Thursday, June 02, 2011

Loyalty Programs for Small and Boutique Properties (NYT)

Loyalty programs are the drugs that keep frequent travelers addicted to large hotel companies and brand systems. Whether for points or recognition, frequent travelers as a class have repeatedly demonstrated that they will pay more and be more loyal to a company if it belongs to a program that offers them benefits and/or points that become more valuable or accrue more rapidly as frequency of use increases. Best depicted in the recent George Clooney movie Up in the Air, loyalty programs have become an end, not merely a means, for the frequent hotel consumer

Big hotel companies such as Marriott, Hilton, and Starwood have built and are able to maintain a critical mass of hotels in their systems and therefore gain nearly automatic distribution for their rooms. With the exception of Starwood's W (which may not really be an exception), there has not been much in the way of loyalty programs for lifestyle and independent hotels. For the most part, having a loyalty program and running a boutique hotel have been mutually exclusive activities. With the growth in the importance of loyalty programs and the continued interest in the boutique or lifestyle segment, a new trend has emerged: the creation of consortium of independent assets tied to a common rewards system (see NY Times article). That development will most certainly aid in the development of innovative and independent properties, something we should all note.

As the larger hotel brands soften their sometimes stodgy images and products and open their own lifestyle and luxury hotels, it is important to note that loyalty and rewards programs, once viewed as a feature reserved for big chains, are fast becoming quite ubiquitous. Such programs, if available to boutique and independent properties, may no longer shield poorer branded products and services, like they have in years past. Branded products have long offered the promise of consistency and rewards. Creativity, passion, and excitement -- things we associate with lifestyle products -- have not been features we expect from the bigger brands. The availability of rewards and loyalty programs to consumers of those products may very well change the landscape of the industry by (a) further leveling the playing field between the independents and the brands and (b) altering the hotels that the large brand companies decide to build as a result. Stay tuned.

Click here for an article from the New York Times on loyalty programs being launched by small and independent hotel,.

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