Owners and operators agreed that well-run loyalty programmes that drive sufficient volumes are worth the cost of managing them.
At the Great GM Debate advisory panel meeting, Abjar Hotels CEO Abdellah Essonni said loyalty programmes are a good thing, and added: “We work with the Sheraton and with SPG, which is one of the best loyalty programmes, and if anything, it brings direct business as opposed to business through OTAs. Because if you are an SPG member and you book through Booking.com you don’t get any of the SPG privileges. Members know that and they tend to book directly.
“And as an owner it costs me less than if it were an OTA booking. Which is why we see in the recent years brands investing in and promoting their loyalty programmes a lot more, and rightly so.”
Viceroy Hotel Group regional vice president and Yas Viceroy Abu Dhabi general manager Andrew Humphries said that while the programmes may seem expensive, the returns exist if they are well-run. “It’s one of those potential hidden costs. On balance if it’s driving sufficient volumes through lower commissions or no commissions, then it’s a pretty compelling argument.”
The reason loyalty programmes are expensive to the owner, he added, is because they are “incredibly expensive to manage as well”. He continued: “So for a small brand under a 100 hotels, it becomes very tough to have a successful in-house loyalty programme.”
Jumeirah at Etihad Towers general manager Stefan Fuchs said that it’s always harder for smaller brands to compete with the giants. “The big advantage of the big players that you can collect points everywhere and spend in different destinations.”
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Fuchs added: “In the true luxury segment, 10 years ago the assumption was that there is no space for collecting points. This has definitely shifted. That was the old approach that a CEO doesn’t collect bonus points.”
Humphries said: “And now in the days of mass luxury, where you had in London 20 years ago, 10-12 luxury hotels, now you’ve got 35-40 so it’s a complete change. That person that you’re targeting is not the CEO and it does make a difference to them that you have the additional benefit.”
Kempinski Ajman general manager Kai Schukowski also mentioned the rise of the OTAs in the loyalty segment.
“We also have to make sure not to lose out to the OTAs, where Booking.com is trying to keep the business with them by creating its own programme, Genius. The young generation is more price-loyal than hotel-loyal. If you have the Booking.com Genius programme, you get good perks. It’s starting to pay off," he said.
Schukowski concluded that the incentive to use programmes like Genius is the ease of not dealing with multiple memberships across multiple brands.
Read the full round-up of the Great GM Debate advisory panel in the July 2016 issue of Hotelier Middle East.
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