This week’s results from IHG revealed several things: it has overhauled its loyalty programme, extended its credit card offering and is going to have to work to drive its unit growth if it wants to meet its targets. Oh, and something about diversity.
No hints are provided for guessing which one was of interest to the analysts, obsessed as they are with pipeline growth and the cash that might bring in, the shallow whatnots. That which obsesses the rest of us – namely, where Keith Barr buys the monkey glands which keep him looking so youthful – wasn’t addressed.
So back to the credit cards, which the large global operators continue to get excited about. In fact Barr was prepared to say that the group was, indeed, excited about the expansion of its programme, launching, he said, a “more compelling, higher-value proposition” which would drive credit card income.
Recent years have seen the big operators look increasingly to credit cards and for this we can only blame Marriott. Earlier this month the group reported that co-brand credit card fees increased by 38% year on year, driven by continued strength in global cardholder acquisitions and cardholder spend, both of which achieved record levels in the quarter.
CEO Tony Capuano commented: “We would expect to see our credit card income continue to grow. And it’s actually intertwined with the strength of the [loyalty] programme. So the bigger the programme, the stronger the programme, the stronger and more compelling your credit card offer is, too. They’re very symbiotic. So we would expect to see our programme grow over time.”
One is starting to appreciate the enthusiasm for credit cards. IHG has launched a new business card with no fees, which Barr said would attract the small business spend it hadn’t historically enjoyed. So fun all around.
This is a tricky area in which to compete. Marriott dominates the credit card market, but offering no fees in an area where fees have often deterred frequent travellers who might otherwise embrace the chance to earn more loyalty points may pique interest in IHG’s offering.
What is gripping for observers of the hotel sector is the link between credit cards and loyalty programmes. Much of the language is the same; it’s all about points and volume and redemption.
Barr described the changes to the group’s loyalty programme, which will see redemption and earning become easier and will, the group clearly hopes, make the credit card more attractive.
Loyalty programmes are doing a lot of heavy lifting at the global operators. All issues seems to come back to them. Expanding? Oh yes, it’s to feed the loyalty programme. Fighting the OTAs? Call in the loyalty programme. Now credit cards – oo, it’s all about the loyalty programme. Owners tend to have mixed emotions about the loyalty programme, because, well, they pay for it and they sometimes need to have the benefits explained.
Now the fortunes of the loyalty programme and the credit card are increasingly linked. Who benefits from a buoyant credit card programme? Well, yes, it’s less the owners and more IHG.
One point of solace for the owners was that IHG has also continued work on ease of booking rooms, something the OTAs worked out years ago. IHG has been at the forefront of making room booking more personalised and, well, functional. The group was happy that direct bookings were rising as a result and that savings were being seen in the cost of acquisition.
Finally, something owners will be happy to give it credit for.