Red Lion Hotels Corporation (RLHC) undeniably bucked the direct booking trend by enhancing its partnership with Expedia to offer the hospitality brand’s Hello Rewards’ members-only rates on Expedia.com and Hotels.com—as well as the opportunity for consumers to sign up for the rewards program directly through these channels. On face value, the move is a thunder grab at a greater base of rewards members and a potentially costly one, considering the associated commission and discounted rates. But for RLHC, the program isn’t simply a sales strategy; it’s more tactical than that. It’s also cost-effective for RLHC.
Focusing on Outreach
Taking into account the high CPM (cost per thousands) involved in building brand awareness by promoting to all consumer bases, including non-travelers, Bill Linehan, RLHC’s EVP and chief marketing officer, told HOTEL MANAGEMENT that: “The economics of being able to increase our share have actually gone down. So the cost to market on these channels is less.”
As other key facets of the program include merchandising (placement) opportunities, SEO and media elements and an optimized presence on Orbitz for Business and Egencia, leveraging Expedia’s global reach is a fundamental component of the deal given that the extent of the hotel company’s footprint is limited to 114 properties spread across the U.S. and Canada. Linehan acknowledged that other hotel brands have a greater presence on the global stage, but added, “Who has a greater ubiquity of inventory than the OTAs and so aren’t I better off marketing within that marketplace and utilizing that as one part of my marketing strategy?" he said. "We need to be nimble and agile, especially given our size, to reach our potential and ongoing consumers.”
Gaining Competitive Edge
But for as boutique a brand as RLHC may be, stepping up its game with Expedia has also gained the company an edge over its competition; the expanded partnership garnered RLHC greater visibility on the sites. “Since the program began, our natural placement with Expedia has improved over 10 positions per hotel and based on the number of hotels that we have, we have better placement than other hotels that don’t have the same level of partnership with these channels,” said Linehan. That exposure has the potential to increase further as more consumers become acquainted with RLHC’s Hello Rewards offerings on the two sites.
The opportunity to introduce consumers who research and book travel online to the benefits of the RLHC brand is equally inherent to the program as part of the company’s marketing mix. As these travelers comparatively shop online, Linehan wants to convey the message that there’s value in every RLHC stay for Hello Rewards members since the program not only offers a free night for every seven consumed, but members also receive a perk such as a free breakfast or a complimentary cocktail or an Amazon credit.
“The hospitality industry is asking consumers to devote their loyalty and business to them before the brand will treat them better and where’s the hospitality in that?” Linehan commented. “I’m relaying to these consumers that we want to welcome our guests and knowingly recognize them from day one.”
He also added that because the program is not points-based, it has more applicable measures for leisure travelers, in addition to business travelers. So promoting Hello Rewards front and center on Expedia channels—where leisure travel reigns—was hand in glove for RLHC. “This partnership makes sense for us because our overall consumer target is less of the elite status traveler and more of the long tail traveler, which is actually bigger. Those are also the travelers who are shopping on Expedia,” Linehan said. “Consumers are becoming less and less devoted to specific brands and more and more devoted to fulfilling their purpose. It’s not about hoarding points anymore. It’s about the instant gratification that fulfills the purpose of that particular trip.”
Speaking to Millennials
Linehan isn’t discounting Millennials from the audience he’s trying to reach through this Expedia program either. “When you look at the generational shift that’s occurring right now, millennials have a higher propensity to use online channels on their mobile and Expedia’s online mobile growth is exponential,” he said. “They also prefer transparency and believe that these larger sites are more trustworthy than brand.com sites because the larger sites are showing multiple, competing rates—and they’re outspending boomers on travel. Instead of telling the consumer how to behave, we’re thankful for their business and we’re present where they’re shopping. So if they’re shopping on Expedia, we want to be top of mind. How they wish to book is their decision. It’s ours to be there or not.”
Aside from educating travelers not yet familiar with the brand, Linehan also wants to reach existing Hello Rewards members through Expedia’s channels, counterintuitive as that may seem. “Just because they seek us out with preference doesn’t mean that they don’t go through the same decision-making funnel to ensure that their preference for the brand holds true and this makes our positioning to our consumer more relevant to that mindset,” Linehan said.
Anticipating Consumer, Owner Reactions
While it’s still too early to tell if the new Expedia partnership is successful or not, Linehan did share that RLHC has already seen Hello Rewards enrollment increase four times month over month, from June to July. But he further elaborated that only a quarter of those enrollments were generated through Expedia channels; the rest were direct enrollments on the brand’s own website. “This just reinforces what we know and what research tells us about consumers shopping around," he said. "They shop on multiple websites and make their decisions based on what they see and their own personal preferences on where they want to book. We’ve seen the traffic to our website increase when we promote on other channels. It’s like fishing where the fish are.”
But are RLHC’s owners onboard with the brand’s out-of-the-box effort to adapt its strategies to meet constantly evolving consumer behaviors? “If someone thinks that by just being listed on an OTA you get the consumer business, they’re wrong,” Linehan explained. “We’re perpetually merchandising our brands through various channels and once we have a relationship with the consumer, we continue to digitally message them. So if we’re raising the RevPAR of our hotels, I don’t see why we would have an upset owner.”