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Hotels.com criticises rivals’ ‘convoluted’ loyalty programmes

Hotels.com’s EMEA marketing boss has criticised big hotel chain’s loyalty programmes as ‘complicated’ and ‘convoluted’, claiming customers prefer its ‘coffee shop-style’ scheme.

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Hotels.com’s loyalty programme offers customers 1 night free when they book 10.

The hotel booking website launched its Welcome Rewards programme in the US in 2008 before bringing it to Europe four years ago. It offers customers the chance to book 10 nights and get one free and has recently passed 10 million members, as well as the 1 million free nights milestone.

Speaking to Marketing Week, Matt Walls says the programme’s simple premise has powered its success.

“We operate in an environment where big hotel chains have complicated, convoluted loyalty programmes that customers struggle to understand. We stripped that away and came up with something deliberately simple,” he says.

He says the firm is now hoping to expand the scheme by making it accessible to a larger part of its hotel base. Hotels.com will also target customers in Europe, Asia Pacific and Latin America, putting loyalty at the “centre” of its marketing message as it looks to get to 10 million members in each of the regions where it operates.

“Loyalty will be central to our messaging going forward. We want to increase aggression in how to promote it,” he adds.

Walls believes Hotels.com’s loyalty scheme is increasingly important in helping the firm stand out as it faces competition from rivals such as Laterooms.com and Booking.com. He says it is also a useful tool in justifying the company’s role in the booking process.

Hotels.com is a middleman between hotels and customers and doesn’t actually own any hotels itself. Walls says that makes it essential for the company to build loyalty, both via the quality of its service and by giving something back to customers through Welcome Rewards, particularly as acquiring new customers online becomes increasingly expensive.

“When we started out we thought we were the masters of online marketing through Google paid search. That marketplace is now very crowded and with crowded comes expensive. We had to move the needle towards retaining customers. Loyalty is fundamental to our overall business economics,” he says.

Walls says a lot of Hotel.com’s marketing budget still goes on search and branded affiliates to ensure the service is in people’s short list when it comes to booking. It also has a strong presence on TV at key holiday buying times, such as January and between May and July, which Walls claims offers the brand a “trust element” that online marketing channels don’t.

He adds that Hotels.com is currently reviewing its brand positioning and is looking at launching refreshed creative before the summer. In the US, the company has just launched a new campaign featuring brand ambassador “Captain Obvious”, based on the fact that given its name Hotels.com should be an obvious choice for hotel bookings.

While Walls admits this is not a character that would work outside the US, he suggests the fundamental idea around the name Hotels.com being obvious is “universal” and it is considering bringing it to Europe.

Readers' comments (4)

  • This is ironic.

    To the untrained eye it sounds brilliant, but what it doesnt show is that once they know you are a returning customer, they bump the prices up.

    I've experienced this first hand as I was drawn in to the loyalty scheme, but noticed the price per night had gone up when I went to book the same hotel a week later. When visiting the site from a different IP address, and as a new customer... the price had magicly lowered by around £30. Times that saving by 10, and I would actually get near 3 free nights as an anonymous user, compared to just the 1 free night as a "loyal" customer.

    Someone explain to me how this is fair/honest marketing to the customer.

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  • If what you say is accurate Lewis, Hotels.com runs the risk of alienating customers - the polar opposite of driving loyalty. Employing underhand techniques such as you describe is too risky in today's competitive landscape. Even if ultimately it is the hotel that ups the price, Hotels.com will suffer as the conduit.

    However on the face of it I can see why their loyalty scheme is successful. Hotel chains need to rethink their loyalty programmes as in my experience they are indeed convoluted and overly complicated and it takes a long time to earn anything of significance. The hotel market is moving at incredible pace & technology will play a big part in the years to come. If hotels do not engage and reward across multiple platforms they will ultimately lose out.

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  • That's a myth, they have no control of their suppliers prices. I hope hotels.com come and clarify. Hotel prices are very dynamic but hotels.com is just a distributor.

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  • We completely agree, it wouldn’t make good business sense to offer higher prices to our most loyal customers and we absolutely do not do this. The Welcome Rewards programme is at the heart of the Hotels.com brand and we actively look to reward loyalty in as many ways as we can.

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