Luxury Loyalty Merger: Taj and Shangri-La Hotels Partner on Loyalty Play

Mumbai-based Taj Hotels Resorts and Palaces and Hong Kong-based Shangri-La Hotels and Resorts are teaming up to debut a brand-new loyalty program alliance.

The Warmer Welcomes program, as it’s called, will debut in March 2017 with a joint website and targeted marketing campaigns, integrating Shangri-La’s Golden Circle and Taj’s InnerCircle loyalty programs. Both loyalty programs and both hotel companies aren’t merging, but they’ll be linked, somewhat similarly to how Marriott has linked its three loyalty programs.

With Warmer Welcomes, nearly five million Golden Circle members and nearly one million InnerCircle members will have top-tier status matching and they can both earn and redeem points for awards and stays at a combined 195 different hotels in 131 different cities.

Although Taj’s InnerCircle program has four tiers and Shangri-La’s Golden Circle has three tiers, status matching will work so that entry-level status is the same for both in the new Warmer Welcomes program. Diamond level in Golden Circle equates to InnerCircle’s Platinum level. Jade status in Golden Circle will be appropriately matched to Gold and Silver in InnerCircle.

In terms of point conversions, 100 Golden Circle points are equal to 67 InnerCircle points, and 100 InnerCircle points are equal to 38 Golden Circle points. Wee Kee Ng, vice president of corporate loyalty and partner marketing at Shangri-La, told Skift, “These point conversions are based on the value of each other’s currency.” He noted the conversions may also be subject to change over time.

The rules for how members of each program earn points and gain status, respectively, will not be changing, and any existing loyalty partnerships and programs that each hotel company has will remain. This includes Shangri-La’s recent partnership with Singapore Airlines to debut Infinite Journeys, a program that allows Golden Circle members and Singapore Airlines Krisflyer members to link their accounts.

Why Team Up?

For both Taj and Shangri-La, a partnership like this simply made good business sense, given the fact that each one has complementary regional portfolios and equally matched brands.

Taj has 100 hotels, many of them concentrated throughout India, whereas Shangri-La has 95 hotels, with many of them located in Asia. Both of these regions combined, especially India and China, represent the two fastest-growing economies and outbound travel markets in the world.

“The footprint was nearly mutually exclusive, so this kind of partnership actually made a lot of sense,” Chinmai Sharma, chief revenue officer for Taj, told Skift. “Because we’re in different geographies, the inherent desire of our members and guests is to be able to get recognition and benefits across a larger portfolio. That’s why this partnership made a lot of sense.”

“We wanted to make our loyalty program, Golden Circle, richer and more relevant to our members, and focus on their aspirations and needs,” added Ng. “We really wanted to be in places where our customers want to go. Extending our footprint is actually meeting those objectives.”

Ng also said that as other “competitors’ footprints get bigger and bigger,” it made sense for Taj and Shangri-La to team up together in this way to reward their loyalty customers and, in a way, achieve more scale without having to spend money on a merger or acquisition.

Instead of joining a collective loyalty program like Stash Hotel Rewards, for example, both hotel companies found it to be far more advantageous to partner with one another because their combined “relationships are already better” than those that could have been offered with those other types of programs and the fact that both companies have such “like-minded brands,” added Sharma.

Also, because both companies don’t have as much scale as, say, a Marriott or a Hilton, their specializations in the upscale and luxury spaces could be a potential advantage, said Sharma. “There’s potential in pretty much being everywhere but we’re more of a niche player compared to some of the larger companies. There’s a good amount of market segment and customers who are not interested that much in cookie-cutter experiences. That’s a key difference.”

He added, “We know that, in order for us to stay relevant in this marketplace, we should continue doing what’s best. I don’t think we [Taj and Shangri-La] want to be the world’s biggest, but we want to be the world’s best. That’s why I think these shared cultures and value synergies were so important.”

Warmer Welcomes and a New Definition of Hotel Loyalty

Sharma said that the initial decision for both companies to partner together was sparked last year when Sharma met with Shangri-La’s CEO at the time, Greg Dogan, at the International Luxury Travel Market trade show to simply discuss “possibilities for working together.” (Dogan left Shangri-La Hotels in March.)

At the time, in 2015, Taj had recently debuted its relaunched InnerCircle to have no blackout dates or expiration dates for active members, and to offer more ways for guests to redeem points for not only stays but restaurants, spas, and other experiences as well.

Shangri-La, as well, has been investing in its loyalty program offerings as well. In addition to launching Infinite Journeys recently with Singapore Airlines, the company also debuted The Table by Golden Circle, which enables loyalty members to earn and redeem points on dining experiences around the world.

For both Taj and Shangri-La, this new alliance is partly motivated by scale, in that it offers more scale in the form of more choices for its guests and a larger global footprint. But it’s also partly motivated by what both companies see loyalty programs evolving into: programs that are more experience-driven and easier for guests to understand.

While both companies do not currently offer discounted loyalty member rates like their peers such as Hilton and Marriott do, they hope that their efforts to link their loyalty programs will help build a deeper kind of loyalty that’s less about discounts and more about value and experiences. And to build the kind of loyalty that gives both companies the intelligence they need to better serve their customers.

“We really want to switch loyalty from bring just a currency to an experience,” Ng said. “That’s why, for us, it’s very important that we are talking about the journey of a customer’s experience to data, to customer segmentation.”

When asked if the companies would be sharing any customer data with one another as part of this alliance, Ng and Sharma said they would not due to issues of privacy and security. However, they said they’ll continue to analyze the data they do have to keep personalizing their guest’s experiences and they’ll be better able to “target offers based on existing trends within our databases,” Sharma noted.

Focusing on loyalty has been a major theme throughout the hospitality industry this year. All the players in this space, particularly large ones like Marriott and Wyndham, have invested a considerable amount of time, money, and resources into evolving their programs to have better direct relationships with their guests. Hyatt, as well, recently announced its plans to debut a brand-new loyalty program, World of Hyatt, in March.

Marriott’s decision to link its three loyalty programs has been, overall, positively received by consumers, and Wyndham has been awarded with accolades for its simple, straightforward approach to loyalty. Hyatt, however, has had a much cooler reception to the news of its new loyalty program, which now makes it more challenging to earn rewards than its current program, Hyatt Gold Passport. A disastrous Reddit AMA (Ask Me Anything) also didn’t help improve the loyalty program’s image with frequent travelers.

For Taj and Shangri-La to succeed with their new alliance, they’ll need to remain focused on giving their customers what they want, especially as bigger players up their respective loyalty offerings, too.

Looking Ahead to Phase Two

A secondary phase of the program, for which a date hasn’t been announced, could encompass some cross-selling opportunities, however.

“The general thought across both companies is that, depending on the success of the loyalty program, in due course we might also want to check the possibility of cross-selling each other at hotels and our websites,” said Sharma. “We may have some synergies in the salesforce who are selling the world of Shangri-La and Taj in different geographies. Those are just some things which are on the table but we’re not adding those now.”