Loyalty programs designed for independents

The Monterey (Calif.) Plaza Hotel & Spa is a member of Stash Hotel Rewards. The hotel has 290 rooms.

National Report-- Gone are the days when only big hotel brands attract all of the “road warriors” and repeat group business. Independent hotels now have viable options for loyalty programs on par with the big brands to entice these lucrative consumer segments.

Blossoming hotel loyalty programs such as Stash Hotel Rewards and Voila Hotel Rewards are designed specifically for independent properties, and are not only making independent hotels more appealing to frequent travelers, but also provide added benefits such as increased direct bookings, reduced commissions to online travel agencies, increased awareness and economies of scale in the marketing arena, as well as increased control of redemption factors, in some cases.

Stash Hotel Rewards, which launched in May 2010 with 65 partner hotels in the U.S., grew to 146 hotel members by May 2011. Most of that growth was achieved by word of mouth, according to Jeffrey Low, founder and CEO of Palo Alto, Calif.-based Stash.

“We have been able to grow so well by our partners’ word-of-mouth,” he said. “We have very happy partners, and they talk.”

Growing membership

With the launch being one of the “hardest parts” of the business so far and that behind him, Low is now focused on growing Stash’s portfolio of properties. He said the company’s goal is to have as many hotels in its program as Hyatt Hotels Corp. and Starwood Hotels & Resorts Worldwide each have in their frequent guest programs. In addition, he said Stash, which has remained domestic until now, will go international this year with potential new hotel partners in Canada and even overseas. However, the company will not continue to grow just for growth’s sake.

“We are highly selective. More than 400 hotels approached us last year and only 17 percent were a fit for Stash,” Low said.

While hotel ratings are a consideration, customer satisfaction scores are often weighed more heavily, with “most loved” properties making the cut most often, he said.

Both one-off independents, such as the Seaport Hotel in Boston and the Yotel in New York at Times Square, as well as small collections of independents, such as Affinia Hotels, are attracted to the program and have recently joined. And the larger Stash’s portfolio, the more attractive it becomes to both hotel partners and frequent guests. As the network gets bigger, so does the potential for referrals from other hotels and rewards/redemption opportunities for guests.

“Our goal is to level the playing field and to be in the same consideration set as the chains,” Low said. “Just look at the George Clooney character from “Up in the Air” and you will see there are people who book strictly based on rewards. We want to make independent hotels relevant to them.”

Business model

With Stash Rewards, a member gets five points for every dollar spent at a Stash partner hotel. It typically takes about the same amount of stays as with chain programs to redeem a free night, Low said, which can be in as little as five stays. Partner hotels pay a nominal fee to integrate with Stash and pay Stash for the value of points issued to member guests.

These partner hotels also have control over the number of points needed for a Stash member to get a free room, which can change on a daily basis based on demand factors.
And while direct competition for Stash may be scarce at the moment, Low described chains with boutique collections, such as Marriott’s Autograph and Starwood’s The Luxury Collection, as potential alternatives for independents.

“We often hear that hoteliers who join Stash have also been approached by those and other chain collections,” Low said.

Voila on the radar

On the radar and primed for growth is another rewards program looking to help independent hotels called Voila Hotel Rewards. The company was created by Hospitality Marketing Concepts, a Newport Beach, Calif.-based marketing loyalty company supporting more than 1,000 hotels worldwide.

And while Voila, a plug-and-play, points-based guest loyalty program, has built co-branded programs around independent hotels’ existing infrastructure and brand since 2008, it recently launched a non-branded version under the Voila name for true independent hotels that are not looking to brand their program.

While its branded version stands at more than 285 hotels worldwide, currently Voila’s non-branded rewards solution has only a handful of partners, including the Seoul Plaza in Korea and the Hotel Ranga in Iceland. According to Peter Gorla, VP and chief marketing officer, the non-branded Voila program will experience significant growth in 2011 and 2012, including growth in the United States.

“Our objective is to be everywhere,” Gorla said. “Part of having a program like this is being a good size. We think a good critical mass would be about 70 cities with 1,000 hotels.”
Gorla said Voila has a few groups in the Americas that are close to signing on with the rewards program.

“We hope to get 50 hotels in the U.S. this year alone,” he said. “We are really pushing hard to make a splash here.”

Voila business model

Much like Stash, Voila has a start-up fee for partner hotels. But its second cost is an administrative fee based on a pay-for-performance model calculated on revenue that is converted to points.

“It is much less expensive than hotel chain programs,” Gorla said.
Voila integrates with each hotel’s central-reservation system and property-management system. Members can book and redeem nights on either the hotel’s website or Voila’s member websites.

The program’s goals include reducing hotel commissions to OTAs, increasing repeat bookings/loyalty and locking in customers from competitors in a hotel’s relative marketplace.

“Hotel partners form alliances with strategic earn/burn partners including airlines, also backed by Voila, and can take advantage of our advanced CRM system to reach Voila’s global membership base, and are marketed to an ever-growing worldwide network in over 120 cities on five continents,” Gorla said.

Independents gain most

So what exactly are the independents getting by joining with the likes of Stash and Voila?
According to Scott Grigelevich, director of sales and marketing at The Lenox Hotel in Boston, which was one of the initial hotel partners in place when Stash launched, “a great competitive advantage. We are no longer at a disadvantage to the big chains,” he said.

Indeed, The Lenox has started to see the Stash website as a viable booking channel, with many guests coming to stay at the hotel based on referrals from other Stash properties, according to Grigelevich. He also noted that Stash has provided other intangible benefits such as markedly increasing the exposure of The Lenox in a way that would otherwise be cost prohibitive.

“And they are great at balancing their portfolio of hotels,” he said. “They are careful to add both unique business hotels and luxury resorts great for redeeming points, which attracts new members.”

Ayres Hotels, a group of 20 family-owned and operated properties, became a Stash Hotel Rewards partner in May and particularly appreciates the “plug-and-play platform they have put together,” said Matt Hildebrandt, revenue, ecommerce and promotion manager.
“Stash makes individual pages for each partner hotel and it is easy to use,” he said.

Ayres had considered other third-party programs before settling on Stash, according to Hildebrandt.

“Stash was the right fit for us,” he said. “We expect real benefits such as an increased loyal following, and it will also allow us to reduce our dependency on OTAs and garner more direct bookings from Stash and cross referrals from other Stash partner hotels.”