Loyalty Growth Spikes in Upper-Upscale Properties

By: Mark Mazzocco

NATIONAL REPORT—Loyalty member bookings, as a percentage of total rooms, continued to increase across all chain scales in the second half of 2016, with the most recent year marking the strongest gains in loyalty contribution in over three years. This accelerated growth is likely due to the direct booking campaigns implemented by many of the large brands during the first two quarters of the year. These programs effectively incentivized customers to join loyalty programs and book rooms in greater numbers than either of the previous two years, and were particularly effective at driving new loyalty bookings in upper-upscale chain scale hotels.

Upper-upscale chain scale properties moved from having only 50% of its business be tied to loyalty bookings in 2014 to over 55% in 2016, shifting it from third to second among chain scales for loyalty contribution. Upscale chain scale properties continue to draw the heaviest loyalty contribution at 60%, and experienced strong growth in 2016. The midscale and economy chain scales had the smallest increases year over year in loyalty bookings in 2016. As brands approach the one year mark of loyalty rate offerings, it will be interesting to see if loyalty growth continues its recent trend of heavy growth or begins to plateau at a saturation point.

• Loyalty growth was extremely strong for the calendar year 2016 in all chain scales, likely due to loyalty rate offerings.

• Upper-upscale chain scale hotels experienced the strongest growth in 2016.

• Economy and midscale chain scale hotels experienced slower loyalty growth rates.

• 2017 is a year to see if brands approach an upper limit of market saturation for loyalty contribution.