Marriott International’s recent merging of its three separate loyalty programs under the Marriott Rewards umbrella has pushed an already formidable program into behemoth territory. It’s too early to tell how having more than 110 million former Marriott Rewards, Starwood and Ritz-Carlton loyalty members under one structure will shift the loyalty landscape — or how competitors will exploit any weaknesses the new structure has exposed.
Here’s what we do know:
Member numbers matter . . . to a point
“Our members pay more, stay more and cost less in our distribution channels. We’ve used our scale to lower costs for owners even more,” says David Flueck, Marriott’s senior vice president of global loyalty. Wyndham Rewards’ 58 million members “stay and spend around twice as much as nonmembers,” says Eliot Hamlisch, vice president of worldwide loyalty and partnerships at Wyndham Hotels & Resorts.
Road warriors remain the most prized prey for these programs. IHG Rewards Club has 120 million enrollees — “but we focus on the active members,” which total about 20 million, says Dave Canty, IHG’s vice president of global loyalty programs. Hilton in recent years has stepped up its pursuit of elites.
Since 2016 the company has been offering status matches to lure the most frequent guests from rival programs. In January, most likely in anticipation of the rebooted Marriott Rewards, Hilton rolled out new elite tier perks, including a 10,000-point bonus for every 10th night after a minimum of 40 nights a year, and new bonus points for elites. Elites can also roll over qualifying nights toward elite status in future years.
Don’t expect a huge defection by Marriott loyalists
That global portfolio of 6,700 hotels is hard to ignore. “In today’s age, scale does really matter,” Flueck says.
Change is inevitable, Canty says, and when it happens “you always have some who will be elated and others who will feel a little disenfranchised, because they don’t like the direction. They will look around. But we’re not saying, ‘We’re a big, shiny penny that you should come see.’ We’re not actively trying to poach people.”
Hilton announced a double- and triple-point promotion shortly after Marriott unveiled its new rewards program in what appears to be a direct response to Marriott’s contention that its average members will earn 20% more points than they had before the consolidation.
Not all owners are sold on the value of loyalty programs
Loyalty members can represent half of any hotel’s room nights, and members typically book through the brands’ CRS, which cuts the cost of each reservation. But those points they earn also represent a cost for owners.
In one camp are loyalty fanatics like Sam Patel, a partner in Kisna Hospitality, owner of several Choice properties in the Knoxville, Tennessee, market.
“Loyalty is huge,” he says. “It’s one of the biggest factors for us, along with location, cost to build and the name.” He says more than half of his hotels’ customers are loyalty members.
Sage Hospitality, with a portfolio that includes Marriott, Hyatt and Hilton branded properties along with unaffiliated hotels, takes a different view, focusing more on distribution and marketing reach when choosing a flag. Loyalty is still a goal, but “our perspective of loyalty has shifted more from points and discounts to experiential opportunities. We see the future guest looking for value-adds and insider access rather than stockpiling points for discounted stays,” says Ken Widmaier, Sage’s chief operating officer.
Marriott’s combined program “opened us up to more redemptions, but at the same time more exposure,” Widmaier says. “So smart revenue management will continue to be the best way to leverage the loyalty programs responsibly.”
Experiences and partner benefits gain popularity versus room nights
Tickets to major events, VIP access, exclusive vacation packages and other rewards appeal to younger travelers and offer a way to stand out.“We’re taking a hard look at our redemption offerings,” Wyndham’s Hamlisch says. “While our free night structure has proven a tremendous success with our most frequent guests, we want to be sure that we’re continuing to engage those members with lower points balances.”
A popular feature of Choice Privileges is Your Extras, a mix of instant gratification and points. Members receive rewards when they check in — a US$5 Starbucks card, an Uber or Amazon credit, or additional points. Global Hotel Alliance’s Discovery members earn credit toward immersive local experiences instead of points.
“If you look at the programs today and how they stack up, it becomes kind of vanilla,” IHG’s Canty says. “We think the most important thing is to start thinking about what are the most meaningful benefits, and to whom. We have to start looking at ways our program evolved and how it can be transformative and relevant to the guest of tomorrow.”
There is room to improve the redemption experience
For guests, hotel stay rewards aren’t always rewarding. “Too often, properties place rewards guests in the lowest tiers of accommodations, and don’t ‘reward’ the loyalty guest the same way as if they were a paying guest,” says Andy Abramson, CEO of Comunicano, a marketing communications agency. “The brand reputational integrity capital is at risk if the properties don’t deliver on the brand promise for the rewards-redeeming guest the same way they do the high-paying, rewards-earning guest.”
Contributed by Megan Rowe