Hyatt loves all its guests. But business travelers, especially ones traveling internationally, are typically its most profitable ones. The company is adjusting how it markets its loyalty program to reflect new realities.
Hyatt sees signs that more people in big cities are returning to offices, which could eventually translate to more business transient travel at the hotel giant.
“Anecdotally, in New York, some of our outlets in our hotels are seeing increased levels of local traffic, which means that more people are back in the office,” said CEO Mark Hoplamazian at the Bank of America Conference last week. “There’s a clear difference now versus at the beginning of the year.”
“That doesn’t mean they’re traveling as much for business transient travel,” Hoplamazian said. “It just means that there’s more activity in the office and that that will, over time, I think, contribute to business transient recovery.
While Hyatt serves all kinds of guests, business travelers — especially ones traveling internationally — have tended to be the biggest spenders and more profitable. But business trips haven’t recovered to pre-pandemic levels yet, partly because it’s not worthwhile to have trips if the people you want to meet won’t be in the office.
“Business transient is not zooming back to pre-pandemic levels, but it has been advancing,” Hoplamazian said. “Business travel is in flux. I think it will fully recover, but it will look different.”
Experiential Loyalty as an Adaptation
While waiting for the business travel recovery, Hyatt has had to adapt some of its longtime strategies. One example is what it emphasizes in its loyalty program.
The CEO said that the pre-pandemic main aspiration of its loyalty program was to focus on frequent business travelers and get them hooked on the company’s reward points. But with business travel in flux, the company is shifting its view of its loyalty program.
“We’ve decided that a more enduring way to actually capture loyalty is through great experiences, and that starts with leisure,” Hoplamazian said. “So we’ve shifted the portfolio along a very deliberate position, which is we can drive true loyalty that’s experiential loyalty, more than it is the currency of the points and becoming a prisoner of the loyalty program. And that’s worked.”
With roughly half of Hyatt’s business likely to come this year from leisure travelers, the company encourages guests to sign up for its loyalty program less for the points and more for perks, such as access to discounts on stays, “curated meditations” to help them relax, the ability to stream content from their favorite streaming services via Hyatt’s TVs, and so-called “milestone awards,” such as access to its “club lounges” at select properties that are separate from elite status and are available to everyone based on hitting certain targets for stays.
The executive’s thoughts echoed what Peggy Roe, chief customer officer at larger rival Marriott, recently said to Skift about how guests rarely say in focus groups that they opt for its brand because of the points and that it has been aiming to shift to a more experiential emphasis, such as by pushing city tours. IHG has also been playing up the experiences by letting guests choose more rewards from a menu rather than pre-selecting them. Accor’s Ennismore joint venture has debuted a loyalty program that de-emphasizes points.
See Hyatt CEO Mark Hoplamazian speak on-stage at the Skift Global Forum in New York City on September 27, 2023.