The Internet wasn't even dreamed of — nor were computers — when a group of 38 resorts got together in 1928 to form The Luxury Hotels of Europe and Egypt. Since then, that group has evolved into Leading Hotels of the World, a coalition and service provider for 420 independent hotels in 80 countries.
As members joined and the group's focus turned global, the rooms it represented grew from 9,000 to more than 83,000 today, in a wide variety of properties from intimate downtown hotels and resort spas to private island retreats.
In 1995, the group introduced the Leaders Club, a program that helped identify the most frequent visitors and reward them with benefits such as room upgrades, gifts and concierge services. Each member hotel was asked to name 20 to 50 of its best clients, and together these constituted the top 10% of the guest population.
But the effort hit a plateau, largely because the members were not listed in a single database. Data collection and distribution were all but impossible across the diverse collection of properties. The group's 22 regional offices were inconsistent in collecting data, and some did all their operations by hand, leading to errors and rendering the database hard to update. The result? Some customers who didn't stay often at any one hotel but patronized several were not asked to join the invitation-only program.
“Those are the problems I was hired to solve in January 2004,” says Allison Cripps, Leading Hotels' director of loyalty marketing. “While they had a program that was working operationally, it wasn't engaging customers through the Leading Hotels channel and needed to be redesigned.”
The first move was to upgrade systems to allow more robust data collection — a capacity Leading Hotels got by retaining Quaero, a CRM service provider.
The revamped Leaders Club, designed after a few months' consultation with Quaero, offers a free basic level of customer recognition and two higher, fee-based levels with more customized benefits. At the bottom level, the group maintains a file of customer preferences that's sent to the member hotel 72 hours before a guest's arrival so the staff will know whether the person likes a hypoallergenic pillow or takes a kosher meal.
Higher levels of the loyalty program come with guaranteed upgrades and enhanced concierge services that include access to local four-star dining, private clubs, cultural events and entertainment. All the tiers are still by invitation only.
Since Leading Hotels doesn't own or operate the properties, it's important to get travelers to use the group's Web site (www.ihw.com) for making reservations. Guests are asked to start building their preference profile at the site and are given access to enhanced call center facilities. A rewards program set to launch next year will offer gifts and gift certificates to frequent customers who book through the Leading Hotels umbrella group.
At the same time, it's important to be able to demonstrate to member hotels that the club is not simply cannibalizing reservations that guests otherwise would've made directly with the hotel. Again, the Web-based CRM database has a role to play, this time by tracking reservations to their original leads.
“The hotels expect the program will bring them guests who didn't know about their property before,” Cripps says. “Some of the proving out of our loyalty approach comes in establishing business metrics and communicating those to our hotels that show, either through surveys or transactional data, that 80% of Leaders Club members who checked into your hotel had never been there before. Or showing that of all the Leaders Club members that stayed at your property last year, you only nominated 10% of them, while the rest came from the Web.”
The club will stay in a member-acquisition phase until the second quarter of 2006, Cripps says. Once it reaches critical mass, Leading Hotels hopes to turn the Leaders Club into a revenue stream by selling subscriptions to its member hotels along with e-mail or direct mail marketing services.
“A hotel could purchase a subscription to the database and say, ‘I want to do two direct mails and three e-mails this year,’” she says. “It could go online using our technology, choose a template for its message and select its target audience [from the Leaders Club]. Then we would build it for their approval, execute it and measure it on the back end for return on investment. We could become a direct marketing service provider.”
