IHG Careful Not To Compete With Itself With 'Hotels Anywhere'

For a couple years, IHG has been boldly letting members of its Priority Club Rewards loyalty program redeem points for hotel industry gift cards, which let guests book room nights at hotels outside the IHG brand portfolio, a candid admission that its portfolio has some market gaps. But the company took things to another level with last week's launch of "Hotels Anywhere," which skips the gift card concept in favor of a direct online booking engine.

Hotels Anywhere is replete with rival chains like Hiltons, Marriotts, Westins and more, along with the IHG family of brands, of course. It must have been a tough sell to IHG franchisees, right?

"Generally speaking, once people—whether it be franchisees or other internal stakeholders—once they understand the program and how the map works, they tend to feel a little more comfortable with it," says Brian Ericson, IHG's director of loyalty development. "It's safe to say that this is not a directly competing product."

In other words, IHG makes sure customers using Hotels Anywhere are incentivized to book its own hotels first by offering them at lower redemption levels than similarly positioned rival hotels. At the same time, the program gives IHG loyalists a way to book free nights in places like Hawaii or the Las Vegas Strip, where IHG market penetration is low. Indeed, since the program's soft launch earlier this month, those two destinations have been the most frequently searched and booked, Ericson says.

Assuming IHG hotels really aren't losing room nights to rivals, the concept is a win-win for the company and consumers. IHG had found that some frequent guests were choosing to stay at other hotels now and then as a way to accrue points for future free nights in places like Vegas; to win back those lost room nights, IHG could either dramatically expand its portfolio or simply open up the redemption barrier. The latter, obviously, is faster and easier.

"Our hypothesis was that destination gaps like (Vegas) are a very bad thing for loyalty to Priority Club, and that people who might otherwise be inclined to stay all of their nights and earn all of their points with Priority Club may be strategically splitting their nights with another loyalty club, like Starwood or Hilton," he says.

But why make the leap from the "Any Hotel, Anywhere" gift cards to direct online booking? Ericson says many consumers were having a difficult time wrapping their heads around the concept, while others were understandably annoyed at having to wait four to six weeks for the cards to arrive in the mail. Hotels Anywhere is in the spirit of better customer service.

Hotels Anywhere uses unfiltered hotel inventory feeds from three third-party providers (Tourico, GTA and Hotelbeds) comprising 36,000 properties. Ric Garrido over at Loyalty Traveler crunched the numbers, and while IHG hotels in the system tend to offer the best rates on a value-per-redemption-level basis, the pricing at other hotels seems fairly arbitrary.

The average free room night booked on Hotels Anywhere thus far would normally cost about US$135.