Wyndham Finally Joins Competitors With Discounted Loyalty Rates

It only took a little less than two years, but Wyndham Hotel Group is finally instituting what many of its hotel peers launched in 2016 — discounted room rates for its more than 53 million Wyndham Rewards loyalty members.

It's in an effort to incentivize more consumers to book direct instead of using an online travel agency like Booking.com or Expedia.

Dubbed the Rewarding Rate, this 10 percent discounted rate applies to all of Wyndham's more than 8,000 hotels worldwide and is available on all of Wyndham's brand channels, as well as to travel agents. Consumers don't need to be a loyalty member to see the rate, but they do have to be signed in as a member to book the rate on a Wyndham channel.

Wyndham had offered a 15 to 25 percent discount for a limited time in 2016. But vice president of worldwide loyalty and partnerships Eliot Hamlisch, who took over Wyndham Rewards at the end of last year, said the new Rewarding Rate doesn't have an expiration date.

The 10-percent discount, Hamlisch added, is also "among the most generous in the industry." Wyndham's peers who have discounted loyalty member rates include Choice Hotels (up to 7 percent); Hilton (up to 10 percent on weekends); Hyatt (up to 10 percent); InterContinental Hotels Group (2 to 10 percent depending on region); and Marriott (up to 2 percent on weekdays and up to 5 percent on weekends).

Wyndham Hotel Group CEO Geoff Ballotti told Skift about the new loyalty member rate last month, and when asked why Wyndham waited until now to launch it, Ballotti said, "It gets down to a number of different things. It gets down to our technology platform, it gets down to our digital platform, it gets down to our website, it gets down to our relationships with our OTA [online travel agency] partners. All of those things come together and we have been focusing on laying down the foundation for our property management central reservation system. Our websites have all transformed dramatically in the last two years."

Wyndham recently updated its Wyndham Rewards website to offer a more personalized consumers experience as well as to make it responsive for desktop and mobile platforms. Hamlisch said that the new site can recognize users based on their loyalty program status, and is user-friendly. On the back end, the site is also more adaptable and "enables the organization to be more nimble in our approach to electronic communications," he noted.

Hamlisch wants to extend the more personalized digital experience to the on-property experience. He said more details about that would be forthcoming in a few months.

Impact of Discounted Member Rates

Research from Kalibri Labs suggests that the brands' direct booking pushes in 2016 led to  more direct bookings for those brands that offered discounted room rates for loyalty members.

However, some industry experts aren't entirely convinced of the benefits, arguing that that hotel owners are bearing a real cost for loyalty. Others maintain that these discounted rates are simply incentivizing people who would have booked direct anyway, and they get a discount in the process. That discount hurts hotel owner bottom lines.

Hamlisch said that preliminary data from the soft launch of Rewarding Rate is showing an "incremental lift" in direct bookings for Wyndham's hotels and franchisees. "The value that the program and our member base is providing to [franchisees] is what carries the day," he added. "If we can continue to do that, which we have, the will continue to be happy."

That same study from Kalibri Labs did not include data from economy-branded hotels. Wyndham has several of these, including Super 8, Days Inn, and Travelodge.

However, Ballotti said that same report "debunked the theory that loyalty doesn't matter in the economy space."

The report, he said, showed how "the share of occupancy in the economy segment grows faster than any other segmentation of contribution of share of occupancy."

Cindy Estis Green, CEO and founder of Kalibri Labs, and one of the authors of the report, said the contribution of loyalty member bookings to economy hotels is growing more rapidly than at higher-tier chains. For most hotel categories, loyalty member bookings account for 40 to 60 percent of bookings. For economy hotels that number is from 13 to 15 percent.

At Wyndham, Ballotti said, the company's North American occupancy share by loyalty members "is right now just shy of 40 percent, at 37 percent. We feel really good about that." When Wyndham Rewards was relaunched in 2015, the percentage of North American occupancy from loyalty members was only 31 percent.

Ballotti also believes that the importance of a free night can't be minimized when it comes to hotel loyalty programs.

"I think all the research points to why loyalty is important and why the ease of earning a free night in the economy segment is really important," he said. "I hear a lot of my peers talk about instant gratification, but all the research that we did when we relaunched Wyndham Rewards showed that what economy and midscale travelers want most is the promise of a free room. It's the ability to earn a night some place really nice."

As for his own plans for Wyndham Rewards, Hamlisch is committed to continuing the program's reputation for being simple and straightforward. "The past three years have been an incredibly busy time for the program," he said. "In 2015, Wyndham Rewards was fully relaunched. In 2016, we introduced member levels and introduced experiences. The year 2017 was all about expanded partnerships like those we established with Caesars Entertainment and Six Flags. There's opportunity for us to continue to extend the relevance of our value proposition in a really simple and generous way."

The Future of Wyndham Rewards

Wyndham Worldwide CEO Stephen P. Holmes has often described Wyndham Rewards as the "blue thread" that will connect the two public companies that would emerge once Wyndham Worldwide completes its planned spin-off in the second quarter.

Hamlisch said that "Wyndham Rewards will continue to stay intact" and "we will continue to be laser-focused on leveraging it as a program and as a currency to make sure we drive great value for both members of both organizations."

The second quarter is also when Wyndham is expected to complete its $1.95 billion acquisition of La Quinta Holdings. If and when that deal closes, Wyndham would then have access to the more than 13 million loyalty members who are a part of the La Quinta Returns program.

"From a loyalty perspective, our intent is to combine their program into ours, but I can't comment on timing at this point," Hamlisch said. "There is certainly more news to come on that point. They have a great program and we are actively looking at the benefits of both programs to understand where we can learn and grow."

When asked if Wyndham would offer a status match or link the two programs upon deal close, as Marriott did when its $13.3 billion acquisition of Starwood closed in September 2016, Hamlisch said he couldn't comment prior to the completion of the acquisition.

Regardless, he said, consumers can expect to see a number of initiatives from Wyndham Rewards in the months, with Rewarding Rate being just one of many.