Nicole Carlino, Hotel Business
Read the story at: Hotel Business
One major way the hospitality industry has tried to entice guests is through offering member-exclusive rates to those who book direct. Companies like Choice Hotels International, Marriott International, Hilton Worldwide, InterContinental Hotels Group and Hyatt Hotels Corporation have implemented measures with a strategy of reducing the cost of customer acquisition and increasing brand exposure. (At press time, Red Lion Hotels Corporation was the only hotel company to offer loyalty rates on an OTA website via a partnership with Expedia Inc., in which guests are also provided a direct sign-up to Hello Rewards.) But what effect will these measures have?
Thom Kozik, Marriott's VP of loyalty, said thus far, member rates have been successful. "We're pleased with the progress and we'll continue to see how we can grow the program and the benefits," he said. "Direct booking isn't just about saving a few dollars here and there-it's about deeper engagement."
Hilton HHonors VP Aaron Glick added, "This is the most effective way for us to ensure a more personalized and memorable stay. We launched 'Stop Clicking Around' to educate consumers on the misconception that booking via third-party sites is cheapest. In the weeks following, we've seen the highest Hilton HHonors enrollments, the highest level of web activity and the most downloads of our app in several years.
Liz Crisafi, head, loyalty & partner marketing, IHG, Americas, agreed, noting that OTAs remain an important partner for driving incremental revenue. "We are driving material increases in revenue contribution for new and existing members. Enrollments are significantly up, as are return stays and points' redemptions – a strong sign that members are engaged with the program. Since the launch, we have seen a material two points shift in growth rate to direct web from OTA," she said. "We are not seeing any ADR decrease as our revenue management systems adjust to account for Your Rate as part of business mix at each hotel, but we will monitor performance to address any concerns that may arise."
In a webinar about Q2, Katie Moro, director, Demand360 data partnerships for TravelClick, which provides analysis of hotel booking data, noted, "In brands that are participating in book-direct initiatives, we are seeing growth from a brand.com standpoint and we are seeing flat in OTA. "In those not participating, TravelClick is seeing the reverse. "Is that OTA business from the brand going to the independents or is it going tobrand.com? I don't know but there's definitely a shift happening."
John Hach, senior industry analyst, TravelClick, told Hotel Business that the company tracks bookings made by loyalty members. For Q2 of 2016, the presence of the loyalty number was in 58.7% of reservations. "We started tracking loyalty a couple of years ago, and it's gone up from56%, but growth overall has been slow." Hach noted that the major loyalty pushes only began in Q2 so it's still early days.
Hach agreed that loyalty can't just be about discounts. "All of the brands are looking at this: How do we engage, attract and increase frequency? It's not just rate alone that creates conversion. It's a combination of rate and added value. There are other major drivers-such as WiFi and F&B-that get people to stay at a hotel with more frequency than hotels that don't have similar offers."
"Our campaign may have brought in new members, but our program overall is what encourages retention year after-year," commented Glick. Hach agreed that initiatives such as this can help get people in the door, but then the hotel has to offer more to get them to come back. "There's three major initiatives every marketer wants to achieve: recency, frequency and high monetary value.
"The hotels have done a good job correlating a reasonable [member]discount with an incremental stay. But as demand continues to decelerate, will they become more aggressive? You have to balance discounting with added value inclusion," he said.