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recent study of 400 US business travelers shows that most travelers are not clear about which hotel brands (other, obviously, than same-name brands) are related to which loyalty programs. The online survey asked 400 business travelers which loyalty program applied to each of 36 hotel "brands" (excluding same-name brands such as Marriott or Hilton), all of which were associated with one of 7 loyalty programs (Marriott Rewards, Hilton Honors, Choice Privilege, Priority Club, SPG and Wyndham Rewards and Hyatt Gold Passport).

F඗ක ඉ ඎකඍඍ ඔඑඛගඑඖඏ ඗ඎ ගඐඍ ඘ඍකඋඍඖගඉඏඍ ඗ඎ ඊඝඛඑඖඍඛඛ ගකඉඞඍඔඍකඛ ගඐඉග උ඗කකඍඋගඔඡ ඉඛඛ඗උඑඉගඍඌ ඍඉඋඐ ඗ඎ ගඐඍ 36 ඐ඗ගඍඔ ඊකඉඖඌඛ ඟඑගඐ ගඐඍ 7 ඔ඗ඡඉඔගඡ ඘ක඗ඏකඉඕඛ, ඍඕඉඑඔ Lඉඝකඍඖඋඍ Bඍකඖඛගඍඑඖ: Bඍකඖඛගඍඑඖ@඘ක඗ගඍඉඖ ඛගකඉගඍඏඑඍඛ.උ඗ඕ

416.967.3337  © 2013 

On average, only about 20% of the associations were correct, and this varied from a low of 11% for Wyndham Rewards to a high of 28% for Marriott Rewards. Higher income travelers (those with household incomes over $100,000) are somewhat more likely to know which brands are associated with which programs (overall, 30% of the associations were correct). When looked at in terms of actual membership in the reward programs, the overall number is not much better. On average, only around 1 in three associations were correct. This ranged from a high of 42% for Choice Privilege members (i.e. when asked which loyalty program Quality, Mainstay, Econolodge, Comfort, Clarion, Sleep Inn and Rodeway Inns were attached to, on

average 42% of members of Choice Privilege were able to correctly identify them), to a low of 23% for Wyndham Rewards members. Are Loyalty Programs Working Hard Enough to sell ALL the brands in the Portfolio? The study raises the question: if (for instance) only 17% of Marriott Reward members know that The Ritz Carlton is associated with the program, or only 25% of SPG members know that Westin is associated with SPG , then are these loyalty programs working as hard as they could to drive business to the brands? The strongest association between brands and loyalty programs is Courtyard (identified as "Courtyard" in the study without mention of Marriott), where 74% of Marriott Reward mem-

Strangely, it is not always the case that loyalty program members are more knowledgeable as to what brands fall in their program, than the target market in general

bers correctly identified the brand as part of the program. The weakest associations, not surprisingly, are between Wyndham Rewards and brands such as Travelodge (11%) and Days Inn (12%). Is this lack of clarity a reason for "Loyalty Vulnerability"? The vulnerability of loyalty programs to members switching to other brands is highlighted in the study by the cross awareness between brands and loyalty clubs. For instance, while 34% of Marriott Reward members on average identified Marriott brands, they also correctly identified 32% of Hilton brands, suggesting that Marriott rewards members may be paying just as much attention to Hilton Honors as to Marriott. On the positive side, for Marriott, over 40% of Hyatt Gold Passport members correctly identified Marriott brands (the same phenomenon applies to SPG members who are more clued in to Marriott Rewards than Marriott reward members themselves). On average, only 11% of Marriott Members didn’t know which brands were associated, compared with 40% of Hyatt Gold members.

Do loyalty programs rely too much on members to “Find Out�, rather than clearly and consistently reinforcing the program-brand associations? The data supports the idea that people who are members of more than one program may pay more attention to the brands of all the programs they are members of. The chart shows that while 45% of Hilton Honors members correctly attributed Hilton brands to Hilton Honors, 53% of those who were members of both Marriott Rewards and SPG correctly associated the Hilton brands and finally, 60% of those whoa re members of all three correctly associated the brands. The pattern is the same for Marriott, but somewhat muted for SPG. While it is probably the case that this phenomenon is due mostly to the fact that people who are members of multiple programs are more likely to use them, or at least pay attention, or possibly travel more, it is nevertheless important to see this dilemma for what it is: multiple program members are probably more likely to associate brands with specific loyalty clubs (a good thing), they also have more options and are more vulneraPage 2

Members of multiple programs are more likely to know what hotels fit into which program, regardless of which programs they are members of.

ble to defection (a bad thing). The answer: Line Extension versus Brand Association -- House of Brands versus Brand House The obvious answer would be attract people who are members of multiple programs and treat them better than the other brands! But we all say we do that all the time, everywhere, anyway. A more realistic answer is imbedded in the way hospitality companies think of their brands. Marriott's extremely strong brand association with Courtyard (65%) is clearly the result of thinking of Courtyard as a product or line extension (Courtyard by Marriott) in a "Brand House", rather than a self standing sub-brand such as Double Tree (24%), marketed as a "House of brands". Choice, catering to lower income groups, has a 31% association factor across all their brands tested among travellers

intending to stay in economy hotels; this increases to 41% for the three primary Choice products (Quality, Comfort and Clarion) that have always been presented as a family of closely related products living happily together in a big, beautiful “Brand House� Technically, a line or product extension is a new kind of product in the same category (as in a new kind of hotel such as an all-suites, or nofrills hotel product). Orthodox marketers suggest that the strength of a line extension is that the new product will draw goodwill (brand) from the existing product line. In other words, a new form of hotel introduced by BrandX, such as an extended stay or budget version, will benefit from being associated with the BrandX name. But only if it makes the association clear by highlighting the original brand name in the new product name. Think Coke and Diet Coke.

Protean Hospitality is a boutique brand strategy advisory firm focused on helping our hospitality clients drive growth. We combine our business/category expertise with tenacity, balancing rigor and creativity, to uncover new opportunities for hotels, resorts and hospitality brands. For further information on this and other Protean Hospitality studies contact: Laurence Bernstein, Managing Partner, 416 967-3337 x 101 Page 3

Hospitality Loyalty Programs: Help or Hinder  

Study of business travelers shows that on average very few actually know which hotel brands are members of which hotel loyalty programs

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