
Priority Club Rewards
Members worldwide: 67 million
Account for one-third of all nights spent in IHG hotels

Marriott Hotels & Resorts (14 brands)
Marriott Rewards (+ Ritz-Carlton Rewards not discussed here)
Members worldwide: 40 million
Members generate more than 50 per cent of room nights

Hilton Worldwide (10 brands)
Hilton HHonors
Members worldwide: 25 million
Members Canada: about 2 million
Point of differentiation: members earn points + miles (Double Dipping)

Best Western (1 brand)
Best Western Rewards
Members worldwide: 15 million
Point of differentiation: not points based

Choice Hotels (10 brands)
Choice Privileges
Members worldwide: 15 million
Membership tripled in five years

Starwood (9 brands)
Preferred Guest
Members worldwide: 12 million
Two percent of travellers drive 30 per cent of Starwood’s profits

Fairmont Raffles Hotels International (3 brands)
President’s Club (for Fairmont)
Members worldwide: 10 million
Customized rewards and benefits rather than a points program

Carlson Rezidor Hotel Group (6 brands)
Club Carlson
Members worldwide: >9 million
Award nights start at 9,000 points

Wyndham Hotel Group (14 brands)
Wyndham Rewards
Members worldwide: almost 7 million
Largest hotel loyalty program in the world based on the number of participating hotels (>6,500)

Delta Hotels & Resorts (1 brand)
Delta Privilege
Number of members: N/A
Guests receive upgrades and food & beverage credits