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A half a year ago, Priceline Group CFO Daniel Finnegan was telling investors at a retail tech conference that loyalty programs can be a source of consumer frustration and costly so the company would rather focus on improving the user experience.
“I feel our performance has been strong without being beholden to loyalty programs,” Finnegan said in March.
But a lot has changed since then. Finnegan’s boss at the time, Darren Huston, left the company a month later, Booking.com’s then chief operating officer Gillian Tans got bumped up to become the Booking.com CEO, and the Group’s dominant unit debuted Booking.com for Business to service unmanaged business travelers (travelers whose companies don’t have a formal travel policy).
And now, despite Finnegan’s earlier pooh-poohing of loyalty programs, Booking.com has debuted Booking.com Travel Rewards for business travelers, offering 10 percent discounts on select hotels and other perks, and has been ramping up enrollment since the Summer.
When you book a hotel on Booking.com, the site asks whether the prospective booking is for leisure or business travel, and if you select the latter and go ahead with the booking, an invitation for a free upgrade to Booking.com for Business arrives by email.
Five bookings bring access to “exclusive discounts and travel perks for future trips,” the rewards program states.
Booking.com considers Travel Rewards to be a test and not necessarily a locked-in program,
A Genius Move?
Booking.com Travel Rewards members who achieve at least five bookings earn the “Genius” label, and get access to the program’s separate customer service phone line. Other perks include “late checkout priority exclusively” for Geniuses, and, at select properties, freebies such as welcome drinks and free airport shuttles.
Booking.com, however, considers Travel Rewards to be a test and not necessarily a locked-in program.
“At Booking.com, we are always testing different options to deliver more value for our customers and partners, and this will always be a part of our strategic approach,” a spokesperson said Monday. “We have been seeing an opportunity to test delivering more value to our most frequent travelers already for years, which is how the genius program came about. Today within Booking for Business we are also testing Genius, but at the moment, no other program has materialized, although we will always continue to test new ways to deliver value for customers and partners.”
Priceline Group officials have said in the past they thought perhaps 20 percent of the hotel reservations on Booking.com came from business travelers but they only started querying consumers on the purpose of their trips, whether they are for leisure or business travel, in the last year or so.
“On the corporate travel opportunity, we always suspected that we had a substantial number of business users that were using our product, but we didn’t until more recently have data on it, which is where that one in five number comes from,” Priceline Group Jeffery Boyd said during the company’s second quarter earnings call August 5. “And that intuition gave us reason to look at the market more aggressively and try to build some functionality that would be targeted directly at corporate travelers.”
That functionality now includes a loyalty for business travelers who sign up for Booking.com for Business.
Despite Finnegan’s earlier dismissals of loyalty programs as a competitive advantage, the Group’s Agoda unit and OpenTable businesses have loyalty programs, but the vast majority of the Group’s profits come from Booking.com, which didn’t have a loyalty program until the advent of Booking.com Travel Rewards this summer.
Boyd definitely sees an opportunity in corporate travel for the Group.
“In the United States, the average hotel has 30 percent business traveler, 30 percent leisure traveler and 30 percent large groups for big hotels, so that gives you sort of a breakdown at least in the U.S. market as to what the market kind of looks like,” he said in August. “But we think there’s a great opportunity to build awareness among business travelers that Booking.com in particular is a great place to go and for business owners to use the tools that we’re building which we think will help us build share there.”
Whether a loyalty program will turn out to be advantageous remains to be seen and can be adjusted as the situation merits. The real question is whether Booking.com, like Expedia’s Egencia, will take the next step into managed travel by acquisition or otherwise.