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ANALYSIS


Points of view


Hotel loyalty schemes are growing in importance and popularity, but at what cost to compliance?


W


HEN MARRIOTT INTERNA- TIONAL merges its Mar- riott Rewards loyalty scheme with the Star- wood Preferred Guest


(SPG) programme – expected to take place sometime in 2018 – it will create a 75 million-plus global behemoth of a frequent guest membership club. But it still won’t be the biggest: that honour will remain, as present things stand, with the Intercontinental Hotels Group (IHG) Rewards Club, with some 92 million members. Marriott’s US$13 billion takeover of Star-


wood Hotels (approved in late September) will give Marriott CEO Arne Sorenson the opportunity to reshape the loyalty schemes of both hotel chains to embrace the changing landscape in the way in which the global


with frequent travellers – was one of the key reasons he fought so hard for the Starwood deal to succeed (see panel, p36). Loyalty programmes, he said, were “the principal tool we use to have direct relationships with our customers”.


A MORE PERSONALISED SERVICE The name of the game for the global hotel chains is increasingly seen as getting closer to their guests, whether staying for business or leisure. While buying airline seats seems to be becoming more of a commoditised purchase, the big hospitality brands are increasingly opting for a more personalised service and making a hotel stay an ‘experi- ence’ in a bid to woo custom, be it on busi- ness or leisure. Not surprisingly, this is partly being driven by the growing influence of the mil-


“The name of the game for the global hotel chains is increasingly seen as getting closer to their guests, whether staying on business or leisure”


hospitality groups market their room inven- tory. His first action as soon as the deal was completed was to enable members of both schemes to link their accounts, giving them reciprocal access to the 5,700 hotels (more than 1.1 million rooms) spanning 30 brands. The speed of the move to allow accounts


to be linked came as something of a surprise, with analysts pointing out it took American Airlines and US Airways five months to enable their separate loyalty accounts to be linked after their merger in 2013. But, for Sorenson, this is still some way short of a fuller integration of the loyalty schemes. Sorenson also made clear at a recent


global travel conference in New York that adding Starwood’s well-regarded SPG loyalty programme – especially popular


34 BBT November/December 2016


lennial generation on hotel design and utili- sation. But there is also an understanding among hotel group chiefs that the relent- less focus on creating brands for virtually every micro-segment of the market is fuelling guests’ increased expectations of what they want from a hotel. And the key to this is data capture, starting with the booking process and continuing throughout the guest’s stay and after they leave the hotel. Yet there has been a problem for the big


hotel chains from the growth of online travel agencies (OTAs) such as Expedia and Priceline having built up such a major role in hotel distribution channels. One consequence of this is that the OTAs have jealously guarded the customer data they


collect, not only to protect their future access to these clients, but also limiting the amount of data the hotels gain automatically. Even routine information such as a


guest’s email address is not always made easily accessible to hotels when booked through an OTA, denying them the oppor- tunity to market offers and information direct. Priceline’s Booking.com, for example, reportedly sends ‘personally identifiable information’ such as email addresses in an encrypted format to hotels for ‘security reasons’. The hotel can decrypt the data, but it is not a seamless transfer. “I think the [customer] data from the


OTAs is getting better,” said Sorenson at the New York conference. “But historically we haven’t really gotten much data from the OTAs.” It is no surprise, therefore, that the global


hotel chains have turned to rejuvenating their loyalty programmes, capturing key data (especially email and mobile numbers) to help build up a fuller picture of guest preferences and what will encourage repeat business.


BYPASSING THE OTAs But hotel loyalty schemes also have another significant role to play: they are the pivotal weapon in the global chains’ efforts to encourage more travellers to book direct with hotels, bypassing the OTAs, whose commission charges range from 15 per cent to as much as 30 per cent. Earlier this year the top chains – in-


cluding Hilton, Marriott, Hyatt, IHG, and Choice International – launched new strategies aimed at encouraging travel- lers to book direct (thus avoiding paying those hefty commissions to the OTAs) by offering discounts – effectively the lowest available prices – to those members of their loyalty schemes who booked via the hotel groups’ own distribution channels. Carlson Rezidor recently became the latest player to offer special rates, in


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