Hilton focuses on engaging "lower level" loyalty program members

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Hilton says it's focusing on driving more engagement from "lower level" members of its Honors loyalty program.

During the company's recent second quarter 2019 earnings call, Hilton president and CEO Chris Nassetta stressed that while these members don't stay as much, they're still "important business."

"The more that can be a direct source of business rather than indirect, obviously it adds to our RevPAR premiums and it does so in an incrementally efficient way in terms of distribution costs," Nassetta said.

Nassetta said the company now has 94 million loyalty program members, a year-over-year increase of more than 20%.

Active members, he added, account for more than half of global members, while share of wallet is also increasing from the company's most loyal guests.

Nassetta said the number of elite members was "up 25% year-on-year in the second quarter, and those members reaching 100 nights, up nearly 60%" for the same period last year.

Responding to an analyst question about the Honors program, he talked about the company's partnerships with Amazon for spending points and more recently with Lyft, for points collection and redemption and how engagement generally increases share of wallet.

"You will continue to see more of this from us, both for higher-level members and lower-level members ... I think really what it's focused on is getting greater engagement from our customer base and having more direct relationships."

A second analyst queried Nassetta on the limited number of luxury options for Honors members to use points and investment in that area.

A recent announcement from Hilton revealed plans to open more than 30 additional luxury properties, with 25 scheduled to open by the end of 2025. 

Nassetta said that while it's important to have luxury properties in the portfolio for loyalty because they are aspirational, actual guest behavior is different.

"What you have to remember is while people aspire to go to the Maldives, that's not actually what they do with their behavior. What they do more than not, is use it for the mundane things in life like going to, you know, New York City for the weekend with their husband or wife or going to Reading, Pennsylvania, for a soccer tournament with their kids and using the points they earned traveling on business."

Source: PhocusWire

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