Can luxury brands like Mandarin Oriental, Four Seasons, and others convince consumers that you don't need the lure of points or free nights to be loyal?
Even though it seems like today’s consumers are inundated with an overwhelming number of travel loyalty programs, some brands have resisted offering their own programs.
For 55 years, Mandarin Oriental Hotel Group was one of those brands — until very recently.
In late February, news leaked about the company’s first loyalty program, Fans of M.O.
When asked why Mandarin Oriental finally felt compelled to launch a loyalty program, Kendall Dunn, director of guest engagement for Mandarin Oriental, told Skift that technology was a “big factor.”
“There have been so many advancements in technology, and the capabilities are out there to collect guest data and do something with it so our colleagues have an easier time anticipating those needs and delivering that information to deliver that exceptional guest experience,” Dunn said.
Unlike most other hotel loyalty programs, however, Fans of M.O. distinctively has no points and does not offer guests the ability to earn free nights. It does, however, have a variety of perks for members to choose from, including streaming Wi-Fi, early check-in and late check-out, room upgrades, and dining or spa credits during each stay.
No Points and No Free Nights
The decision to create a program without points or free nights, Dunn said, was the result of a lot of market research and direct feedback from more than 3,500 past Mandarin Oriental guests from five global markets in the form of survey, chats, and forums.
“We’re focused more on enhancing that particular stay and their experience every time they stay with us,” Dunn said. “It’s more about personalization and getting to know guests better so we can anticipate their need better than we can now and optimize that experience for them.”
Dunn noted that the extensive market research yielded some surprising revelations about how consumers view their relationship to hotels.
“Choice was a big thing that came up quite often,” she noted. “The guests said they felt like they were losing out if they were given the exact same benefits every time. If a hotel can provide something that has more of a local flair and can be more adaptable, they liked that more. We were surprised that they didn’t ask more for complimentary nights, but that it was really more about enhancing their actual stay.”
Dunn also noted that Mandarin Oriental purposely designed Fans of M.O. so that it could “evolve over time” and that “if certain benefits don’t resonate with guests in five years, for example, we can change them.”
Luxury Hospitality Loyalty Program Competition Is Heating Up
The luxury hospitality market, in particular, is known for having brands that do not have their own loyalty programs. However, Mandarin Oriental and its competitor, Four Seasons Hotels and Resorts, have both recently launched what they like to refer to as “guest recognition” programs in lieu of traditional points-driven loyalty programs.
One potential reason why more luxury hoteliers are thinking about launching formal loyalty programs, or at least their own versions of recognition programs, could be the fact that loyalty is increasingly becoming more important in persuading guests to book a return stay.
That sort of thinking becomes even more heightened when you consider that recent mega mergers between Marriott and Starwood and AccorHotels and Fairmont-Raffles-Swissotel have produced luxury hotel powerhouses with equally formidable loyalty program numbers.
Later this year, Airbnb plans to get into the loyalty and luxury space when it debuts its own loyalty program, called Superguest, as well as its version of a bespoke luxury travel agency, called Beyond by Airbnb, which will include luxury vacation rentals and tours and activities.
Then again, as Red Lion Hotels Corporation CEO Greg Mount pointed out recently, it may also be a futile endeavor for other hotel companies to think that loyalty program numbers alone can drive business to a hotel, unless you happen to be affiliated with Marriott or Hilton.
Mandarin Oriental has 31 properties worldwide, while a company like Marriott has nearly 400 luxury hotels.
One thing Dunn noted, however, is that she does see more hoteliers in general shifting their loyalty programs to be more about experiences, as Hyatt recently did, and she sees that trend boding well for Fans of M.O.
Using Loyalty Member Data
Whether or not a loyalty program drives significant business to a hotel brand, another important reason more hoteliers are launching these programs is to be able to capture customer data for marketing purposes, in addition to offering better guest experiences through personalization. That’s something Mandarin Oriental fully intends to do with Fans of M.O.
One other possible extension of the program could be for Mandarin Oriental to launch its own mobile app for guests, Dunn noted.
“What’s really exciting to me about the program,” Dunn said, “is the beyond-the-stay benefits and access to special things that we can provide to members. I think we can give them something really different.”
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Photo credit: The Mandarin Oriental, London. The luxury hotel chain, with 31 properties around the world, recently debuted its first loyalty program. Mandarin Oriental Hotel Group