Deanna Ting interviewed the CEO of Red Lion hotels for Skift and he slammed loyalty programs pretty hard but I’m not sure the actual lessons come through in his thinking.
Red Lion acquired Knights Inn from Wyndham, blocking Wyndham’s attempt to own every bad hotel in America. And Red Lion CEO Greg Mount threw some shade at Wyndham Rewards, suggesting that ‘only Hilton and Marriott’ get traction from their loyalty programs.
The only two programs that drive meaningful demand are Hilton and Marriott,” Mount said. “Outside of that, some of these other systems have large numbers, but they’re not getting a significant amount of demand. It’s kind of a falsehood as it relates to what’s really being driven. I know there are systems [loyalty programs] out there with 80 million guests to it, but they still have to take 30 to 35 percent of their demand from OTAs [online travel agencies].
Red Lion Hello Rewards isn’t nearly as big or rich a program as Wyndham Rewards. So he’s re-assuring Knights Inn owners that they’re not losing out in moving from one program to the other, by saying that loyalty programs don’t matter for all programs — essentially that sure Red Lion’s program is weak but it’s not like Wyndham was great either.
That misses the point. While Wyndham’s “North American occupancy share by loyalty members is 37 percent, up 6 percent from 2015 when Wyndham Rewards was relaunched” and Marriott’s is 55%, there are several things going on here.
Obviously the ‘only Hilton and Marriott’ is hyperbole, since it leaves out IHG Rewards Club and World of Hyatt. He’s really just incentivized to slam Wyndham.
Loyalty programs are separately about recognition (elite benefits) and reward. Lower end properties have less opportunity for both. Budget hotel chains suffer the ‘Greyhound Road Rewards’ problem (10 bus trips rewards you with… another bus trip).
Wyndham has made some progress solving it by making their more aspirational properties affordable and introducing homesharing redemptions, although I’m not sure their messaging has been as strong or clear as it could be.
Wyndham Kona Hawaiian Resort, credit: Wyndham
Elite benefits are also limited at budget properties. They aren’t as well-suited to providing VIP treatment experiences.
Lower average daily room rates fund less in a program, and more budget conscious guests may not be as likely to spend more to remain loyal to a preferred chain.
So while there’s been some reporting of the Red Lion CEO’s claims that loyalty programs don’t drive bookings, he’s really saying that Red Lion doesn’t drive bookings through its loyalty program and that’s ok because others in the market don’t drive as many bookings as higher-end chains. That doesn’t mean Wyndham Rewards doesn’t move the needle at all, or isn’t a better program than Red Lion’s.