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‘Bucking’ The Trend

Red Lion Eschews Traditional Point-Based Loyalty Program With New Digital Currency

Monday, January 28, 2019
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By Keith Loria

Red Lion Hotels Corp. (RLHC) has already had an established loyalty program with Hello Rewards, but the Denver-based company recently expanded its offering with the unveiling of Hello Bucks, a new digital currency that rewards all of its hotel guests—not just frequent travelers.

That’s a significant distinction since most hotel loyalty program benefits kick in for the consumer after a number of visits. Though the average North American traveler takes 7.6 trips per year, that threshold has limited the “everyday” traveler from taking advantage of many loyalty programs.

“We as a franchisor are particularly focused on reinventing what we think has been a static industry with minimal innovation in it and we really want to step forward and say that today’s consumer has changed and the needs of today’s owners have changed. We need a currency that will work for both of those parties and not just one or the other,” said Leslee Torres, RLHC’s SVP of digital, loyalty and partnerships. “The Hello Bucks currency actually came out of that idea.”

The new Hello Bucks currency will gratify Hello Rewards members with compensation of 10 Hello Bucks for every qualifying stay at any participating RLH Corp.-branded hotel and the benefits can be reaped immediately.

“We’ve looked at today’s currencies in the market and noticed the average currency out there is costing a hotel 5.3 percent of their gross for growth rooms revenue. So every time a guest walks in your door, whether they are earning or they are redeeming, you’re paying five percent of gross rooms revenue on that day,” said Torres. “Then, if it is a redeeming stay on top of that, the franchisor is paying you pennies on the dollar for that redemption.”

That means for most hotels, they are not getting paid dollar for dollar on a reservation, which is painful for owners and a problem RLH Corp. wanted to rethink to find a better way.

“We also wanted to look at not what the road warrior needed from a loyalty program, but we wanted to step back and see what the average consumer in North America needed because they’ve generally been forgotten about by loyalty programs,” said Torres. “They are structured to only reward those guests who spend a lot of time on the road.”

That’s why RLH Corp. set out to do something different and shift the balance to reward all guests. “A third reason we decided to shift the way our currency works was that our hotel owners want more direct business,” said Torres. “We want guests to book direct so we can provide the best economics in the market for our owners. We wanted to ensure our currency helps drive an interest in the guests around booking direct.”

Guests can discover the benefits of the Hello Rewards program on the OTA. All member rates are out on Expedia for its guests to find.

“So, no matter where you book, whether it’s through our call center, Expedia, Redlion.com, if there is a member number with your reservation, when you check out, we’re going to electronically deliver 10 Hello Bucks to your digital wallet on Redlion.com,” said Torres. “One Hello Buck is worth one U.S. dollar or one Canadian dollar based on where you choose to redeem it. The math is simple and that was really important to us.”

Redeeming the Hello Bucks are designed to be just as simple. All guests need to do is go to Redlion.com, log into the Hello Rewards profile and part of the page shows up revealing how many Hello Bucks they have and asks if they would like to redeem them. It’s an open field and a guest can use as many Hello Bucks on a reservation that they choose.

“For us, Hello Rewards is a marketing tool that we use to really show the scope of our elite corporation now that we are at 1,400 hotels,” said Torres. “We look to differentiate our brands from their competitors by creating a loyalty program that speaks more directly to today’s consumers and, in particular, the consumers who have unmet needs based on other loyalty programs in the industry.”

Additionally, there are a few things that help engage the more frequent traveler.

“First off, the Hello Bucks has the ability for us to issue on demand so there will be added little perks or benefits through the Hello Bucks currency for those guests who frequent us more regularly than other guests,” said Torres. “No. 2, the program is really geared toward recognizing individuals for things that are helpful to our hotels. So if you are a guest that stays frequently, the program is going to be more beneficial to you.”

Three Pillars of Loyalty

RLH Corp.’s loyalty program has three pillars, starting with its Hello Rates component, which offers discounted stays. By putting a member ID on a reservation, the ADR will be reduced for that reservation.

Component two is Hello Bucks and component three is the Hello Perks program, which is meant to give instant gratification, surprise and delight moments that are far more memorable than a set of points being sent into an account at the end of the stay, such as digital gift cards.

“We want something that is tangible that the guests can immediately associate with their stay and creates that memorable moment,” said Torres.

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