Loyalty programs connect guests with independents
 
Loyalty programs connect guests with independents
27 JULY 2016 11:07 AM

Loyalty programs offer independent hoteliers another way to connect with guests and compete against the draw of major brands.

REPORT FROM THE U.S.—Traditionally, loyalty programs and the opportunity for guests to earn points toward different perks and rewards have given brands an advantage over both standalone and collections of independent hotels.

In recent years, independent hoteliers have found ways to move in on the loyalty program territory, either through starting one of their own programs or signing up with a third party, such as Stash Hotel Rewards and Voilà Hotel Rewards.

Creating a program
Preferred Hotels & Resorts created its own loyalty program, iPrefer, 10 years ago as a perks program guests could join by sharing their email addresses, said Casey Ueberroth, chief marketing officer at Preferred Hotels, and in exchange guests could receive things like free internet, late check-in and early check-out.

Three years ago, hoteliers within the brand* asked about adding points to the program so guests could earn free nights or treat the points as cash. The company added points and a three-tier system, but it also removed some of the upfront amenities.

“Six months ago, we decided to simplify it and make it an extremely easy program, catering to anyone going to book at an original, one-of-a-kind property,” Ueberroth said.

The company eliminated one of the tiers, added some of the upfront amenities back and kept the points.

When Preferred Hotels started its own program, there were no independent loyalty programs like Stash and Voilà. Since their creation, Ueberroth said, programs like that helped motivate Preferred Hotels to look closer at its own program because they showed the viability of loyalty among independents.

Choosing a third-party program
Greystone Hotels has worked with Stash for a number of years, said Candice Cancino, GM of the King George Hotel in San Francisco. http://www.greystonehotels.com/about-us.aspx

Greystone’s guests are looking for something beyond a cookie-cutter hotel experience, she said, and they want something that fits their personality. Stash reward members are looking for the same thing, she said.

“What we like about Stash is, it’s a unique program for us and is more than building loyalty points,” Cancino said. “We do cross marketing with our sister hotels in the Stash portfolio. We work with guests and say, ‘If you love the King George, you’ll love other Stash hotels in Nashville.’”

The Voilà rewards program is similar to Stash in that it connects different independent properties, according to Michael Lorenz, SVP of sales and marketing at L.E. Hotels Collection. About three to four years ago, his company was looking to start a rewards program, he said.

“We felt we weren’t large enough to do it on our own and be impactful,” he said. “We wanted an organization with more reach.”

Guests in the L.E. Hotels Collection want to travel worldwide and experience different things, he said, so his company felt Voilà was a good match for what guests would want out of a program.

What guests want
Preferred Hotels has a mix of leisure and resort properties, with some more corporate hotels mixed in, Ueberroth said. While points chasers don’t view the iPrefer program on the same scale as a major brand loyalty program, he said, it does capture the business traveler seeking higher-end properties and who travels about 10 to 15 times a year to two or three destinations.

“People like the redemption side and that they can earn points,” he said. “I think that’s a huge reward that brands don’t have.”

L.E. Hotels has a mix of leisure and corporate guests, Lorenz said, and many of the corporate guests are independent business owners who tend to be receptive to programs like this. Many of the traditional business travelers are already members of several different reward programs, he said, but they aren’t the key focus of L.E. Hotels. Instead, the company focuses more on leisure and corporate guests.

Most Voilà members look to earn points to redeem free stays at hotels in the program, Lorenz said, as well as to take advantage of the retail options, such as gift cards to airlines, online retailers and charities.

“That’s what differentiates us from the larger programs,” he said. “They don’t have as many choices as we do.”

Major brands have a larger selection of hotels worldwide, he said, but when looking at today’s consumers, mainly millennials, the trend in thinking is they’re not loyal to brands.

“That tells me they prefer the independent properties,” Lorenz said. “Let’s not kid ourselves, everyone likes rewards. Millennials like rewards as much as anyone else, but they’re more transaction-based.”

The financial side
The algorithm to determine what rooms are worth for free night redemption makes sure it’s not a big margin cut for hotels in the brand, Ueberroth said. The iPrefer program points are like cash, he said, which gives the hotel owners a good value.

“It’s nice for owners getting cash-on-cash for everyone delivered to their property,” he said.

Lorenz agreed and added that the margins are worse for the bigger brands.

“When I look at the margins that the loyalty program provides us, it’s one of the more affordable channels we have,” he said.

Free-night redemptions through Stash work great at the property level, Cancino said. Her hotel can do a full-bar rate for redemptions, she said. While major brand loyalty programs get the selling rate for the day, her hotel can tell Stash what the rate is and it receives the redemption for that.

“I think that as far as a revenue aspect, it’s been great for us,” she said.

*Clarification, 28 July 2016: This story has been updated to refer to Preferred Hotels & Resorts as a brand.

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