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.