What membership means for the hotel industry

Like many service-led sectors, the hotel industry has evolved in recent years from a transactional business to one built firmly upon guest relationships. More than ever, the consumer is most certainly king.

It’s a transition that has raised expectations around how a company and its brands should behave, how they should interact with and reward guests, and of course around the service they offer. The industry’s challenge is to be both global and local, to have scale but remain personal and to have the digital capabilities required to keep up with an always on society.

Successfully addressing these trends requires a multifaceted approach, but the central thread is consistent; know your guest. For the past four years IHG has published a Trends Report, which in part draws upon our experience of operating 5,000 hotels in 100 countries to explore some important factors shaping consumer behaviour, and shares our views on how businesses can understand this to generate high quality revenue growth.

In 2013 we explored the drivers behind a shift from a transaction economy to a relationship economy. The following two years looked at how trust – in a service and brand, and then in a corporation – is becoming an increasingly key element of building relationships.

Our 2016 IHG Trends Report focuses on how to make membership meaningful by creating membership communities. Here, fuelled by the internet, like-minded people develop social identities as they share a sense of belonging and connect around a brand’s values and personality. Alongside this they reinforce their uniqueness by sharing experiences created as a result of their personal relationship with a brand. Both the social need for inclusivity and individuality are met.

To achieve meaningful membership, a brand must know what resonates with a guest, their likes and dislikes, what they need and when they need it. This is what consumers expect today. These communities make membership engaging and help nurture brand loyalty, which is crucial in any industry. For hotels it leads to guests that are less price sensitive, more resistant to competitive promotions, more willing to recommend, buy more, and are more profitable.

Knowing your guest is crucial and helps companies meet the three forces of globalisation, localisation and personalisation – an underlying theme across all of the IHG Trend Reports.

Technology is the great enabler for this personal approach and companies are investing heavily to ensure they can gather and best use data that paints a picture of a guest’s needs – from how they rated their last stay, to their favourite pillow and what floor they prefer to stay on. Much of this is driven through loyalty schemes, which allow hotels to go beyond customisation and get personal by creating feelings of recognition, respect, involvement and commitment.

Our own loyalty scheme, IHG Rewards Club, is an important asset and the industry’s biggest loyalty programme with more than 90 million members.

Data is also allowing businesses to establish what guests aren’t getting. Based on an unmet demand IHG launched both our EVEN Hotels brand, as the industry’s first wellness focused offering, and a Chinese-specific focused hotel brand in HUALUXE Hotels & Resorts. It also informed our decision to transform our boutique offering with the acquisition of Kimpton Hotels & Restaurants last year.

Spotting these gaps in the market or a portfolio continues to be a focus for the industry and this was very much the case in 2015, as we saw a number of companies turn to M&A to build scale.

With size and scale comes greater responsibility and the industry is paying more attention to building trust. This is because trustworthiness, be it in a brand’s service or how it behaves at a corporate level, now forms a much greater part of a consumer’s decision making process. At IHG, doing business responsibly is part of our DNA. It’s important to us and it’s important to guests.

This theme of knowing what matters most to guests is ultimately what matters most to hotels today. At IHG it is our core focus. The challenge for all in the industry is to deliver the small things while still achieving global success.