Insider: the loyalty test

Bonvoy has cost Marriott in redemptions (Marriott unveils new event platform)

This results season has, once the coronavirus has been stripped out, been all about loyalty. Not quite the kind of loyalty which is demanded by characters in The Godfather, although any creeping downturn is likely to mean an increased number of horse’s heads in beds if things go south. Worth noting that horses don’t count in terms of revpar, whole or otherwise.

This sort of loyalty is the type which the global hotel operators have all been driving towards with the frenzy of M&A which has been keeping us all so captivated for so long, the type of loyalty where you can capture a customer and keep them in your realm for the rest of their lives as they progress from budget customer to consumer of gold and marble.

The results from Host Hotels & Resorts gave loyalty - well, Marriott International’s loyalty - a huge boost last week when it was widely lauded and we were all looking forward to hearing what Arne Sorenson would say on this week’s earnings call. What he said was that the loyalty programme was just tickety boo but it wasn’t half costing. I paraphrase, but the message was that, for 2019 it was most of a cost than was normal for the loyalty programme.

Last year was no normal year, of course, with marketing costs associated with launching the Bonvoy name and what Sorenson described as “pent-up demand” to cash in points once cashing in points had become easier and, with the integration of Starwood, fraught with choice. Everything was expected to calm down this year and then it was hoped that, as the company expanded, points earned would outstrip points redeemed. The group was also looking at peak and off peak points.

This latter point is key to the success of any loyalty programme. With the move to book direct and the relaunch of loyalty programmes there was much talk of how customers had previously found redemption too hard and how the new regime would be seamless and clear. For evidence of how this is best limited where possible, look at John Lewis in the UK, where holders of a (free) Waitrose card could claim free lattes, without having to make any purchases. Seamlessly and clearly, with no black-out days. Revenue was brutalised and now those seeking a caffeine fix must buy something and bring their own cup.

Hotels are hoping to employ a more successful caffeine route with their loyalty programmes through earn-and-burn, which plays on our essential impatience as humans. Look forward to being encouraged not to save up your points for rooms, but fritter them on Kaffee und Kuchen. Loyalty is all very well, but it didn’t end up so dandy for a number of the Corleones.

In a slightly less menacing tone, this week also saw the first contributions from our Inner Circle, a group of industry leaders and innovators we have brought together to help us contribute to debate in the sector. This week we had Robin Sheppard, chairman of Bespoke Hotels and Chris Mumford, founder of Cervus Leadership Consulting, both commenting on the absolute shower that the is the UK’s immigration plan. Don’t expect them to sit on the fence.

Along with our loyal contributors, we would like to thank our loyal IHIF sponsors and delegates who have changed their diaries from March to May after the event was postponed on Friday. To quote Marriott CEO Arne Sorenson on the coronavirus “We know one thing with confidence. This will pass.” And when it does, we will return with gusto.