The Hotel Loyalty Programme Landscape

Full article published in the bi-monthy print edition of Hotel Analyst (1 Sept).

As a large and effective loyalty programme is increasingly viewed as a differentiating factor by owners looking to evaluate brand partnerships, what are the recent trends and longer-term outlook for participation in these programmes?

For hotel chains, the good news is that loyalty programmes have a strong recent track record of growth. In the UK, an estimated 6 million travellers are members of a hotel brand-operated loyalty programme (or are at least able to identify themselves as such) - a 40% increase since the start of the decade. Underlying growth in the number of UK citizens staying in hotels over the same period (powered by the leisure market) is clearly an enabling factor here, but not the sole explanation, given the faster rate of programme membership growth. The British have demonstrated an appetite for a closer, more convenient relationship with their hotels and, yes, one which also gives them a better deal.

For a bit of international context, the incidence of loyalty programme membership among the U.S. traveller population is almost twice as high as in the UK. While the dynamics of that market are different, it suggests that there is still significant growth potential on this side of the pond. Moreover, today’s channel proliferation and near-universal rates of smartphone adoption make omni-channel loyalty initiatives which track and reward incremental guest spend, while also offering a genuinely personalised experience, a viable reality.

However, for hotel brands determining how much to invest in loyalty marketing, and those which need to evidence their programme’s value to owners and investors, a key question inevitably
is, to what extent do they actually drive loyalty?

The answer depends on how you define ‘loyalty’. If we use the marital analogy of forsaking all others, few loyalty programme members give all their love to one brand and many sign up to
multiple programmes. Observers of the Marriott / Starwood deal may speculate about how SPG members may take to a merger with Marriott Rewards - but in the US, approximately 3 in 5
SPG members are already members of Marriott Rewards, so the majority will know what to expect! In the UK, lower membership numbers generally mean fewer travellers taking out multiple
scheme memberships, but the overlap across the leading programmes is still significant. If we take Hilton Hhonors, the largest scheme by membership in the UK, 23% of members claim also to participate in Marriott Rewards, the same proportion in IHG Rewards, 18% in Le Club Accorhotels, and 13% in SPG and Best Western Rewards.

On other measures of loyalty, the prognosis is more promising. Across the leading schemes, there is clear evidence that they drive front-of-mind brand awareness, brand preference and ‘share of
wallet’, albeit with varying degrees of impact from programme to programme. Latest BVA BDRC British Hotel Guest Survey data (based on a nationally representative sample of 5,000 business and
leisure traveller interviews) shows that members of leading loyalty programmes in the UK are 3.5 times as likely to have used a brand affiliated to that programme compared to non-members. They are 2.9 times more likely to cite a brand within their portfolio as their leading choice, compared to non-members. Although the incidence of membership and frequency of travel is higher
among corporate travellers, it is in the leisure market where loyalty programmes create the greatest uplift in percentage terms, reinforcing their value in the battle to capitalise on the long-term growth in leisure travel demand.

The full article is available to read in the print edition of Hotel Analyst (bi-monthly - print date 1 Sept).

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