Island Fever: Lost and found in Eden

PHUKET: As many jaded expats living in Thailand for any length of time know, the search for enduring values in a littered landscape is often a bottomless pit. Perhaps it was that herd of stampeding elephants which obliterated those rose-colored glasses. In the heat of a sunny tropical landscape, blindness is inevitable. In some ways, it might even be comforting to live in a black box. Where is the love, understanding and a return to simplicity?

Let’s turn our focus for a moment to loyalty, which for all its faults remains an admirable human quality and one that Wall Street long ago tapped into as a business tool. It’s very simple math, when you reduce the cost of customer acquisition and have them returning time and time again. This recurring magic wand of a revenue stream is pure magic.

Major hotel chains have for years tapped into the concept, with incentive programs such as Marriott Rewards, Hilton Honor, Starwood Preferred Guest or InterContinental Rewards. For anyone who saw the Hollywood film Up in the Air, who can forget that scene when two frequent travellers play show and tell with their mass of loyalty cards.

For hotel groups, the ability to lure corporate guests with rewards enticements, so that they pay premium rates when the company is footing the bill, is as tempting as the snake offering Eve the apple in the Garden of Eden.

But we do live in a changing world and the skyrocketing travel landscape of online travel agents (OTAs) and TripAdvisor are changing hotel booking patterns. Be it Agoda, Expedia or Hotels.com, choices are only increasing and attracting more users each day in the search for values that do not focus on a single brand or offer.

We continue to evolve in the long-tail of choice, where there is engagement rather than pure selling and users are no longer content to be at the mercy of a hotels marketing department, but they want to search our deals, new hotels and destinations. Niche, lifestyle and personalization are at the crux of the matter.

For large-scale hotel groups, one of their key selling points to attract developers into signing those lucrative management agreements is the perceived ability to outperform the independent hotels and obtain higher rates and occupancy. Call it scale or what not, but in most – but not all – cases, the function does work.

Yet the hospitality sector is not one that is rampant with innovation. You have to look at the four walls and programmed check-in and out welcome drink experience that has not changed for decades. Perhaps the overriding concept is: if it ain’t broke, don’t fix it.

But times are changing. OTAs are now looking at loyalty programs of their own that are not limited to their own hotels or brands. The world is indeed the traveller’s oyster, and now more than ever the third-party booking avenues are taking on increased market share.

You have to wonder if hotel loyalty programs in the coming decade will become obsolete, just like the DVD or landline telephone. How will hotel groups who want to contain loyalty deal with these OTA interlopers? Eventually one has to view what value there is for a large brand if they can only offer reduced commissions for OTAs and not deliver the business.

Certainly there are other merits of hotel chains in terms of systems, processes and scale, but the revenue side, which drives the business, is going into unknown territory and it remains unclear who the winner and losers will be. Customer choice reigns supreme, and frankly speaking the next switch from web-based systems to mobile is inevitable and only a heartbeat away. The real question is where does loyalty belong in 2020 and who can capture the market? Hotels, OTAs or maybe even Google?

— Bill Barnett