Toward the beginning of “The Godfather,” Luca Brasi, attending the wedding of Vito Corleone’s daughter, Connie, waits nervously for an audience with the don, practicing prepared remarks. His timorous speech now part of Hollywood lore: “Don Corleone, I am honored and grateful that you have invited me to your daughter… ’s wedding… on the day of your daughter’s wedding. And I hope their first child be a masculine child. I pledge my ever-ending loyalty.”
Sadly, Luca would later meet his maker at the end of a piece of piano wire. But his words illustrated the kind of man he was: loyal to the core.
In the hotel industry, loyalty goes a long way. Loyalty programs, which vary by company, but in their most basic state allow members to accrue points toward free stays and other amenities, carry huge benefits, and like a chewed piece of gum stuck to the bottom of a shoe, they are sticky, cajoling consumers to stick with the brands of one hotel company.
For the lodging companies, loyalty programs keep paying guests within their system, drive more direct bookings and help prevent those guests from plumbing online travel agencies to make reservations. There’s a cost to running these programs, but their strength is a top reason why hotel owners choose a particular brand to hang on their door.
“Loyalty has never mattered more,” said Charmaine Taylor, SVP of loyalty and partnerships for Wyndham Hotels & Resorts. She said the company refers to Wyndham Rewards as the “blue thread” that connects owners, brands and guests.
That sentiment is a common theme among hotel brands to the point that loyalty programs have in some ways effectively superseded brand names. When it’s necessary to tie together upwards of 30 brands—as is the case with Marriott International—it makes sense for owners, franchisors and operators to connect their products to consumers and build powerful tools for driving repeat business.
Consider one of Marriott’s newest brands, Apartments by Marriott Bonvoy: It carries the loyalty program’s name— in its name. In fact, as Brian Povinelli, SVP, global head of marketing and brand for Marriott International, said, “Marriott Bonvoy is our master brand encompassing our nearly 8,700 hotels, in addition to home rentals, yachts, tours and activities and more.”
Robert McDowell, chief commercial officer for Choice Hotels International, said that now more than ever “it is important to make sure you have a strong loyalty program with a clear value proposition,” adding, “Choice Privileges is critical to our owners’ and operators’ success, helping to keep our brands top of mind, driving repeat stays and more profitable direct bookings, which improves their top-line revenue.”
Hilton Honors, said Jenn Chick, global head and SVP of Hilton Honors customer engagement & partnerships, is “the connective tissue” that brings Hilton’s 22 brands together, adding that the program “is a critical tool that connects us to our guests during every moment of their stay.”
Preferred Hotels & Resorts is classified as a soft brand that does not own or operate hotels, but represents hundreds of mostly independent hotels globally, offering sales and marketing tools and more. A guest who stays at the Eau Palm Beach Resort & Spa in Florida might not know that another hotel, Le Logis, a 14-room country estate in Cognac, France, is also part of Preferred. What binds them together is the I Prefer loyalty program, “the thread,” which is what Lori Strasberg, SVP of marketing, calls it. The network also aims to gain leverage by including its sustainability brand Beyond Green and some members of Historic Hotels of America and Historic Hotels Worldwide in I Prefer.
“With the challenges independent hotels face in getting reach and exposure, I Prefer brings them scale and credibility,” said Strasberg.
MARKETING LOYALTY
The importance brands place on loyalty programs is clear in their marketing. The first sentence of a recent press announcement makes that clear: “Marriott Hotels, part of Marriott Bonvoy’s portfolio of over 30 extraordinary hotel brands, today announced the opening of Nagasaki Marriott Hotel.”
Wyndham Rewards, said Taylor, is integrated into all marketing touchpoints so members and nonmembers understand the opportunity they have when they choose Wyndham. It’s equally important, she said, “that we make sure our brands are top of mind so when someone hits the road, they choose to stop at a Days Inn or a Super 8, or when they want to book a getaway, they think about our newest Wyndham Grand in Barbados.”
Marketing loyalty has become “without a doubt” more important in recent years, said Kristin Klebanov, VP of IHG One Rewards, IHG Hotels & Resorts. In 2022, after a major reimagining of the program, she said, the marketing communications strategy was revamped to be more personalized and localized. The springboard for the effort, she said, was IHG’s largest global marketing campaign to date, “Guest How You Guest,” which, she said, “reinforced IHG as a hotel company that takes care of everyone—all supported by IHG One Rewards.”
Unsurprisingly, the competition among loyalty programs is as fierce as among the brands themselves. Povinelli said the depth and breadth of Marriott Bonvoy “differentiates us from our competitors, resulting in increased room nights and revenue for our owners, while simultaneously propelling pipeline growth.”
OWING TO OWNERS
Of course, it’s owners who are paying for these elaborate and expensive programs, so what are they getting out of them? The consensus is that members stay more often and for longer, spend more than nonmembers and book direct rather than through third-party channels. Wyndham Rewards members, said Taylor, stay and spend nearly twice as much on average as nonmembers. Within six months of joining, she said, hotels in the U.S. see nearly 50% of their occupancy from members.
Agreeing that loyalty members are more valuable, McDowell said they are 88% more likely to book through direct channels, making them a more profitable guest for franchisees.
IHG, said Klebanov, has worked closely with the IHG Owners Association’s loyalty committee to ensure that managers “are constantly striking a balance between guests’ needs and the owners’ cost to deliver.” It has always been the company’s intent, she said, “to present IHG One Rewards in a way that’s cost neutral, or better, for the majority of hotels.”
Preferred, said Strasberg, provides member hotels insight into the portion of I Prefer member revenue they are receiving from members enrolled elsewhere in the network (“cross-brand” stayers) so they can see their referred business. They also have visibility into bookings driven by marketing targeted to the I Prefer database and to members-only rates.
The sheer number of brands, according to the brands, will drive revenue to owners because of the increased redemption opportunities, including more at luxury properties and resorts. One owner, Ketul Patel, who owns three Super 8 by Wyndham properties in West Virginia, said the program is especially beneficial to him as an owner, driving revenue and higher rates when compared with alternatives, such as OTAs. He said he prioritizes enrolling members because it builds repeat business.
Many construction workers stay at his hotels for weeks at a time, said Patel, capitalizing on their stays with Wyndham Rewards by taking their family on a summer vacation or redeeming points for gift cards, experiences and more. The program, said Patel, is also important for his staff members, who get points for enrolling guests, “giving them a reason to get excited and create fun and friendly competition in the workplace.”
There are, however, observers less positive about the benefits of loyalty programs to owners. Bjorn Hanson, adjunct professor at the Jonathan M. Tisch Center of Hospitality at New York University, said the programs have become more favorable for loyalty program members because of changes like eliminating most blackout dates; they are, thusly, costlier to owners. Some owners complain, he said, that because they bear the cost of loyalty programs, and the brands receive management or royalty fees based on revenue, the loyalty programs have become more advantageous to the brands.
In addition, said Hanson, reservations made through most OTAs do not qualify for brand loyalty points, but his experience is that when guests check in and ask to be registered for points, a large percentage of the time, points are earned. This is a problem, he said, because the loyalty program did not generate the reservation, the OTA commission can be high and then there is the loyalty program cost as well.
Meanwhile, OTAs have in recent times launched their own loyalty programs, adding competition and making the booking experience even more crowded and, sometimes, ambiguous. Consider Expedia, which launched One Key in the U.S. in July 2023. The program has a single rewards currency called OneKeyCash, which members earn when they travel and can use on future bookings.
A judicious Peter Kern, vice chairman and former CEO of Expedia Group, speaking during the Americas Lodging Investment Summit, said the program was actually beneficial to hotels and their loyalty programs.
“We reward them to book through us, but we give them money to stay at your hotel,” he said, offering that if that customer booked through Expedia but became, for example, a loyal member of Marriott Bonvoy, thereafter, “well, there you go.”
BEYOND THE STAY
Despite potential issues like those cited by Hanson, brands clearly believe loyalty is key and are investing heavily to make programs about more than just free room nights, through partnerships and exclusive experiences.
Hyatt recently announced, “Be More Here,” a brand platform that, according to Amy Weinberg, SVP of global brands, loyalty and insights, “brings to life how guests and members can have more meaningful experiences and celebrates Hyatt’s growing global footprint of brands and experiences, including a list of offerings curated to support travelers’ individual well-being journeys.”
Like the airlines, members are increasingly able to earn points and rewards through affiliated credit cards. Marketing Marriott’s co-branded credit cards, said Povinelli, plays a significant role in driving engagement and loyalty, “and our cardholders represent some of our most engaged and loyal members.”
Since the launch of its revamped loyalty program, said Klebanov, “we have increased the number of IHG One Rewards members who are also IHG credit card members to help drive incremental value within our loyalty program.”
In between trips, said Hilton’s Chick, a suite of Hilton Honors American Express credit cards and loyalty partners, such as Amazon, Enterprise, Live Nation and Lyft, help to power members’ future stays, “and are a great way to attract new members, thus benefiting our commercial engine.”
There’s no question that the programs are popular with consumers, with recent research showing Marriott at 192 million members, Hilton at 173 million and Wyndham at 105 million.
If there is power in numbers, there is power in loyalty.
Story contributed by Harvey Chipkin.