Loyalty Pricing Can Work for More Than Just Marriott, Hilton

It’s been hard to miss all the headlines over the past month about hotel companies’ new loyalty strategies centering on providing members better prices. First was Hilton’s “Stop Clicking Around” marketing campaign that included the promise that HHonors members would receive instant benefits, like the lowest price online. And now there’s Marriott’s “It Pays to Book Direct” campaign and the promise of exclusive rates for loyalty members.

In Marriott’s press release announcing this, Karin Timpone, global marketing officer, said: "We're rewarding our loyal members by providing a rate exclusively designed to show them how valuable they are to us. We also want to help dispel the myth that other travel websites offer better rates for our hotels. The simple fact is that you will find the lowest rates across our portfolio when you join Marriott Rewards and book direct."

This idea — to drive more direct bookings through loyalty pricing — and marketing it to the world sounded familiar to me. That’s because Duetto CEO Patrick Bosworth has championed this strategy for nearly three years, starting with this blog post titled, “The First Step to 1:1 Marketing.”

In it, he detailed exactly how and why hotel companies could be using their loyalty programs to create personalized pricing for their most valuable customers to drive loyalty, direct bookings and, ultimately, more profits.

[bctt tweet="Great to see $MAR, $HLT roll out #loyalty pricing, but all #hotels have the same opportunity."]

He explained how loyalty members should be receiving preferential prices when they log in, better than what a non-loyalty member would see at the brand.com site or other OTAs in parity. These offers would be fenced and not violate rate parity agreements.

What he suggested, which I haven’t seen detailed yet in any stories about Marriott or Hilton, is that hotels could actually offer specific discounts based on the value of the customer. Not all loyalty members would receive X percent off, as I think Hilton and Marriott are proposing. Instead, loyalty members who stayed 10 nights over the course of the year might get X percent, while those staying 25 nights would receive a bigger discount.

From that blog two years ago, Bosworth suggested what is happening today: “If communicated, or branded by a hotel company, this approach could be a marketing opportunity and shift significant share back to a company’s low-cost direct booking channel.” 

It is great to see the hotel industry awakening to this opportunity. Other brand companies will surely follow, but it doesn’t just have to be the big brands doing this.

Any hotel or company that can segment its guests in some fashion could use Open Pricing to match personalized prices with specific segments of customers based on how the hotel or company values them. The segmenting (and pricing) of those loyalty customers doesn’t have to be based on amount of stays. It could be based on recency of stays, frequency or ancillary or even total spend.

Customers win with better prices. This might even help “un-train” the most price-conscious consumers from shopping around at 20-some sites looking for that best deal.

More importantly, hotels win by driving more direct and profitable bookings and ensuring they’ve always got their most profitable customers in house.

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Eric Stoessel, Vice President of Marketing

Eric leads Duetto's marketing strategy and execution and has been with the company since January 2013. He started as a writer and became senior director of content, where he created and managed the company's extensive library of thought leadership and educational content. Before joining Duetto, Stoessel spent eight years covering the hospitality industry as an editor at Lodging Hospitality, Restaurant Hospitality and Food Management.

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