It's easy for hotel chains to spend time and resources on their highest loyalty spenders. But there is plenty of money to be had at the other end of the tier as well.
More than ever before hotel brands are determined to maximize revenue from their loyalty offerings. Hilton is looking to do this at both ends of the spectrum.
The hotel chain is actively looking to engage more with low-tier Hilton Honors members, in order to increase wallet share, CEO Chris Nassetta said on Hilton’s second-quarter earnings call with analysts last week. This is predicated on introducing more loyalty partnerships with third parties, according to the company.
While engagement from high-level members remains steady — and is a crucial part of revenue per available room (RevPAR) growth — Nassetta said those guests are not going anywhere. The brand instead has to regularly reward consumers that may only stay at a Hilton hotel two to five times a year; compared to the 100 nights a Hilton Honors Diamond level guest will book a room.
“Those [partnerships] are about getting lower-level members who don’t accumulate potentially enough points to go to the Maldives for a week to get engaged with us,” he said. “The more that people are using their points and doing things with it that get them active in our system, the more we get them thinking about us, the more they spend with us.”
The more partnerships, the better
Hilton has recently launched loyalty partnerships with rideshare service Lyft, e-commerce giant Amazon, and entertainment company Live Nation for concert tickets, among other deals. The McLean, Va.-based hotel group said it plans to announce even more partnerships going forward, though it did not provide any specific details.
“The Hilton Honors team is always listening to our members and exploring partnerships that fit into their everyday lives and travel space,” the company said in an email. “We are constantly on the lookout for partnerships like Amazon Shop with Points or Lyft or Live Nation as they seamlessly fit into our members’ travel ecosystem and lifestyle.”
Hilton’s rewards program grew more than 20 percent year-over-over to 94 million members, Nassetta told analysts. Engagement rates from all users are also currently higher than 50 percent, compared to half that amount in 2012, he added. Hilton defines engagement by the number of customers that redeem points on its platforms or that of its loyalty partners.
In September, Hilton launched a new marketing campaign playing up the benefits of joining Hilton Honors, including its price match guarantee, in efforts to woo travelers and deter guests from booking travel through online travel agencies.
More communication and tailored loyalty offerings for consumers has quickly resulted in higher occupancy for the brand from its rewards members, up five percentage points to 63 percent in the quarter. Meanwhile, the number of elite members also grew by 25 percent, with the amount of loyalty members reaching 100 nights up an additional 60 percent from the same period last year.
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Photo credit: Hilton has several active loyalty partnerships, including with Amazon, Lyft and Foursquare. Andrew Kelly / Reuters