In the past, I’ve reported on how loyalty programs are becoming even more important to airlines during the coronavirus pandemic. But after a discussion with Jeff Borman — the former VP of Revenue Management at both Marriott and Hilton — I’ve come to realize that it’s even more important to hotel groups. After all, in Borman’s own words: “Hotels own customers, not real estate.”
But there’s more to it than just this statement. Hotels rely on franchises to make money, and their franchisees rely on the hotel group’s brands and loyalty programs to bring guests through the door. In this article, I’ll walk you through my conversation with Borman and other tidbits on how hotel loyalty works and just how it makes hotel companies hundreds of millions of dollars every single year.
I’ll start with an overview of the hotel group business strategy — it’s important to understand this as it has a huge impact on how loyalty programs make money. Then, I’ll move into some key points on how loyalty programs generate revenue and how they work from a financial perspective.
Let’s dive in!