The Loyalty Partnership Questions Operators Should Be Asking

Earlier this week, Accor and Hard Rock announced a distribution and loyalty partnership with no ownership stake and no rebrand, with Hard Rock keeping its equity and Accor collecting ongoing fees, in a structure Accor describes as closer to a franchise model, in which it is paid for the business it brings.

The opportunity is real. Hard Rock's New York hotel went from 84 room nights in its first month on Accor's channel to more than 1,500 a month by July, more than Hard Rock's own site produced for that hotel, and more than 90% of those guests were new to Hard Rock.

As deals like this become more common, hotels should firm up their criteria for evaluating a partnership opportunity.

Some thought starters:

Know your real cost of acquisition by channel. Before you can judge a partner platform, you need a clear, current figure for what a booking costs you through OTAs, brand.com, voice, GDS and groups. Include commissions, marketing spend, payment fees and any loyalty costs.

Ask whether the demand is incremental or redirected. A partner channel that mostly pulls guests away from your OTA bookings may lower your costs, which is worth something. But a channel that brings in guests you would never have reached is worth much more. Ask the partner how they measure incrementality, and plan your own test before you go live.

Settle data ownership up front. Who owns the guest profile when a partner's member books your room? Can you market to that guest directly after checkout? What happens to that data if the agreement ends?

Understand how redemption will play out. Earning points is the easy part. Find out what you're reimbursed when a member redeems points at your property, how that reimbursement compares with your ADR in peak periods, and whether you can limit award inventory.

Bring your finance and technology teams in early. Two loyalty programs mean two sets of rules, fees and reconciliations. Ask how commissions and fees will be settled, how rates and inventory will map between systems, and how you'll keep rate parity across channels.

Read the exit terms carefully. A partnership with no equity should be easier to leave than a franchise.

I’m curious to hear what else operators think they would need to see before signing on to a loyalty partnership!