With the relaunch of Shangri-La’s loyalty program I had the chance to speak with Shangri-La’s Vice President and Head of Shangri-La Circle, Kevin Siew. Kevin previously ran the chain’s JEN brand – and was a military commander in Kandahar, advising combat operations in Southern Afghanistan. I had the sense that the rethink of loyalty at Shangri-La was executed with.. precision.
And he offered both real insight into how the chain thinks about loyalty – and what’s necessary to deliver great experiences for guests regardless of the chain. So this was a very interesting hour, spent together via Zoom since he’s based in Hong Kong. My key takeaways included the importance of treating guests well at each interaction, regardless of their reason for a stay or meal, and contra most of the industry just how much vertical integration – owning the hotels and restaurants – actually matters for a hospitality chain.
Kevin began by explaining that Shangri-La began by thinking about how to use “loyalty as platform for deeper engagement.” Shangri-La hadn’t “transformed Golden Circle in the past 10 years. We made improvements but nothing fundamentally different. We didn’t want to put out just another loyalty program; just make it more flexible or remove blackout dates. We saw Shangri-La Circle as an opportunity to be the main platform for why consumers engage with us directly.”
There’s a template for a hotel loyalty program, if you weren’t just looking to benchmark against other programs and use that template, where do the ideas come from?
We looked outside the hotel industry, looked at tech and social media to drive engagement and mindshare. We looked at the gamification they’re using, what are lifestyle magazines and blogs doing?
We started off looking at competitors to make sure we covered the baseline – that the core rewards program development was competitive, but we wanted to be moving more in a moonshot direction to integrate our e-direct platforms (website, app, WeChat mini program) and also bringing marketing, social media, and content development under Shangri-La Circle. Previously Shangri-La Golden Circle was just rewards, siloed from social media. Everything is now under me, with a mandate to be coordinated and seamless.
It makes sense to want to have a consistent narrative for the brand, leading with the program, and to engage customers in a variety of different ways. But for someone on the outside just coming to this, how would you describe what program is all about in simplest terms?
For guests we are highlighting the benefits we have, we believe our benefits are clear and competitive, and somewhat the best the market has to offer in terms of points value and experience for frequent travelers.
Those are easier for members to understand but once they make their first booking and are in the door we start selling them the offerings beyond the stay experience. We own 80% of our properties and have full control of our F&B, event spaces, and our stay offering is only 50% of our business.
We’re part of the journey that our customers go through. People get married, have a baby shower, have their anniversaries with Shangri-La. It’s really a life journey where we’ve stood out in Asia, that a lot of people aren’t aware of. People may see luxury high-end business hotel, which road warriors appreciate, and Golden Circle traditionally catered to this group. But the program is catering to leisure travel and family experiences, too.
Why are you re-conceiving of the program now, when travel to and within Asia especially has been so limited?
Covid definitely helped in some ways, all of us were forced to take a step back in the business to rethink our priorities and where the market has changed. Some of the core themes around Asian travel, China’s rising middle class, the core themes remain unchanged. Revenge travel comes back in a big way – maybe not next 6 months in Asia but towards the end of 2022.
Leisure travel will outpace business travel in this part of the world. It’s an untapped opportunity for our group, maybe less so for other chains, given that the market is shifting away from business travel we wanted to make sure we could grow new customer segments while not isolating the current core of business travelers who have been very loyal.
Is there anything you wanted to accomplish in the new program but aren’t there yet?
There are a lot more features in the app that we wanted to get ready at launch, but [IT] resources are finite. ..[I]t’s a continuous innovation process. We want to make food and beverage searchable and bookable on the app, but there are 100 legacy systems in hotels that have to receive and manage the bookings.
The challenge for any hotel program is taking benefits on paper and delivering it for a stay experience – at the individual hotel level, and even individual employee level. One thing that’s unique about Shangri-La is that you own most of the hotels, how does that make a difference for execution?
We want to provide priority access to restaurants and bars during peak hours, we can do special seating at the F&B venue because we own the restaurants. The new Shangri-La Circle offers instant dining awards with no minimum (members can spend just 1 point). Big food and beverage retail chains might allow that, but hotel chains usually don’t.
Even the manner in which you earn and interact with the program – digitally and using QR codes instead of keying in membership number – we’re able to implement tech solutions more easily to enhance the journey since we own the venues. This means that on property we can be making sure we know our guests really well.
When thinking about design of the program, how do you balance recognition (benefits) versus reward (rebates)?
Everyone wants to do both. My guidance to the team as we were working through the new program, we need to be clear about our objectives and track the cost of the benefits and the rewards and recognition we’re putting out so we can justify from a business point of view why we’re doing something.
Often there’s no way to track the cost and return of a benefit. We want to be making sure we have a system in place [to] track down to every benefit we give out and make sure that cost-wise where a certain percentage tagged to the revenue received from the tier of member, not over or under-spending on the tier based on the revenue they bring into the group.
Recognition is a slightly different story, the program aims to be aspirational. We are a luxury brand at the end of the day and want to make sure people don’t just join for the points and goodies.
So many loyalty programs and reward programs out there, that will never be a differentiator no matter how good you are. You have to do it really well but if you’re talking about 2022 and beyond the majority of customers won’t be sticky because you have the best rewards program, so the focus on recognition is really important – doing rewards to understand customers better, giving out points and collecting data on customers and understanding customers, so we can service them better. We can service them better with the data from the loyalty program.
Take Polaris, the reason we start with this invite-only group is to test how well can we know and service a group of 300 people and service them to a level where we know everything about their preferences, family travels, kids birthdays? As much information so we can surprise and delight so “there’s no other hotel chain I would stay with than Shangri-La because they treat me as someone special and no one else could do it.”
We were already doing it at the individual hotel level but didn’t know these top customers at the corporate level, if they move from Shangri-La Singapore to Beijing or Shanghai or Tokyo we’d have to start fresh again. There’s not a lot of sharing across hotels. If we centralize that management in the program and then over time we can grow beyond Polaris to Diamond and Jade members maybe not at the cost of Polaris but we can service our top customers better with stronger recognition.
My takeaway is that free nights are an ante. Everybody does that. It’s the experience that creates loyalty, and delivering that experience takes understanding each customer. Transaction data from the loyalty program – watching how points are accumulated – can help identify customer-specific knowledge and deliver tailored service at scale, with benefits tiered to the value profile of a customer.
While I do have many readers in Asia Pacific, where Shangri-La has the greatest presence, North American guests might only have the opportunity to visit a property four to six times a year even if they’re seeking one out. How should a 4-6 time a year guest think about the program?
We’d love to engage guests more regularly. For someone making a trip to Asia 2-3 times a year, from a brand perspective Shangri-La gives you the best of East and West. If you want the comfort and convenience of a well-known American chain then consider staying at a Marriott or Hilton, But if you want something different, you want to stay at an Asian hospitality brand that understands global standards of hospitality then choose Shangri-La.
The rewards side of the house, for them it wouldn’t be as attractive, they’d collect the miles and change over to United points (airline miles), the conversion rates are competitive. Or redeem lifestyle rewards on iPhones – but the point value proposition isn’t as strong for someone living in North America. But for the service and recognition side of the house we have an advantage and reputation that sets us apart.
There’s a big effort to reach guests on leisure as much as business, in the new program and coming out of Covid. How much of a shift is that for a chain often associated with business stays?
One thing we’re trying to fix is definitely on our family experiences, we undersell ourselves if you’re coming from North America and you didn’t know that much about Shangri-La you might think it’s in the key Asian cities, it’s a good stay, but you may not think about it as a business-leisure travel opportunity.
We have some really good family offerings, e.g. Singapore my family loves staying at resort properties obviously, but the city hotels, and not just for kids-themed rooms and play rooms, also the amenities and menus, the kids-friendly facilities we put out. We offer connecting rooms as a default. We’re going to launch attribute selling on our digital channels, to let guests select connecting rooms and get immediate confirmation (not 72 hours in advance like some other chains), along with rooms with a view or higher floors.
I’ve come to realize traveling with my daughter that whereas I used to value a suite most, connecting rooms are even better, and delivering that consistently removes a lot of stress from the travel experience.
We talked about how owning the hotels helps you deliver a consistent experience. I’ve been thinking about this a lot more, how much of a contrast to the conventional ‘asset light’ model this is, and so I wonder if you’d speak more to how much you think common ownership matters?
The key learning for us is that loyalty and rewards are just one piece of this entire transformation. We have to fix that and be competitive but ultimately beyond the rewards and benefits, how do we make the stay experience the best ever pre-arrival on property and post-journey? The Shangri-La Circle transformation must transform the entire experience.
Delivering on benefits, delivering on a stay experience, consistently every time is hard even when you own the hotels. When you’re giving instructions to disparate owners that seems closer to pushing on a string.
About the transformed experience, it seems notable that you’re counting transactions when customers stay as well as when they’re not guests on property – but even rewarding e-commerce transactions and counting those towards status. What does that say about where you’re headed and what you’re trying to accomplish?
We really do want to pivot the entire Shangri-La Circle program to be more like a lifestyle platform. It’s more aspirational longer-term. We’re using the transformation of rewards as a starting point to help people see us as the go-to Asian travel lifestyle destination place, not just for a room but for content, food, maybe less fashion, but for the good life.
For e-commerce and merchandising as well, starting from our food offerings, we sell a lot of F&B products like moon cakes during festive seasons. Marriott’s shop is beds, bed sheets, and pillows but not moon cakes.
What we’re strong in and known for in Asia is our food offerings so we’re allowing our guests and customers to bring a piece of a stay home or gift it to a loved one during special occasion. You can stay once, dine 2-3 times, but buy a cake once a month or twice a month because it’s more accessible to more people. You’ll earn points on those purchases, redeem points like cash or use a mix.
[Previously] you’d only qualify for status based on stays, going forward we’re dropping stays and doing nights only, but the primary means of qualification is elite points (spend). Merchandising spend qualifies. Our customers are good customers whether they stay with us or however they spend with us, it’s a more holistic customer and experience with us.
At that I practically jumped through my screen with joy. I’ve been shouting from the rooftops that a good customer is the same valuable person every time they walk through the door (physically, and now metaphorically online). Add onto that a focus on using data to deliver tailored guest experiences, the conversation left me wishing there were more Shangri-La properties in North America. But now that they’ve made it possible to redeem even just a single point on property, I’ll get value out of their rewards program when I do stay as a guest.