Hyatt recently announced that they will start a new loyalty alliance with London-based Small Luxury Hotels. This means that World of Hyatt loyalty members can earn and redeem points when they stay at participating SLH hotels when booking through Hyatt. What does this mean for similar hotel loyalty programs?
Based on a recent study by Magid, an overwhelming majority of hotel loyalty members already belong to multiple programs. 95% of Hyatt’s loyalty program members, World of Hyatt, also belong to other competitive hotel programs. This is among the highest crossover we have seen among major hotel groups. Members aren’t necessarily feeling obliged to use any single loyalty program, especially since signing up is easy and doesn’t require a commitment.
The challenge is not so much for hotels to acquire loyalty members because Magid has seen that members will sign up for many, but rather to differentiate their programs in meaningful ways to improve engagement. This loyalty alliance with SLH makes sense for Hyatt, since they have comparatively less distribution than other well-known hotel groups.
For independent hotels, there are challenges to building loyalty as it is difficult to break into the consideration set, as many travelers are already reliant on existing programs. It is critical, especially for independent hotels, that they pursue opportunities outside of traditional loyalty tactics to engage members. Magid’s study on memberships and subscriptions points to new learning about potential tactics and several opportunities to build loyalty and drive revenue.
Hyatt’s bold move to partner with SLH creates a unique and new potential to drive valuable engagement. Hyatt loyalty members benefit from access to over 500 properties that are less about a place to stay and more about an experience to remember, and hopefully to repeat. Hyatt gains credible scale from being associated with SLH without having to make a huge financial investment or wait the significant time required to further develop additional properties to include in their Unbound Collection.
Hyatt has developed an effective method to compete against larger players in a geographically favorable way that augments their existing footprint. For SLH and its member hotels, their presumed presence in Hyatt booking channels should drive considerable awareness and incremental business.
Despite the investment it takes to create and cultivate loyalty programs, Magid anticipates continued efforts from hotel groups to differentiate their loyalty programs with the winners capitalizing on insights coming from human-centered design thinking.