InterContinental Hotels Group has signed a partnership with Mr & Mrs Smith, which see IHG rewards club members able to earn and redeem points at over 500 new hotels.
The move was the latest in a series by the global branded hotel groups to use partnerships to bolster their stables and offer loyalty members greater choice.
At IHG, the partnership was due to begin early next year, with the company commenting that the partnership would more than double the number of luxury and boutique hotels which members could choose from.
Claire Bennett, CMO, IHG, said: “IHG’s exclusive partnership with Mr & Mrs Smith illustrates the truly transformative travel we bring to our IHG Rewards Club members. This loyalty partnership will allow our most loyal guests to discover even more of the world with the most incredible and inspiring luxury rewards.
“By bringing this spectacular collection of award-winning hotels to our direct booking channels, this partnership means members can earn and redeem points in some of the world’s most sought-after destinations – the perfect complement to IHG’s growing luxury and boutique hotel portfolio, which includes InterContinental Hotels & Resorts and Six Senses Hotels Resorts Spas.”
The end of last year saw Mr & Mrs Smith raise close to GBP4m in crowdfunding as it looked to pursue further global expansion. According to the company’s pitch document, the group had 1.5 million members, had completed over GBP60m in bookings in the last year and grown booked commission revenues by 35% year on year, generating total revenues of over GBP13m and Ebitda of GBP1.37m, with 98% of members stating that they would book again.
IHG has been bolstering its luxury offering in recent years, most-recently paying Pegasus Capital Advisors USD300m for Six Senses Hotels Resorts Spas at the beginning of this year.
Keith Barr, IHG CEO, said: “This acquisition continues the progress we’ve made against the strategic initiatives we outlined a year ago, which included a commitment to adding new brands in the fast-growing USD60bn luxury segment.”
Six Senses currently manages 16 hotels & resorts with 18 management contracts in its pipeline and a further 50 deals under active discussion. The transaction took IHG’s total portfolio of luxury hotels to 400 properties with 108,000 rooms, out of a total portfolio of 5,518 hotels with over 825,000 rooms.
The agreement between IHG and Mr & Mrs Smith had echoes of the partnership agreed last year between Hyatt Hotels Corporation and Small Luxury Hotels, which the Hyatt loyalty programme including more than 200 SLH properties globally at which members can redeem or earn points.
SLH said the partnership had boosted reservations, while Hyatt members have wider choices. Italy, the UK, France, China and Greece have been the most popular destinations since the arrangement began in late 2018. At its second-quarter earnings, Hyatt said that over 96% of the hotels in the programme were already seeing bookings from World of Hyatt members.
In the same earnings report, Hyatt said that World of Hyatt members accounted for about 75% of Hyatt’s website bookings and a third of overall bookings.
Mark Hoplamazian, the company’s president & CEO, told analysts: “Elite customer scores are up significantly, and our global room night penetration has increased approximately 460 basis points to over 41% during the first half of 2019 compared to the same period in 2018. We believe engagement of World of Hyatt members fuelled our transient demand and contributed to our market share gains during the second quarter.”
The CEO also credited the addition of Small Luxury Hotels in part with the group’s pipeline growth, with Hoplamazian adding: “The network effect of having such an intense focus on high-end customer and bringing together the value proposition around the World of Hyatt through Small Luxury Hotels and the other partnerships that we’ve got, that yields an ability to actually impact the results of these kinds of hotels, and that’s why I think we’re seeing some of the conversions that we’ve now signed.”
HA Perspective [by Katherine Doggrell]: As any of the large luxury hotel owners will tell you, creating a high-end property is a massive effort. Marble to be mined, silk sheets to be teased out of worms, staff to be train in the dark arts of psychic service. It’s not the same as putting a budget hotel next to a petrol station.
The large global hotel brands have got wise to the bother of luxury ownership a while back, although they have yet to move as far as franchising other than in extreme cases. Which leaves them in a pickle with their luxury portfolios. It’s very hard to gain scale in a hurry. Yes, you can buy brands, as IHG and Accor have. But that can be a but costly, particularly when your board would rather you not fritter cash up the wall.
So why not do one of these loyalty partnerships? Lots of fun, new hotels, places for loyalty guests to stay and even adding the gloss of luxury for potential conversions. But once the hotels have come under the auspices of the IHG – you can book direct through IHG channels – then one has to ask what the point of the global branded groups are any more. Curators?