Loyalty programs held hotels grab bigger share of reservations
Washington, D.C. – 19 July 2017 –
Reuters put out a story about hotel loyalty programmes helping US chains such as Hyatt, Hilton and Marriott score more bookings on their own websites and luring customers from online travel agents that had seen commissions balloon to an estimated US$3.5 billion a year.
The report said that grabbing a bigger piece of the reservations pie has become a priority for chains trying to limit the flow of commission dollars to companies like Expedia and Priceline. “It’s costly for hotel companies,” said Telsey Advisory Group analyst David Katz. “Necessary, but costly.”
Cutting commissions is important enough that the hotel chains have made it easier for loyal customers to win free stays. This has helped them gain ground, although online travel agents still account for the overwhelming majority of US hotel bookings.
Six of the top 10 hotel brands had direct bookings increase from May 2016 to May 2017, a recent report by audience insight company Hitwise showed, while just three of the top eight online travel agencies had more bookings during that period.
Wyndham Worldwide, the No 3 US hotel chain by market cap, more than tripled its share of direct bookings to 9.61 percent, according to the report. Marriott had the industry’s biggest share of direct bookings, at 26.21 percent in May 2017.
Dan Wasiolek, an analyst with Morningstar, said Wyndham’s jump surprised him, though the company started at a lower base. He cited a US$100 million revamping of its loyalty programme eliminating blackout dates and other restrictions common to other chains’ rewards programmes.
Hilton Worldwide and Marriott International have also heavily promoted the linkage between loyalty rewards and direct bookings.
Hilton’s “Stop Clicking Around” advertising campaign, touted as its largest ever when it was launched in February 2016, offered loyalty members a discount when booking directly from the hotel’s website. Marriott created a similar campaign, also offering discounts to members who booked directly starting in April 2016.
Loyalty programmes allow hotel companies to circumvent the rate parity rule barring hotel companies from advertising lower rates on their sites than are available through the online agencies, Wasiolek said. But they present the risk of getting travellers too accustomed to discounted rates or free stays.