What’s the story behind Global Hotel Alliance?
When we created the alliance, the idea was to try and help smaller, independent hotel brands compete with the ever-growing mega chains. GHA was born around the time that Star Alliance was being created as the first major airline alliance. We followed that model closely and felt there was an opportunity to create something similar within the hotel industry.
We actually sat down for days on end with our customers, potential customers and the general traveling public to try and understand what it is today that changes their behavior or their views of different hotels.
What key insight has emerged from talking to your customers?
Everyone has a view on loyalty programs. What you discover is that people talk about them as a commodity. They’ll say things like, “how many flights do I need to get a free night?” It quickly became clear to us that there was no emotional attachment to these things. It was a means to an end.
The co-creation discussions with our customers were very helpful in helping us understand that there was a new type of customer evolving – one that had a different view of what would make them change their minds about where they would stay in future, and which hotels they would choose. What emerged was this idea of local experiences and DISCOVERY – which has proved to be several years ahead of the game.
How did DISCOVERY get its start?
As we brought in customers in from around the world to these co-creation discussions, it soon become clear that they actually didn’t want another points program. They were actually exhausted with the number of points systems that were out there.
Customers were starting to express a desire for different experiences as they travel around the world. Not the same Marriott, Hilton and Sheraton experiences – they wanted to try new brands, different types of hotels and have local experiences. As we started to hear these stories from customers, we started to realize that there was an opportunity there. We, as hoteliers, have access to so many different local experiences. If we could make this our rewards system, we could help ourselves in terms of communicating our brands and promoting the hotels.
Has it been successful?
We’re seeing a YOY increase in DISCOVERY membership. By the end of 2018 we had 13.6 million members. We’ve amassed over a billion dollars in revenue from it. Cross-brand revenue (that’s revenue produced by our members who stayed at one brand and another), grew by 17% last year. So we know that people who use the local experiences are 5 times more likely to come back to our business and stay in one of our other brands.
The model we created has become a necessity for small brands to survive in this very competitive environment. It’s allowed us to bring local brands to a global audience. This approach is something that we’re seeing appeals to consumers, who, to a certain extent, have become tired of the big brand experiences over the last few years.
Are consumers moving towards smaller, independent brands?
The industry has changed a lot, but the big brands are still here, and still very successful. But today, the world is open to everyone in a way like it never has been before. More and more people are traveling, and they’re actually looking for new experiences when they travel. That’s where our opportunities emerge. We’re able to offer a brand experience that consumers can talk about between themselves. And that in itself is helping us to create awareness for these brands and demand for what is a very different experience from what the big brands can offer.
Want more? Read our interview with Caroline Gardner, Global Brand Manager at Ritz-Carlton.