While 75 percent of luxury hotel loyalty programs offer free-night stay rewards, only 35 percent offered other experiences as rewards, according to a new report from Gartner L2 that examines the state of loyalty programs for luxury hotel brands.
The report, “The Loyalty Landscape After a Year of Mergers and Data Privacy Concerns,” examined a total of 49 luxury hotel brands and their respective loyalty programs, 10 of which are multi-brand, like a Marriott Rewards or World of Hyatt. The report also looked at 10 that are single-brand programs, like Mandarin Oriental or Warwick, or part of an independent hotel collection, such as Leading Hotels of the World of Small Luxury Hotels of the World.
“Brands are still very heavily invested in these loyalty programs,” Michael Silverman, co-author of the report and senior associate of client and strategy research, Gartner L2, said. This is especially telling at a time when “the big are getting bigger, like Marriott and AccorHotels.”
“Even with consolidation, not everyone is shutting down programs or scaling back. People are leaning into this and they are worth investing in and they are seeing customers coming back,” Silverman said.
At the same time, however, Silverman said, these programs are not without their challenges.
“There’s a big difference between multi-brand loyalty programs and what the independent players have,” he said. “Very few independent loyalty programs are offering experiences, or branded credit cards, and very few have standalone social media or Facebook accounts.”
There do, however, seem to be some changes on the horizon. The newly relaunched Leading Hotels of the World loyalty program, Leaders Club, will have an emphasis on more experiences that can be redeemed. And single-brand programs like Small Luxury Hotels of the World’s Invited program are now teaming up with multi-brand programs, such as World of Hyatt.
And even emerging hotel brands that have yet to launch a formal loyalty program of their own, such as Equinox Hotels, are already debuting luxury experiences, or tours and activities, of their own.
Gartner L2 said that many luxury hotel brands today are “seeing success and feeling pressure” and that Mandarin Oriental’s new loyalty program is “probably scaring other independent brands into looking into what they could be doing in loyalty.”
And while most of those independent luxury hotel brands “aren’t looking to get into the complexity of a Marriott Rewards structure, they are looking at what’s comfortable in their wheelhouse in terms of recognition.”
Better Marketing and Promotion Tactics
Another finding from the report was that only 31 percent of brands examined featured their loyalty programs prominently on their own brand sites, suggesting that brands, especially those belonging to multi-brand programs, could be doing a better job of promoting their loyalty programs.
“Single brand loyalty programs are persistently on the page, while multi-brand programs had them down in the footer,” Silverman noted.
Implementation of General Data Protection Regulation in the European Union also decreased the size of luxury hotel brands’ distribution lists, but Gartner L2 noted that consumers still value communications from loyalty programs: dedicated loyalty email domains had twice the average read rate of non-loyalty brand email domains for the luxury hotel brands examined in the report.
Photo Credit: The Mandarin Oriental Milan. Mandarin Oriental and other luxury hotel brands are investing in loyalty programs even as the luxury hotel landscape becomes more consolidated. Mandarin Oriental