Hoteliers diversify loyalty program offerings
17 SEPTEMBER 2014 8:22 AM
Hotel companies have revamped their loyalty programs to include more than just points-based rewards.
REPORT FROM THE U.S.—Hotel loyalty programs used to be all about accruing points and earning free hotel stays. But now hotel companies seek to offer guests more value and flexibility with loyalty programs, according to sources.
“Now more than ever, our members want more utility and flexibility. They want to be able to redeem their points more quickly and have more flexibility in the way they redeem them; in effect, they want more choice and control,” said Kendra Hayden, senior manager for Hilton HHonors.
In July, Hilton Worldwide Holdings became the first hotel company to offer its loyalty program members room selection and customization via mobile and Internet-based floor plans. HHonors members can select their exact room online or via the Apple and Android HHonors apps across six Hilton brands in the United States: Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Hilton Hotels & Resorts, Hilton Garden Inn, Homewood Suites and Home2 Suites.
The company also added room upgrade rewards, “which enable HHonors members to use their points to guarantee an upgrade to a premium room or suite with no blackout dates,” Hayden said in an email.
Room selection is available to Hilton’s 41 million HHonors members worldwide in addition to digital check-in and check-out, and the ability to order food and beverage ahead of time, she added.
Selecting a room on a mobile device prior to arrival is a leap from tracking guests’ likes and dislikes on index cards, which is how a concierge in 2002 at the Hotel Palomar in San Francisco began tracking guest loyalty. From there, Kimpton Hotels & Restaurants in 2004 adopted the concierge’s practice and birthed its InTouch guest loyalty program. The company formed the program organically around personalization, said Maggie Lang, senior director of guest marketing for Kimpton.
In July, Kimpton relaunched the loyalty program, changing the name to Karma Rewards and introducing additional intermediate elite tiers. Lang said that while the company’s previous loyalty program was successful, the reward landscape began to change.
She said the sales team upon implementing a new customer relationship system found that the company was missing out on referrals, specifically those emanating from social media.
“I saw this huge amount of referrals and people talking about us on social media, people taking ‘selfies’ in our leopard robes,” she said. “So why not reward based on every engagement? Why should we only reward nights? Reward Facebook, tweets, having a cocktail in our bar. Every touch point they have with the brand, we should be rewarding.”
The relaunched Karma Rewards program offers all the favorites of the InTouch program, including free Wi-Fi and the $10 “Raid the Bar” credit, but the unpublished layer is what is most important, Lang said.
“Tweet about us, post on Instagram, attend a wine hour, attend a cooking class—we reward based on all of those things,” she said. “This finally is a program where not one size fits all.”
Lang added the key to Kimpton’s Karma Rewards is rewarding loyalists organically. “Reward them when they least expect it.” Kimpton operates 61 boutique hotels in 27 cities throughout the U.S.
Some boutique and independent hotel operators use points-based loyalty programs such as Stash Hotel Rewards to gain an edge on the brands, said Jeff Low, founder and CEO of Stash. They will sometimes take it one step further by implementing a proprietary program that offers “soft benefits” such as complimentary shuttle rides or free welcome bags. Such is the case with The Commons Hotel in Minneapolis.
The Commons Hotel in August announced “Club Alchemy,” a membership-based program designed to better recognize and reward loyal guests with exclusive perks, privileges and benefits during their stays, said Duane Rohrbaugh, GM at the hotel.
“Being an independent and competing with the brands downtown, we realized we wanted to create a program where we could tailor around the guest experience in advance,” he said.
Once enrolled, members for an upgrade fee of $25 per night enjoy several benefits, including: personal assistance with transportation; priority early check-in and access to a private members-only check-in line; complimentary room upgrade; in-room access to 2,000-plus magazines and newspapers via PressReader; a welcome bag of amenities; and pre-reserved passes to University Recreation & Wellness Center, located on the University of Minnesota campus next door to the hotel.
Research and ROI
Lang said the path to figure out what guests want from Kimpton’s new loyalty program started out quantitatively.
“We looked at all of those who returned time and time again and asked them why they return. They ranked all the benefits and perks. Guest experience was at the top, and the free night was at the very bottom,” she said.
“That was a really eye-opening moment for us,” Lang added. “Oh, so our customer is not that miles-and-points fanatic.”
Kimpton then spent three months researching what loyalists wanted from the brand. Then executives turned to a customer research firm to form focus groups and hash out the logistics, Lang said. “One woman said, ‘Don’t tell me you want me to tweet about you; just surprise me.’”
Karma Rewards is rapidly growing and expected to hit 2 million members by the end of the year, Lang said. Previously, free Wi-Fi was the most popular source for signing up, but Kimpton in its first 10 days of launch turned off that perk to make sure the program was working, Lang said.
“Daily join numbers are higher, even with the Wi-Fi turned off,” she said.
The Commons Hotel turned to Cornell University’s Center for Hospitality Research to discern what business travelers wanted most from a loyalty program, Rohrbaugh said, such as early and late check-in and check-out. The team then coupled that research with the hotel’s customer feedback, he said.
“We did some research, and we knew our guests wanted high-speed Internet, passes to the recreation center and they didn’t like the cost of valet, so we included those as components to Club Alchemy,” Rohrbaugh added.
Club Alchemy officially launched in early September, but Rohrbaugh expects the hotel will see about 20 to 30 upgrades each week for the program, mostly from downtown Minneapolis road warriors.