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Latest Numbers Behind Hotel Groups' Bet on Credit Card Rewards
13.07.2024 - 01:27 / skift.com / Sean Oneill
Hotel chains are doubling down on loyalty programs, and the strategy appears to be paying off. A CBRE report shows these plans drive occupancy growth for major groups like Marriott and Hilton, even as the programs evolve beyond catering solely to road warriors.
The research arm of CBRE, a property agency, has published a study analyzing the hotel loyalty programs of five major U.S. public hospitality groups — Marriott, Hilton, Hyatt, Choice, and Wyndham.
Tellingly, loyalty members accounted for one out of every two room nights booked. That’s a sizable chunk of business, especially valuable during slow periods.
Hotel groups have worked to broaden the base of loyalty members by diversifying away from a dependence on road warriors and points obsessives.
Here is how that shift is being reflected in the performance.
Hotel group loyalty programs are becoming less dominated by frequent travelers. Heavy users, meaning those who stay at least 30 nights a year, now are a smaller percentage of the total memberships.
More of today’s guests are increasingly incentivized through point awards from credit cards and affiliate programs because hotel groups have shifted their programs to emphasize those offers rather than pure, traditional point-earning from frequent stays. IHG, for example, tries to give more rewards and choices of rewards sooner than in the past.
As a result of that shift, two trends are happening at once.
On the one hand, the average dollar value of unredeemed points has been modestly declining. That means the typical member either stays less on average, redeems more points, or both.
On the other hand, despite the per-member decrease, hotel groups saw their total balance sheet liabilities associated with loyalty point accruals increase by 9.3% in 2023. That rise was mainly owed to the total number of loyalty members growing by 11% in the same period.
Loyalty programs are broadening the base of membership by shifting their emphasis away from maxing out points for their most frequent travelers. They’re trying to do that without increasing their liabilities (or promised rewards) too much.
These more incremental loyalty members may help fill rooms during shoulder seasons and economic downturns when hotels might otherwise struggle with lower occupancy rates, wrote Rachael Rothman, head of hotels research and data analytics at CBRE.
The loyalty arms race isn’t over. Subscription-based models are emerging as potential disruptors, a trend the report didn’t cover.
The most extreme example is the lifestyle hospitality brand Ennismore, an Accor partner. Ennismore launched a “Dis-loyalty” program a year ago with no need to earn points, no tiers to climb, and no need to wait for the rewards — at a typical
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