Being an independent hotel and giving out loyalty points is not only possible, but also profitable. In fact, a rewards program increases the chance of guests returning to an independent hotel by 50%! That’s according to Stash Hotel Rewards - a loyalty programs provider for independent hotels’ guests.
Stash Rewards offers partnership to the one-of-a-kind hotels across the U.S., Canada and the Caribbean. The catch is, the partnering hotels have to be both a) independent; and b) highly ranked on TripAdvisor. “The average TripAdvisor rating of a Stash partner is 87%. We’re committed to holding the line on quality, even if it means slower growth.”, says Jeff Low, Founder & CEO of Stash Hotel Rewards. We got in touch with him to find out more about the current challenges for independents, the future of loyalty programs and its influence on driving direct bookings.
You have been working with hotels for a long time, gathering many valuable industry’s insights. Can you share with us your thoughts about the current state of hospitality?
It’s fascinating watching the chains trying to run from their own shadows. The guaranteed sameness that was the value proposition of the chains in the prior century has now become a liability. People travel to experience new places, and many don’t want to stay at a hotel that looks exactly the same whether it’s in Boston, Boise or Belize.
In the same way, the 12%-14% the chains charge a hotel owner just doesn’t make sense in an era where TripAdvisor rating is more important than being associated with a multinational hotel brand. In fact, the chain hotel affiliation is often seen as a negative.
You can see the chains trying to run away from their reputations as creators of bland consistency with the growth of their “independent collections.” By co-opting the term “independent”, the chains are admitting that their cookie-cutter model of hospitality is increasingly irrelevant.
Stash Hotel Rewards focuses on working with independent hotels that are certainly the very opposite of “sameness”. What problems are you solving for these hotels, and how?
I’m a huge fan of independent hotels. And a number of years ago I noticed that some of the best independent were disappearing — either going out of business or converting into chains.
One of the main reasons was that independent hotels struggled to attract frequent travelers - the 10% of travelers who represent nearly 50% of all hotel room nights. Those frequent travelers were typically very focused on earning points and so they wouldn’t consider a hotel that didn’t offer points.
To solve this issue, Stash provides great upscale and luxury independent hotels with a chain-like loyalty program - just without the chain. We help independent hotels attract frequent travelers, increase repeat business, drive direct bookings and win more groups and meetings. That leads to higher RevPAR and higher NOI.
You mentioned driving direct bookings as one of many benefits of loyalty programs – does that mean that you are also the champions of the Direct Booking Movement?
Absolutely. Let’s remember that often the #1 reason that people book direct is to earn points. The chains know it, and that’s why they push their own loyalty programs so hard. The chains have trained travelers to book direct if they want their points. As a result, the average OTA share at chain hotels is about one third that of independent hotels.
Stash gives independent hotels these same tools to drive direct bookings, lower OTA share, and increase guest loyalty. For example, one of our partners just shared with me that after enrolling their OTA guests in Stash, 84% booked direct on their next stay.
That’s an impressive number of direct bookings on return – the loyalty programs prove to be extremely useful for independent hotels!
Yes, it is! Stash brings a hotel’s best guests back more often. A 2-year Cornell study of 50,000 travelers found that after joining Stash, guests returned 50% more often and spend an addition $261 per year at the enrolling hotel.
What do you consider to be your biggest challenge then?
We sometimes encounter markets without any independent hotels that meet our customer satisfaction thresholds. We only partner with extraordinary independent hotels. For example, the average TripAdvisor rating of a Stash partner is 87%. But we’re committed to holding the line on quality, even if it means slower growth.
One solution has been to expand to more international markets. We’ve also seen a trend of chain properties de-flagging, often creating a new potential partner hotel in a market that previously didn’t have one.
So, in the market where the chain properties start to become more like their independent competitors, while some independents join the chain programs, what do you think is the future of hotel loyalty programs?
The consolidation of brands has led to a lot of frustration among loyalty program members. For example, my brother in-law was a die-hard fan of a certain independent hotel. Now that it is part of a chain, he no longer finds the special touches that the hotel was famous for: the chocolate chip cookies on his pillows and the chance to “raid the mini-bar.” He just told me he’s giving up on it!
Similarly, the distinctive aspects of some chain programs will probably not be able to survive the integration with the chain reward schemes. There are loyalty program rules that can be applied to hundreds of hotels across multiple countries, a kind of formulaic delineation of how a hotel can say thank you to a guest. It is the exact opposite of the authentic guest experience that most hoteliers aspire to provide.
Compare this to the guidelines The Hotel at the Arundel Preserve provides to their front desk team how they should welcome a guest: “Do whatever it takes within reason to provide the guest with an extraordinary experience.”
What are your thoughts on the rise of 'instant rewards' and cashback loyalty programs at independent hotels?
Cashback loyalty programs are a short-term play, like Groupon for retail. It may encourage trial in the short term in your time of need - but make no mistake that you aren’t encouraging repeat behavior.
Is this something you would consider incorporating at Stash?
Instant on-property rewards is something we’re definitely considering. Loyalty is a two-way street, so we want to be sure our members are feeling the love immediately and for years to come.
Could you describe your commercial model to us?
I’m proud to say Stash has the friendliest business model for partners and members of any loyalty program I’ve seen. We spent a considerable amount of time talking to hotels and travelers to design a program that is win-win for everyone.
The overall concept is pretty simple, Stash members are able to earn and redeem points at any Partner Hotel in our carefully curated network. Thus, Stash becomes an indicator of quality and a benefit to the property and traveler, supporting a hotel’s individual brand. One of the most unique aspects of our program is that when a traveler goes to redeem their points, we pay the Partner Hotel the full room rate. Because partners control their rates, we don’t need blackout dates, and a redeeming guest can be treated like the VIP they are rather than a “revenue loser”.
Your model seems to be very considerable of both hotels and guests. Thank you for sharing your thoughts with us! Lastly, we wanted to ask you to give good advice to hoteliers reading this article. Besides considering loyalty programs for independent hotels, of course!
Firstly, know the warning signs of OTA addiction. Are your OTA rates lower than the rates on your site? Are you hiding your OTA share from friends and family? Did your Expedia market manager invite you to her wedding? It’s not too late to get help!
Secondly, don’t be fooled by the terms “independent collections.” These are still franchise agreements with huge upfront and ongoing fees that encumber your property for up to 20 years.
Lastly, make time to travel yourself! The inspiration and perspective it provides are immeasurable.