Do loyalty schemes undermine corporate buyers?

Marriott’s seductive offer to Marriott rewards members of free wifi to those who booked direct – via the hotel group’s website, call centre or with a property – has caused some consternation with travel buyers. As Buying Business Travel online reported late last year, the Institute of Travel and Meetings (ITM) wrote to Marriott urging it “to rethink [an] offer that could hinder companies’ ability to manage money spent on hotels and breach duty of care procedures”.

Mark Cuschieri, chairman of ITM’s industry affairs group, said: “We recognise the importance of rewarding loyal customers with complimentary services or amenities… but when there is an effort to attract business travellers away from approved corporate channels, it becomes a major problem.”

Marriott is adamant that it intends no such thing. “This Marriott Rewards benefit is meant to influence the traveller who is able to choose where and how to book lodging stays. It is not to encourage travellers on company business to break corporate policy and book out of compliance,” says Marriott vice-president David Bartlett.

However, PWC’s head of UK hotels and venues, Sam van Leeuwen, says Marriott has upset a lot of people. “The last thing we want is for travellers to be going direct. I don’t know how they are going to recover.

“It’s all right to offer wifi for loyalty programme members but unprofessional to do so for direct booking, especially when we have worked with partners for years to grow compliance.”

Meanwhile, Starwood’s SPG members benefit from keyless check-in via a mobile app in selected Aloft, Element and W properties, eventually to be available at 150 hotels worldwide – although Starwood points out that travellers booked via corporate channels can still use keyless, as long as their SPG profile is linked to the booking and they’ve downloaded the app.  Hilton’s mobile-enabled room key goes live this spring for HHonors members at US Hilton, Waldorf Astoria, Conrad and Canopy properties.

Difficult though it may be for hotels to tread the fine line between wooing travellers and keeping corporate travel buyers happy, it is not in their interest to drive a coach and horses through adherence to policy. “Corporates want to control travel expenditure – they want transparency and to be able to get reporting on hotel spend,” says Ian Flint, managing director of consultancy Inform Logistics. “They also want to get compliance up, so that overall, they can get a better room at a better price and with all the amenities, such as wifi, thrown in. And if that’s part of a loyalty programme that is fine.”

The art of the deal

But negotiating a good deal is no easy task, and Flint also points out that even when someone at a global hotel level can offer a company a good deal, in a lot of cases that person still has to persuade local properties it is worth being part of that deal. “It is the general manager’s kingdom,” says Flint. “The advantage is to get a global deal based on overall volume – Hilton, Starwood and Marriott are particularly good at it – but get a better deal in individual properties where business is concentrated.”

Stephen Swift is regional corporate travel and international relocation manager at car manufacturer Ford. He negotiates rates with properties in the cities required, and doesn’t set up group-wide deals, which would undermine those in place with individual hotels.

But it all boils down to how a company polices booking behaviour. Ford’s global travel management company (TMC) is American Express, and all bookings should go through the Amex site. “If non-compliant behaviour is challenged and those expenses are not reimbursed, that ensures the processes are robust,” he says. “We want to know where people are and to track volumes for negotiating purposes.”

To be fair, loyalty programmes are not always a bête noire for travel buyers. “When I have been reviewing hotel chain deals with clients, they see it as an advantage, it’s another extra convenience that makes life a little easier but it doesn’t determine whether or not they go to them,” says Ian Flint. And because of the size of PWC,  Van Leeuwen can negotiate to have travellers fast-tracked to ‘gold’ status on hotel schemes, depending on the  territory.

Free wifi

Many find it surprising that in the second decade of the 21st century, hotels are still not automatically giving free wifi to all guests in all areas of the hotel. Radisson Blu has long given free high-speed wifi and Park Inn free basic, which can be upgraded for £5 a day. Other hotel companies paying the compliment include Hampton by Hilton, Park Plaza; Choice – at all European properties; Marriott Edition, Moxy, Courtyard, Residence Inn; and Starwood’s St Regis, Aloft and Four Points properties.

Sheraton hotels have the Link@Sheraton communications hubs in the lobby, which provide free wifi – of which principle (generally, rather than Sheraton) Ian Flint says: “It’s a pain in the neck when they say you can use free wifi in reception but it will cost you in your room.”

David Bailey, senior director of consultancy for CBRE, points out: “Wifi and connectivity are the bane of travellers’ lives. The lower level of hotels give it free but the more exalted the brand you are staying in, the more it costs.”

Buyers variously negotiate to have wifi, breakfast, food and beverage discounts, parking and access to an executive lounge included in the rate, so that people working on a project can get out of their room in the evening.

Last room availability (LRA) is also an important component. “This is one of the priorities that we still have to push for. But hoteliers that value the business and understand their pricing formula generally agree,” says Wings Travel Management COO Paul East.

However, Tom Stone, founder of travel consultancy Sirius, points out that with LRA, there is a trade-off against rate. At PWC, Van Leeuwen says that getting a “fair” rate (fair to both PWC and the hotel group) is a priority – so that travellers can get into the hotel rather than agreeing a rate they can never get, which pushes up the firm’s ADR (average daily rate).

Good relations

‘Blackout’ dates are an additional thorn in buyers’ sides and often hidden in the small print, as are cancellation charges. All this seems to paint a rather negative picture of hotel companies’ desire to create and nurture relationships with travel buyers, but Paul East at Wings says: “We find that hotel chains are making significant strides to achieve the optimum solution for corporates and travellers alike; first, signing the agreement with the corporate, and then ensuring regular travellers are members of the frequent traveller scheme. Our experience shows that the two critical factors a corporation looks at first are location and cost, and then soft offerings for their travellers,” says Paul East.

Sirius’s Stone adds: “The room rate may be low but volume spent on extras can be very high, and a smart hotel will look at it and see the total value of the relationship. They need to understand who is the decision-maker or influencer.” But he agrees the key to success is giving both traveller and buyer what they want. He does think most business  hotels have upped their game in customer recognition, but product differentiation is difficult.

The PPHE hotel group works with clients and their appointed TMC. “It is a partnership on a national or international front with agreed strategies,” says regional sales director Katja Lyle-Smythe. She says programme negotiations vary, with many buyers focusing on a specific property but some with requirements covering multiple properties in numerous regions and cities. “We listen to guests on an ongoing basis through regular drinks parties, and share any feedback with sales teams, operations managers and the general managers,” she says. “But the most important thing for us and particularly for the corporate market, is a location close to transport links, meeting and event facilities, entertainment for guests while in the property, wifi and recognition.”

Choice Hotels also seeks a balance between corporate and individual traveller loyalty. “We adapt our account management to mirror the client, their organisation and their management structure,” says UK sales director Brian Garvan. “Our objective is to have a touch point with customers at every stage of the booking process.

The potential for conflict exists but it is increasingly rare, especially as TMCs have made their pricing models and value propositions more transparent to their corporate clients.

“We communicate the value of joining our rewards programme to both corporate travel managers and travellers, and we flag benefits such as late check-out and free upgrades to corporates, as this demonstrates how we add value to buyers and travellers alike,” he says.

Understanding priorities

Starwood also aims to maintain a balance between interested parties: “There is rarely conflict because we work with our corporate customers to understand their priorities and allowances for their travellers, and then keep within the parameters they have defined,” says sales vice-president Asad Ahmed.

But company and traveller requirements can change over the life of a contract. “A construction company working on a major public infrastructure
project has different accommodation requirements and expectations for the duration of the works, from during the tendering process,” says Intercontinental Hotels Group (IHG) vice-president Apurva Pratap. 

“There is no conflict between the focus on buyers and travellers,” he says. “Our operations teams are always measured on
guest satisfaction for all guests. The
sales teams are experts at understanding the dynamics of the accounts they are dealing with and ensuring we deliver beyond the expectations of buyers/managers.

“There are benefits to being an IHG Rewards Club member and we are always looking for opportunities to add to this, but it is never to the detriment of people who are yet to become members.”

The last word goes to PWC’s Van Leeuwen: “Guest recognition is critical, so that when they check in they are recognised as a regular traveller. That brings a lot of benefit, and if they are happy, we are.”

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