Hotel And Hospitality

Hotels double down on experiential loyalty

hotels-double-experiential-loyaltyDespite industry consolidation, hotel brands have yet to solve the problem of Airbnb, which continues to horn in on the industry’s turf and shows no signs of slowing down. To combat the upstart, hotels are doubling down on their loyalty programs – not by offering more points or room nights, but rather by offering one-of-a-kind elite experiences to their top-tier customers. Will “bleisure” travelers currently shifting spend to Airbnb come back home with the offer an experience that fulfills a long-cherished vacation fantasy or helps them cross an item off their bucket lists? Customer behavior will tell the tale.

By Rick Ferguson

The New York Times has the story, which sets up the problem of Airbnb’s current 12 percent market share and then details the industry’s attempts to woo elite travelers via unique, luxury experiences that no quaint Airbnb chalet can match. Imagine taking your pick from one of these experiential rewards from a list culled from the NYT article:

  • Cooking class with a Michelin-starred chef
  • Snorkeling in Hawaii with Jean-Michel Cousteau
  • Basketball clinic from the NBA star Dwyane Wade
  • Golf lessons from Annika Sorenstam
  • Surfing lessons with Laird Hamilton
  • Photography workshop with a National Geographic photographer
  • A Tokyo excursion featuring the Mori Art museum
  • Driving a Lamborghini

I mean, holy cow, right? The impetus behind this drive toward experiential rewards – geared as they are almost exclusively to the one percent of elite travelers – is the cultural shift away from purchasing material goods and luxury items to purchasing aspirational experiences, particularly ones that lead to self-improvement. Money quote #1 from the Times:

“Marriott is trying to differentiate itself by focusing on self-improvement activities, in part because its own research suggests this is how people will increasingly spend their money when traveling. According to Marriott’s consumer research, younger travelers are willing to spend twice as much… on self-improvement, including bettering their sports or cooking skills. Such experiences not only boosted travelers’ self-worth and satisfaction, the research found, but travelers sought to share their interactions with experts on their social channels.”

As the Times points out, however, Airbnb is also playing the experiential rewards game – and is doing it at a more egalitarian level than the major hotel brands:

“The large hotel brands are mindful that right over their shoulder, Airbnb, in particular, is reinventing what travelers expect from a local stay by rolling out smaller-scale experiences and classes, which people can bid on through its site even if they are not staying in an Airbnb rental. One in Paris, for example, offers to teach patrons how to sculpt a head from clay, taught by an artist who studied at the Louvre museum. Another offers a class in San Francisco on creating a French macaron.”

This is all good news for travelers, of course, even though the number of hotel program members or Airbnb guests who will actually avail themselves of these rewards is vanishingly small when compared to the tens of millions of members active in hotel loyalty programs. The experiential rewards game is therefore much more about brand cache than it is about impacting a critical mass of members.

The real opportunity, and one that hotel brands have yet to fully seize, is what Merkle Loyalty Solutions consultant Allison Cripps Ferguson (full disclosure: she’s this writers’ wife, which I hope makes the use of this quote no less salient) calls the “democratization of loyalty” – designing broad-based programs that build relationships beyond the few deciles of road warriors who earn enough points to surf with Laird Hamilton. One of the keys to doing so is to make customer data work harder. Money quote from Ferguson:

“To build relationships with leisure as well as business travelers, hotel brands will need to develop data sophistication along two fronts. First, they’ll need to overcome the ownership or technology hurdles that prevent them from capturing a traveler’s total on-property spend, including dining, spa, and other amenities. And second, they’ll need to leverage the resulting data, often in real time, to provide personalized, relevant, and differentiating experiences at every stage of the travel cycle, from consideration and booking, through the stay, and on to the post-travel experience.”

Don’t get me wrong – lavishly wonderful experiential rewards are a terrific way to build long-term relationships with elite business travelers. To successfully combat Airbnb, however, hotel brands will also need to figure out a way to improve the hotel experience for the broad middle of business and leisure travelers. If your brand only caters to the elite, after all, then you may one day find your best customers storming the bastille.

Rick Ferguson is Editor in Chief of the Wise Marketer Group and is a Certified Loyalty Marketing Professional (CLMP).

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