HB ON THE SCENE: The New Face of Loyalty

NEW YORK—With revamps to programs, both in terms of structure and rewards offered, as well as marketing campaigns and strategies from many brands designed to increase both loyalty and direct bookings, the industry has made loyalty a major focus in 2016, a trend that will continue in 2017. This week, Hotel Business held “The New Face of Loyalty,” an Executive Roundtable sponsored and hosted by The Wall Street Journal, part of Dow Jones & Company.

“Loyalty fatigue is definitely a trend that’s coming up on all of us,” said Noah Brodsky, SVP, worldwide loyalty & engagement, Wyndham Hotel Group. “Some of the research has it that the average American now has 28 loyalty memberships across all of the work that they do but can only remember seven of them. The question for all of us: how do I become one of those seven? We’re all challenged to find ways to… create that emotional connection with people.”

The panelists debated whether hotel companies were headed in the right direction to engender that loyalty. “We get confused about what we’re trying to do with loyalty programs. When you look at the ones that are very successful, they are really simple and there’s a lot of value,” said Christopher K. Anderson, director, center for hospitality research, Cornell School of Hotel Administration. “Where we get into a problem with loyalty programs is when we have to add layers to the program to go across segments and that confuses that value proposition. We’re going to see that in the hotel space very clearly over the next couple of years as Marriott tries to integrate SPG, given they haven’t fully done so with Ritz yet.”

However, Dorothy Dowling, SVP/CMO, Best Western Hotels & Resorts, noted that most hotel loyalty programs had evolved in terms of bringing more value to the customer. “I don’t think it’s all that complicated; it’s a 10 to 1 currency value for the most part. It was really about us leaning into [our]partners and broadening opportunities for redemption.”

Panelists who own and/or operate hotels also weighed in on how loyalty plays into the overall picture. Jeffrey Dauray, SVP, acquisitions, RLJ Lodging Trust, noted that all aspects of a business are about making money, but with loyalty in particular, it’s about curating a repeat customer. “That’s done at the property level and through the execution of all of these different mandates,” he said, adding that for brand companies with diverse brands and customers “there’s a lot of different wants and needs from those customers… It’s harnessing that technology, providing those extremely memorable experiences that bring the customer back that allows for brand x to offer me as an investor 35% of my hotel filled every day before I have to go to other channels. It’s getting more competitive and it’s going to come down to execution.”

For his part, Naveen Kakarla, president, CEO, HHM, said, “When I think about signing a franchise agreement with a large brand and what I expect, there is a really important trend that I hope continues where we’re finally starting to use or talk about using our distribution platforms and loyalty platforms as differentiators as to how folks book into our products. Slowly, what I’m noticing is the brands are working, often with our dollars, to change what you get when you book direct. The verdict is still out how impactful it is, but the trend is correct in that you’re starting to find technology that allows you to select a room, get discounts if you book directly… We’re starting to create differentiated offerings that allow us to control the customer experience a bit more fully; the loyalty programs are starting to take advantage of the relationship with the consumer, and those are the dollars I mind spending the least when I think about the cost of a loyalty program.”

Stefani C. O’Connor, executive news editor, Hotel Business & managing editor, roundtables, moderated the panel discussion, which also included Susanna Freer Epstein, SVP, customer loyalty marketing, IHG; Kathleen Chiechi Flores, EVP, new brands & innovation, Trump Hotels; Christina Komporlis, general manager, membership, The Wall Street Journal; and Jamie Russo, VP, loyalty programs & customer engagement, Choice Hotels International.

For more insight into the changing face of loyalty, look for extended coverage of the Executive Roundtable in the January issue of Hotel Business and read takeaways from the event on Twitter via #HBRoundtable.


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