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Spotlight on Loyalty

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June 18, 2018
Customer | Loyalty
Mark G. Haley, CHTP+
Mark B.Hoare

Today, we will examine some of the recent developments in hotel loyalty programs.
 
Fans of M.O.
Mandarin Oriental Hotel Group, like many luxury brands, had eschewed creating a formal loyalty program in the past. However, as the culture of loyalty has evolved beyond just points, the opportunity to better recognize guests through a membership program became compelling. 
 
The critical strategic decision before Mandarin Oriental then became “How do we offer our valued guests a membership program, but one that leverages and strengthens the service-oriented and relationship-driven culture of the brand, and not reduce it to a transaction?” Kristin Ruble, SVP of consumer marketing explained. “We knew we didn’t want to try to out-point the major global multibrand hotel companies. We needed to find our own definition of loyalty, one built around a relationship between the guest and hotel colleagues, and not about buying stays with points.”
 
Which is what they did with Fans of M.O., launched February 2018. Fans of M.O. does not have a points-based currency. Rather, the core of the program is the capture of guest preferences and interests, leveraging Mandarin Oriental’s unique abilities to recognize guests and act on those preferences to enhance the guest stay. In addition, Fans of M.O. is a community that provides members-only access, offers and experiences.
  
To drive enrollment, all Mandarin Oriental Hotel Group properties offer members of Fans of M.O. complimentary Wi-Fi access. Each hotel offers a minimum number of direct booking benefits to drive channel shift from third-party channels. Members that book directly via any branded channels receive direct booking benefits. These direct booking benefits may include breakfast, late checkout, room upgrade or other soft and hard benefits.
 
Launching Fans of M.O. required a complex orchestration across Mandarin Oriental, its vendors and consulting resources. All of the business rules, software development and integration were documented and brought to life in an incredibly short time window measured in months. Global Chief Information Officer Monika Nerger said, “In order to successfully deliver this program, deep collaboration amongst our consulting partners, vendors and colleagues needed to come together. Fans of M.O. is the largest scale cross-business global technology project that we have launched and (it) could not have been achieved without phenomenal support and commitment.”
 
The lead vendor partner in the initiative was Sabre Hospitality Solutions, tasked with developing a guest-facing portal for the program and integrating it with the group’s existing profile database from Springer-Miller Systems, Global Guest, and identity management services delivered by iReckonU. To fulfill the complimentary W-Fi program benefit, HSIA provider GuestTek played a key role with an API for which Sabre developed a new user interface for in-hotel HSIA authentication. Consulting talent from rDialogue, The Prism Partnership and Invotar rounded out the external team. 
 
Internally, Mandarin Oriental created new roles to administer the program and provide guest support on an ongoing basis. The company borrowed a large cross-functional team from their day jobs in IT, marketing, digital, operations and finance to complete development and launch the program simultaneously on four continents. A great deal of effort and focus went into change management and deployment processes, with extensive documentation, webinars and live training. The focal point of the live training included regional workshops held in North America, Europe and Asia to institutionalize the new concepts and enable consistent fulfillment of the crucial additions to the brand promise.
 
All told, Fans of M.O. represents a leading-edge perspective on loyalty, with a strong focus on the guest’s actual stay experience rather than a points transaction. A key factor in its success was the fundamental strategy of tuning the program design and benefits to both guest expectations when staying at a Mandarin Oriental hotel, and the Mandarin Oriental colleagues’ unique abilities to fulfill those expectations.
 
IHG/Kimpton and Marriott/Starwood
When InterContinental Hotel Group (IHG) announced the acquisition of Kimpton Hotels & Restaurants (2014), the first reaction from many Kimpton-loyal guests was fear – fear that IHG would dilute the brand and roll the much-adored Kimpton Karma loyalty program into the more-prosaic IHG Rewards Club. Likewise, the news of Marriott International’s commitment to buy Starwood Hotels & Resorts (2015 announcement) triggered outrage amongst the Starwood Preferred Guest membership, especially from the elite members, a passionate group. 
 
Leadership of both organizations realized from the outset how crucial it was to get the loyalty program aspects of the mergers right. Marketing communications to members of both the Kimpton Karma and Starwood Preferred Guest (SPG) programs immediately after the announcements were intended to quell the fear and stem the outrage. These communications promised no immediate changes and assured top management commitments to get any combinations of programs right. Marriott’s Arne Sorenson said, “We’ve heard from SPG members loud and clear when they say, ‘Tell me I’ll be OK.’ You’ll be OK. I want to make sure we continue to earn that loyalty.” 
 
The global megabrands have been deliberate in unifying their loyalty programs, although Marriott did offer up the means to link SPG and Marriott Rewards accounts on the closing of the transaction (September 23, 2016). This served to reinforce to members that they could enjoy both programs and gave Marriott International immediate visibility into the hotel purchase behavior of all the members. Other features of the account linkage included elite status matching and points exchange.
 
Fast forward to 2018, and both IHG and Marriott have announced the integration of the separate programs. In Marriott’s case, the program rollup will include The Ritz-Carlton Rewards program as well. The Kimpton Karma program was formally made a part of IHG Rewards Club in April, while the Marriott program integration will complete in August. 
 
So, have these loyalty leaders fulfilled their promises to get it right? And how have they done this?
So far, most observers are giving the megabrands due credit for honoring the commitments made after the merger announcements. Some of the common features of both program merger initiatives include:
Maintaining the identity of the acquired program, at least for now: 
• Kimpton Karma and Starwood Preferred Guest remain as program names (although Marriott hints that a new loyalty brand will come in 2019).
Pooling the points of acquired and acquirer programs into a single rewards currency
Making the pooled currency valid across the thousands of hotels throughout the merged enterprise
Joint promotions across the merged programs
Making the program even richer
• More benefits points, F&B credits, upgrades and more, especially for elite members, the heart of any loyalty scheme 
 
Oracle Hospitality Study
Oracle Hospitality published a report that compares and contrasts the perspectives and opinions of hotel guests versus those of hoteliers. The findings were released at the Oracle Industry Connect conference in April, presented in a vivid opening session for the hospitality track. Space constraints prevent us from analyzing the report here, but interested loyalty professionals can download the report from https://go.oracle.com/LP=68644. The variations in perspectives between the hotelier and guest are fascinating and well worth your time.
theprismpartnership.com


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