IHG Says Their New Elite Program Is Already A Success: Nowhere To Go But Up

The CEO of IHG says that the revamp of the chain’s loyalty program, IHG One Rewards, is starting to pay off. Every company says the bets they’re currently making are great, and they’ll marshal out of context numbers to prove the point.

Here all we know is that,

  • travel is rebounding broadly
  • IHG has historically gotten less mileage out of loyalty than competitors, so there’s nowhere to go but up

In the second quarter, the company overhauled IHG One Rewards and saw enrollments rise 30 percent year-over-year. It added 11 million net loyalty members year-over-year. It didn’t specify the new total other than to say it had more than 100 million members.

The company said it expected ongoing gains as a result of the loyalty program overhaul.

Of course program signups grow when guest numbers rise, that’s going to be simple math. And note that they expect gains, rather than having generated those gains.

New benefits have only been live for two months, in fact less than four weeks of the second quarter. And the revamp is largely of elite benefits and not the experience relevant to those 11 million new program signups.

Here’s where the upside comes in:

“We’re getting about 50 percent of our room nights coming through our loyalty program,” CEO Keith Barr said in an interview with Skift. “We know there is more headroom in that number based on our consumer research and what our peers do.”

…“We believe [the new elite program is] going to be one of the most compelling offers in the market for a selection of customers who will shift their share over time away from a competitor into IHG’s program,” Barr said. “We’ve got a lot of headroom between where we’re at today and where we could be at an end state.”

Rising engagement in the loyalty program will translate into “incremental revenue delivery” because the company’s loyalty members “are generally higher-value customers,” Barr said.

They offer breakfast as a choice amenity to top elites now; club lounge access as a benefit choice based on nights stayed (but not for elites upgraded to club rooms); and confirmed suites as another choice benefits (only on non-prepaid revenue stays, within 14 days of arrival). They aren’t as good with late check-out as Marriott but offering a confirmed suite upgrade booked out of revenue inventory after 20 nights stayed is a strong value proposition.

The IHG One Rewards elite program will work well for a certain type of traveling, who slogs it out on the road at the Holiday Inns off the world, and books a nice paid vacation stay occasionally for family at a premium property.

Allowing confirmed suite upgrade use on award stays would be nice, as it is there isn’t a chain-wide approach to offer premium rooms for additional points even in order to guarantee better accommodations for those family trips. The basic earn-and-burn program has declined over the years, as redemption prices have risen with their dropping award charts, too.

Ultimately the appeal, or limiting factor, is the chain’s foot print. While there are adds at the premium tier, most of their hotels aren’t going to offer club lounges and many of their brands already give breakfast to everyone. If you need a chain with properties everywhere, IHG more or less has that, and their new elite offering makes them competitive with Marriott and Hilton (and remember that Hilton doesn’t promise suite upgrades at all, and doesn’t commit to late checkout).

IHG has lacked a program that rewards frequent stay customers. They’ve been all about the points. They’ve now layered on benefits, and hotels are just now getting used to delivering on those. The chain’s CEO is right, they’ve had nowhere to go but up and the new program is a clear improvement for almost every regular-stay guest.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. @ Gary — IC RA is still the best loyalty program, by a decent margin over Hyatt. You effectively get unlimited suite upgrade nights at ICs, while Hyatt limits you to 28 nights (with the chance to earn more). The only real exception that comes to mind is in NYC, where IC refuses to give suite upgrades. However, they do have an excellent club lounge at the IC Barclay, which partly makes up for the lack of suite upgrades.

  2. To me, IHG is a complete nonstarter. I can get platinum status, their second-highest status, with a credit card. Why would I stay 70 nights or more for Diamond when I’m not going to get anything with it. Domestically in North America, platinum is perfectly fine if you’re just staying at Holiday Inn Express. Even at Holiday Inn, it’s better than nothing. The restaurant at most Holiday Inn properties is so bad that I never eat there anyways.

  3. Indeed, I agree with the CEO of IHG.

    On a recent trip to Europe, we stayed at apartments but when not, IHG was there to the rescue for the following reasons:

    – Relatively low redemption rates & availability of rooms on points (no games).
    – Availability of properties in cities we needed them, when got screwed by Airbnb.
    – Breakfast for 4-5 people – we are Diamond.
    – Other benefits such as upgrade, happy hour, etc.
    – No nickel and dime-ing!

    In the meantime, Hilton (Diamond), Marriott (LT Platinum & currently Titanium), and Hyatt (Globalist) rates were astronomical. Radisson not as centrally located and also much more points.

  4. 5 years ago IHG had one redeeming feature which made their rewards program worthwhile – Pointsbreaks, a periodic list of hotels discounted to 5,000 points a night. Had a great stay at the IC Vienna for example which swayed me to move all my business to IHG for a while. Then they foolishly cancelled Pointsbreaks and the IHG program effectively disappeared.

  5. @FNT called it right. Then there’s the exceeding bad faith that IHG is showing by allowing hotels to say that their club lounges are no longer club lounges so the promised benefit of lounge access is pretty close to worthless in many cases. The fact that the program is thus devaluing so quickly shows that customers cannot trust the program. We don’t need another chain to Bonvoy us.

  6. I’m one of the people Gary described for whom IHG’s program works. Huge global footprint of limited service hotels for business trips. Those trip are only me and I’m expensing food so breakfast benefit is irrelevant. 2x points bonus is best earning of any major program. Mostly redeem at Mr and Mrs properties for vacation, which was a huge recent improvement in the program. Some amazing properties, particularly in Europe and SE Asia. Credit card allows for 4th night free which is better than other programs. Stack with another card that gives 10% rebate on redemptions means I can pay 68% of published points rate at Mr & Ms properties. No other program comes anywhere close to that value for exceptional holiday travel. Breakfast benefit as Diamond is helpful when traveling in Asia but is not something I care about when staying in US (nearly all US hotels have horrible food).

  7. @Gene
    IHG RA is not a program but status as is Bonvoy Ambassador. You have to spend significant amount of employer or personal cash to achieve that.
    While Hyatt gives you only 4-28 nights confirmed upgrades, you still get ones to standard suites when there is availability. I have never used any of my upgrade vouchers and always got suite in Hyatt branded hotels.

  8. @Miamiorbust: Holiday Inn Express is fine for me if I’m passing through a random town and just need to sleep. But if I’m in a city for business, there’s no way I’m staying at a Holiday Inn or even Holiday Inn Express. I have to occasionally meet clients or prospects for drinks. They don’t want to meet at a Holiday Inn bar. I often find clients ask where I’m staying. Unless your client are cheap like Sam Walton or Warren Buffet, some will make judgments.

  9. I had two recent stays – one at a Kimpton in DCA and another stay at AC by Marriott in Atlanta. Kimpton honored breakfast benefit and you could order anything on the menu.

    AC Hotel said they do not offer breakfast for Elite members. Seriously made me rethink where I want to spend $$$ and keep status. (Did not hurt that the Kimpton was a delight and the AC Hotel in ATL was just a cookie cutter property.

  10. @Franz Christian how often have you been in a city with a HIE and a CP or IC in the same town? We were in Paris and the HI was just as expensive as the IC on a Saturday night.

    We do not stay at Hyatt because they are not everywhere. you can not find them in 99% of the places we go.

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