The Takeoff Episode 02: How Startups Can Adapt and Pivot Sponsored This content is created collaboratively with one of our sponsors.
Getting independent hotels that compete against one another and have various agendas to cooperate in a loyalty program such as Stash Hotel Rewards has its built-in challenges. However, despite the myriad obstacles, there is a market need for such a program.
This has not been an banner year for hotel and airline loyalty programs with chains such as Marriott and Starwood devaluing points, and carriers such as Delta and Southwest awarding points based on dollars spent rather than miles flown.
Then at the property level, many hoteliers put on their best fake smiles when loyalty program members show up with a redemption stay where compensation for the property falls well below the rate it might have obtained during a relatively strong demand period.
Enter the four year old Stash Hotel Rewards, a loyalty program and booking site for independent hotels and small chains, which sees opportunities to take advantage of the pain points, but has to compete against giant chains with massive marketing budgets, and boutique brands such as Kimpton, with its own rewards program.
“We are a smaller company up against giant competitors with millions and billions of dollars in their marketing budgets,” says Jeff Low, founder and CEO of Stash Hotel Rewards.
Stash Hotel Rewards has cobbled together a network of some 200 properties, including independents like the Lenox Hotel in Boston and The Strand Hotel NYC, plus small chains or management companies including Magnolia Hotels and Denihan, all of which participate in the Stash rewards program. Most of the properties are in the U.S., although there is a smattering of hotels in the Caribbean, too.
What can Stash Hotel Rewards offer guests and hoteliers that Hilton HHonors and Starwood Preferred Guest can’t?
Less choice when travelers are bouncing around from city to city around the world, and more risk when it comes to the consistency of the guest experience. All that’s for sure.
Low doesn’t feel quality assurance wrapped up in big chains is that much of an issue in an age where potential guests can consult TripAdvisor reviews, and he says all of the properties in his program must achieve high ratings from TripAdvisor to qualify for participation.
The Stash Hotel Rewards program appeals “to a core set of travelers who want to experience life when they travel,” Low says. “No one is aspiring to stay at another Hilton Garden Inn.”
For hoteliers who feel they get ripped off when a loyalty program member redeems a stay at what is essentially a below-market room rate, Stash Hotel Rewards offers dynamic redemption rates so hoteliers can jack them up during peak demand periods and lower them when demand is slack.
The Trouble With Independence
For travelers, who earn five points per dollar spent on the Stash Hotel Rewards website, such dynamic redemption rates translate into the promise of no blackout dates — although it will take a lot of points to get a room during the Christmas holiday period in Manhattan or Super Bowl Sunday in Phoenix next January.
It’s extremely hard to make apples to apples comparisons, but a stay at the Doubletree Suites in Manhattan in late March would cost 70,000 Hilton HHonors points while a night at Affinia 50 New York can be redeemed for 17,356 Stash Hotel Rewards points.
Stash Hotel Rewards has a few things in the pipeline for 2014, including a move to share travelers’ preferences across the diverse properties and brands in its programs, as well as moving to a tiered membership structure.
Hotel consultant Robert Cole opines that “Stash is conceptually a good idea for independent hotels to compete against the reward programs from major hotel chains.”
“The challenge,” Cole says, “is to gain critical mass, with sufficient breadth of geographic distribution to provide guests with acceptable opportunities to convert award bookings.”
“While Stash may have 50 hotels throughout California, they currently only have one property in Dallas, Austin, and San Antonio, respectively,” Cole says. “Those are pretty big markets and may not offer convenient locations or sufficient availability during peak periods for members.”
Tom Botts, chief customer officer at Stash partner Denihan Hospitality Group, says business travelers are so addicted to points that there are many corporations that won’t contract with an independent property unless they have a loyalty program.
“For these clients Stash is a great win for hotels and guests,” Botts says. “Stash also brings us new clients who enroll at other hotels and then want to collect at our hotels.”
“We’d like more of these guests from Stash and they are working on it, but it is an important hedge against the OTAs for independent boutique hotels,” Botts adds.
Low says the company, which launched in May 2010, is profitable, with its founding team providing all of the funding.
“I live in Menlo Park, which is the epicenter of venture capital,” Low points out, noting that the company didn’t need the funding infusion, and the pressures that come with it.
Even if you take Low at his word on that point, he may have to get more familiar with some of his venture capital neighbors if Stash Hotel Rewards is to get any kind of scale to make a difference.