InterContinental Hotels Group reported this week and, with no disrespect to one of the last hotel groups to be listed in the UK, its calls are not known for their gripping content.
So we were expecting more about extended stay, more about hybrid working, more about the move towards luxury. And we weren’t disappointed.
Less expected was chat about loyalty programmes. For those who can remember a time before the pandemic, these were programmes which the large branded operators used to try and persuade owners that they could still deliver heads on beds, by making a lovely closed group of guests who would only stay with them and certainly not book using the OTAs. Discounts and more brands that anyone can comprehend or remember fed this.
Then we had the pandemic and loyalty became instead way to raise money, certainly for Marriott and Hilton. The latter raised $1bn from an advance sale of loyalty points to its co-brand credit card partner, American Express while the former raised $920m in cash through its credit card partners, including $350m through the pre-selling of loyalty points. Not too awful.
But that was about it. Loyalty programmes don’t count for much when there is no-one earning points. Marriott offered points when you bought groceries to keep things ticking along.
Instead, there was chat about loyalty being something which could be earned through…decent customer experience. Tristan Gadsby, CEO & founder, Alliants, said: “Messaging helps to create that relationship with the guest which drives lifetime loyalty, but on their terms.” Richard Valtr, Mews founder, also talked about the power of human interaction to create lifetime loyalty, commenting: “What is really spectacular about the hospitality industry is that it has a history of innovation – if you look at the 1920s, it triggered a boom. And it can do so again”.
Back to IHG and Keith Barr, CEO, used the group’s calls to talk more about “transformational changes”, but to the loyalty programme. Yes, the group is using Concerto to drive attribute-based bookings, which give the customer the level of choice we all want, but loyalty was what was on his mind.
And you can see why. Barr described the IHG Rewards programme as a key part of “our owner value proposition”, with 100 million members and member contribution growing by seven percentage points over the four years prior to the pandemic. Members who traditionally accounted for more than around half of IHG’s guest days, spent more and were nine times more likely to book direct.
Barr said that members had “proved to be the most resilient during the toughest periods of the pandemic, and we’ve made sure to look after them by protecting status and points expiry and introducing new programme enhancements, such as dynamic pricing for reward nights, which is lowering the average number of points needed for a booking by around 15%, helping members get free nights faster”.
And now an overhaul. Barr said: “It’s going to be with more personalisation and increased benefits, which will close some of the competitive gaps or create some areas of competitive advantage for us. And from that increased loyalty contribution, more revenues to owners, better credit card fees, reducing costs, and better returns. So we think that it’s one of the biggest thing we will have done to this loyalty programme since we invented loyalty for this industry and really excited about that opportunity”.
Barr said the group was “keeping the next phase under wraps for now, but look out for further detail in the coming months”.
And we will. Much of the commentary around the pandemic has been about permanent change in the sector. Will hybrid working stay? Will longer trips stay? And now, can loyalty programmes be resurrected?